Despite the risk of capital misallocation, historical experience shows that such speculative bubbles typically do not spill over into the broader market. This article is sourced from an article written by Wall Street Insight and organized and written by Deep Tide TechFlow. (Background: Coinbase will launch tokenized stocks, prediction markets, and IEOs in the United States: Moving towards a universal exchange) (Supplementary background: Popular Science | How to assess how much your crypto stocks are worth using 'NAV net asset value'?) Despite the risk of capital misallocation, historical experience shows that such speculative bubbles typically do not spill over into the broader market. Meme stocks are making a comeback, with retail investors' speculative enthusiasm igniting a market frenzy in July, which has raised concerns about a stock market bubble. However, analysts believe that this round of speculation has relatively limited spillover effects on the overall market. Analysts believe that, unlike the 2021 meme stock craze dominated by GameStop and AMC Entertainment, the current speculative activity is mainly concentrated in small-cap and low-priced stocks, with negligible impact on major indices like the S&P 500. Despite the risk of capital misallocation, historical experience shows that such speculative bubbles typically do not spill over into the broader market. Low-priced stocks have become the new favorites for speculation, with trading volumes reaching record highs. The most significant feature of the July market was the frenzied pursuit of low-priced stocks. Data shows that the bottom tenth of stocks by price at the beginning of the month saw a median increase of 16% by July 23, when a new round of meme stocks peaked, far exceeding the 1.4% increase of the highest-priced stocks. The starting price of stocks has become the best predictor of performance for the month. This investment logic, based on stock price rather than company fundamentals, seems quite absurd to institutional investors. Companies can easily change their stock price through simple stock splits or reverse splits without affecting shareholders' actual ownership ratios or profit distributions. Unless a stock price remains below $1 for an extended period facing delisting risk, the absolute stock price itself has no practical significance. However, a large number of retail investors either do not understand this basic principle or choose to ignore it. In the frenzy of trading in July, these investors' strategies did indeed work, while the rational analysis of professional investors failed. When the speculative frenzy reversed at the end of the month, the cheapest stocks experienced the largest declines, reaching 6%. Concerns about capital allocation have emerged, and historical lessons are worth heeding. Excessive speculation can lead to capital misallocation, and the meme stock craze in 2021 has provided a clear example. At that time, companies like GameStop and AMC took advantage of high stock prices to issue billions of dollars in new shares, but stock prices subsequently fell sharply. GameStop and AMC have since fallen 74% and 99% from their peaks, respectively. Economist Keynes warned in 1936 that when 'real industries become bubbles in a speculative vortex,' capital will flow to the wrong companies, harming growth and employment. This concern is equally applicable in the current environment, especially when speculative funds flood into fundamentally weak companies. However, the impact of current speculative activities is relatively limited. There are no low-priced stocks in the S&P 500 index, and cheaper stocks among large companies did not show obvious performance patterns in July. When retail investors pushed up green stocks, SPACs, and loss-making tech stocks in 2021, the impacts of these bubbles bursting on the broader market were similarly minimal. Market sentiment is tending towards rationality, and overall risks are controllable. Long-term sentiment surveys by the American Association of Individual Investors and Investors Intelligence show that while current investor sentiment is more positive than at the beginning of the year, it has not yet reached excessive optimism levels. Futures traders tend to favor call options, but to a much lesser degree than in 2021. Analysts estimate that retail investors may have boosted the S&P 500 index with their dip-buying since April, but the impact in July was relatively limited. The new round of meme stocks, referred to as DORK stocks (named after the company codes of Krispy Kreme, Opendoor Technologies, Rocket, and Kohl’s), is merely a public manifestation of the private traders' speculative frenzy this summer. While investors have reasons to worry about high stock prices, the impact of tariffs on earnings, potential economic weaknesses, and excessive enthusiasm for artificial intelligence, the prosperity and decline of meme stocks and low-priced stocks have relatively limited spillover effects on the rest of the market. Historical experience shows that such speculative activities are more of a marginal phenomenon in the market rather than a significant source of systemic risk.