This question is about the Efficient Markets Hypothesis $($EMH$).$ Meme Stocks

In early $2021$ a group of retail traders teamed up through online forums to attempt one of the biggest short

squeezes in market history. This led to a new phenomenon called "Meme" stocks where retail investors

collectively buy a heavily shorted stock to purportedly inflict as much harm as possible to short sellers, and

to potentially profit when short sellers are forced to cover their positions.

This phenomenon started with GameStop, a U$.$S$.$ video game retailer, which went up by as much as $1,745\%$

within the month of January alone. ${?}^{108}$ This caused a frenzy in the markets as some hedge funds ran up

huge losses trying to buy borrowed stock back. But this squeeze ended in a controversial way when the

trading app Robinhood curtailed share buying. The trading app blamed the intervention on its clearing

houses. Another example of the "Meme" stock frenzy during $2021$ was the cinema group AMC which

jumped from $$2\mathrm{.}12$ on December $31,2020$ to $$19\mathrm{.}90$ on January $27,2021($an $839\%$ increase$),$ and closed

out the month at $$13\mathrm{.}26.{?}^{109}$

Despite the volatility in these two examples of "Meme" stocks, they ended the year with a calendar year

$2021$ performance of $688\%($GameStop$)$ and $1,183\%($AMC$).$

Andrew Lo$,$ writing on the Efficient Markets Hypothesis $($EMH$)$ in the New

Palgrave Dictionary of Economics $($p$.785),$ asserts that the "most common

challenge to the EMH is the anomaly, a regular pattern in an asset's returns

which is reliable, widely known, and inexplicable." He goes on to say that the

combinations of a regular pattern and reliable occurrence imply a "degree of

predictability, and the fact that the regularity is widely known implies that

many investors can take advantage of it$."$

Read the following extract from the SBBI $2022$ Yearbook on the concept of

a meme stock $($attached on the next page$).$

Based on readings in the EMH module including, but not limited to$,$ the

commentary in my anomaly lecture notes, and Bailey's text, argue for or against

the following statement:

The returns on meme stocks are evidence against the EMH. Is your

argument with the weak EMH, or the more general $($larger

information set$)$ semi$-$strong EMH? Be explicit.

Hint: You might think about whether or not the meme stock episode is an

anomaly.