Article: Catching Rides on Meme-Mafia Trades May Boil Down to Models

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Catching Rides on Meme-Mafia Trades May Boil Down to Models

Lu Wang, 13 June 2021

Staring at a meme stock craze that shows few signs of abating, Wall Street is still wrestling with how to trade it.

Many traders scroll through Reddit blogs that cheer on day traders to suss out the next big thing. Others obsessively track Stocktwits citations. There are even firms hiring WallStreetBets veterans to get inside the heads of the people who call themselves apes with diamond hands.

The stakes are high. Meme stocks like AMC Entertainment Holdings Inc. and GameStop Corp. have been known to double in no time. Day traders have banded together to target hedge funds’ short positions. And — face it — no investment professional wants to be bested by a 24-year-old celebrating a 32% gain with chicken tenders.

Now Goldman Sachs Group Inc. has developed models that may help crack the code.

Using metrics to detect jumps in retail activity, Goldman strategists led by John Marshall developed three trading models to take advantage of sudden spikes in demand of certain stocks.

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