The GameStop buying frenzy was driven by 'irrational exuberance' – and investors should consider cashing out, market bull Ed Yardeni said

Brendan McDermid/Reuters

  • The GameStop buying frenzy signaled “speculative excess” in markets, Ed Yardeni said.
  • The Yardeni Research president highlighted government stimulus as a key driver.
  • Yardeni said the US economy could bounce back to pre-pandemic levels next quarter.
  • Visit Business Insider’s homepage for more stories.


The GameStop mania provided fresh evidence of a stock-market bubble, Ed Yardeni said on CNBC’s “Trading Nation” on Friday.

“It’s just one of many signs of speculative excess,” the Yardeni Research president said about day traders boosting the video-game retailer’s stock price by as much as 2,500% in January. “Irrational exuberance of a sort.”

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The ever-bullish analyst pointed to government stimulus as a major driver of the buying frenzy, and suggested the next round of stimulus checks would add even more fuel to the fire.

“There’s just so much liquidity that has been provided by the Fed and the Treasury,” he said.

The mounting number of wild market trends could be a warning to investors to take some money off the table, Yardeni continued.

“If you make a list of all the speculative things going on, it kind of gets you a lot of bells and whistles suggesting that it’s time to get out or cash in or take some profits,” he said.

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However, Yardeni doesn’t expect a crash around the corner. The US economy could rebound to pre-pandemic output levels by the second quarter of this year, assuming vaccines are rolled out across the country and new strains of the COVID-19 virus are brought under control, he said.

Moreover, lofty stock prices are being shored up by rock-bottom interest rates and low inflation, he added.

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