The Return of Meme Mania: Are These Tariff Dividends Actually Happening?

Nothing could have prepared Adam Aron for 2021. A seasoned executive with 40 years of experience and two degrees from Harvard, you would have thought he had seen it all.

At that point, he had been CEO of movie-theater chain AMC Entertainment (AMC) for about five years. As the calendar turned from 2020 to 2021, Aron watched in helpless horror as AMC shares lost more than 90% of their value during the extended COVID-19 lockdowns. Theaters were dark, revenue had evaporated, and the company was fighting for survival.

And then the impossible happened.

In the summer of 2021 – while theaters were still empty – AMC shares surged 3,000% in a move that was completely untethered from economic reality. Suddenly, and inexplicably, Aron found himself at the helm of one of the world's most popular companies. AMC had become a so-called "meme stock."

Over the past few months, there have been faint but steady meme-stock echoes ringing throughout the market. Retail investors – that is, non-professionals – are once again piling into buzzy but downtrodden companies, just like they did in 2020 and 2021. Online message boards are heating up, trading volumes are spiking in unlikely places, and the tone feels eerily familiar to anyone who lived through the mania.

And a few days ago, President Donald Trump took to social media to tease a policy which, if pushed through, would single-handedly add tens of billions of dollars' worth of fuel to the meme-stock fire. Because, just like in 2020, putting extra cash in people's pockets often ends up in the stock market. Another round of direct payments – even if funded by tariffs – could spark the same kind of meme-stock frenzy.

To be clear, piling into meme stocks is a dangerous game of market roulette. We don't recommend playing. History shows how quickly these manias can enrich a few early traders and then wipe out everyone else. But that doesn't mean we recommend sitting on the market sidelines...

In this article, we're going to provide you with a few rules to keep in mind should the market find itself in another meme-stock frenzy. It's the exact playbook we used in 2020, when the picks in our Stansberry's Investment Advisory flagship newsletter trounced their market benchmark, without risky meme plays.

But before we get to that, let's go back to AMC's August 2021 investor call, when Adam Aron hosted "hundreds of thousands, if not millions, of (AMC) investors": Over the course of this call, Aron listened carefully as some of these millions of newly-minted AMC superfans – who, collectively, had taken to referring to themselves as "apes" – offered a stream of unsolicited suggestions.

For example, a guy named Timothy suggested that the company – which, at the time, was burning hundreds of millions of dollars per quarter – institute a dividend. A new AMC investor named David suggested Aron partner with fellow meme-stock GameStop (GME)... An AMC enthusiast named Ryan wanted Aron to spend tens of millions of dollars to "reestablish drive-in theaters."

But the question of the day came from a guy who requested an interesting tribute to AMC's "apes." Chief Financial Officer Sean Goodman sheepishly relayed the question to his boss:

Aron asks, I promise, not a sarcastic question, but can you guys make the AMC mascot officially a gorilla?

"It's an interesting question," Aron politely lied, showing remarkable restraint. Not many Harvard MBAs are asked to rebrand a multibillion-dollar enterprise based on a meme created by anonymous forum users.

Market historians have spent the past four years dissecting the causes of this meme-stock mania. Huge federal liquidity injections to small- and medium-sized businesses, expansion of unemployment benefits, and monetary easing at the Federal Reserve – including cutting some interest rates to zero – all contributed to a general rise in capital sloshing around the economy... much of which found its way into financial markets.

But various studies suggest that the primary accelerant of the meme-stock was federal stimulus checks. As I'm sure you recall, between March 2020 and March 2021, millions of Americans received three rounds of stimulus checks totaling $3,200 for a single adult. Families with kids could have received nearly $9,000. Millions more Americans received one or two of those payments, bringing the total for all three rounds to roughly $900 billion.

One Harvard Business School study suggests that between 10% and 15% of this stimulus – more than $100 billion – wound up in the stock market. By 2021, brokerage firm Charles Schwab estimated that 15% of all non-institutional investors in the stock market bought their first stock in 2020. In other words, a single year pulled an entire generation of new traders onto the field.

This massive influx of "new money" is huge reason the stock market surged 50% from March 2020 to March 2022. But the newcomers – the millions identified by Schwab – tended to flock to the far-out corners of the market, including meme stocks. Instead of buying quality companies based on earnings or competitive advantage, many gravitated toward the loudest online narratives and the most viral ticker symbols.

Which brings us back to Trump, who on November 9 posted on Truth Social:

A dividend of at least $2,000 a person (not including high income people!) will be paid to everyone.

Trump says he'll pay for this with proceeds from his new tariffs. So, while the circumstances are different, the parallels to 2020 are worth paying attention to.

There are real reasons to question whether this will actually happen. While we won't dwell on the potential snags, suffice to say there are logistical, procedural, and even legal questions about whether the U.S. could do something like this.

Not to mention the fact that it's not clear how serious Trump himself is about the idea. The aforementioned Truth Social post was in the context of supporting his tariffs. In the same post, Trump blasted:

People that are against Tariffs are FOOLS!

Trump floated a similar plan back in February, when he was trying to drum up popular support for his Department of Government Efficiency ("DOGE") cuts. Back then, Trump floated the idea of cutting $5,000 checks as a way of "sharing" DOGE's government savings with everyday Americans.

We have no interest in wading into a debate about the appropriateness or wisdom of special, pandemic-like payments. But, as investors, we need to watch the dynamics no matter how we feel about the politics.

Especially because – even without a huge check from Uncle Sam – there's already a hint of meme fever in the air. Companies like OpenDoor (OPEN) and Krispy Kreme (DNUT) are already popping up in online forums exchanging meme trading strategies. The ingredients for speculation are back: cheap trading apps, online echo chambers, and a fresh crop of willing gamblers.

As value investors, we're steering clear of meme strategies while watching and waiting for another potential round of stimulus money. Here are three practical suggestions to keep in mind as this plays out:

No. 1: The most important thing for investors to understand about investing in stocks is simply what kind of businesses make for great investments and how to properly value these kinds of businesses.

When Schwab released the aforementioned report on all of the market newcomers, there was plenty of blowback from stodgy institutional investors and academic types, mocking the influx of unqualified novices. "Stick to the indexes," is the conventional wisdom.

For lots of folks, that's probably good advice... especially for those who don't want to spend the time or energy educating themselves on proper investing. If you're willing to put in the time, it's not rocket science. But the truth is, the basics of valuation aren't mystical – they're the same judgment calls you already make in everyday life.

Every day you make decisions about how much you're willing to pay for stuff – coffee, your kid's tuition, even the house you live in. With every cash outlay, you weigh costs and benefits. For long-term investments like education and your home, the pros and cons will often factor in considerations about the broader economy or projections about what may happen to asset values in your area.

Buying a stock is buying a tiny fraction of a company. You own it. With a little practice, you can learn how to not only evaluate a business's quality but also decide how much you're willing to pay for it.

The AMC apes didn't bother with this. And, within three years of the infamous "gorilla mascot" investor call, shares were down 98%. Meanwhile, the stocks we recommended in Stansberry's Investment Advisory throughout 2020 included a couple of insurance companies, an energy business, a cash-flow generating software company, and even the publicly traded shares of an English soccer team. Boring stuff. Huge profits.

We won some, we lost some... but, by focusing on business quality and valuation, the overall returns of our 2020 picks returned 26% annualized, on average, easily outpacing our benchmark. That's the power of staying grounded when the rest of the market is chasing illusions.

No. 2: Lay out a strategy that will continue to make you money even when you're wrong about the big picture.

In 2012, our Investment Advisory team was as bullish as ever. We recommended 28 companies that year, and averaged nearly 42% annualized per pick, blasting by our benchmark. In short, we nailed the trend.

The next year, after looking at some of our favorite market indicators, we began to sense that a major market correction loomed. We trimmed our positions. Selectively short-sold a bunch of stocks as a hedge. And made only the most conservative stock picks we could find.

The expected crash never came. We were completely wrong. But our 20 recommendations still made around 5% annualized. We trailed our benchmark that year, but by focusing only on quality businesses trading at decent valuations, subscribers still booked gains.

Which brings us back to Trump...

Most market pundits and policy wonks don't think the new Trump "tariff dividends" are going to happen. They think there's too much resistance in Congress, or legal snags, or possibly the president will simply lose interest.

I disagree. I think there's a decent chance Trump finds a way to make this happen. But I could be wrong... and the fact is, my strategy will be similar whether or not I end up having to navigate a market rife with first-time stock-pickers and meme-stock hunters. A resilient strategy doesn't hinge on predicting which version of the future unfolds – it works across most of them.

No. 3: The last thing I think most individual investors either never learn or only learn the hard way after several big beatings is to never, ever chase what's "hot."

For a while, the meme-stock crowd looked like geniuses. And hey, I'm sure there are lots of folks who timed things right and made good money. But it's almost never a good idea to chase what's hot.

These investment mirages will cost you almost every time. The hotter the story, the colder the ending tends to be. It takes a lot of discipline to stick with great businesses that you can personally understand. It takes discipline to buy them when you can get them at a reasonable price.

You may be surprised to learn that I think the meme-stock mania of 2021 was a positive development for the overall market. Looking back at the meme-stock peak, there's plenty of circumstantial evidence that those guys who got burned on AMC and other meme stocks are still in the market today.

After all, the entire market didn't collapse when the meme-stock bubble burst... and valuations of the high-quality companies we recommended have gradually been grinding higher since 2022. This suggests that the stars of the "gorilla mascot" call of 2021 – investing newbies like Timothy, David, Ryan, and Aron – took their lumps, learned some valuable lessons, and stayed in the market... boosting the returns of those of us who were focused on quality all along. Every cycle creates new long-term investors – even if they begin their journey in all the wrong places.

Over the next few months, the chatter about "free money" and meme stocks will get louder. Don't reenact the mistakes of the apes – but don't sit it out, either. If another wave of cash floods into the market, the investors who stay rational while others lose their minds will be the ones who win.

P.S. A potential cash wave of nearly $7.4 trillion could soon start flooding back into

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