Mall stocks are ripping right now. Here’s how nostalgia fuels our trading decisions

GameStop and AMC attract vast amounts of traders’ attention. Brands like Build-a-Bear and Abercrombie & Fitch are ripping. Kohl’s is all over the place.

It seems like if you were in a mall in 2005 and managed to survive the retail apocalypse, you’re doing pretty well in the market these days. 

But let’s be a little more specific here: if you were somewhere a teenager in the early 2000s spent a lot of time and money, it sure seems that those kids — now in their late 20s and 30s, and with money to spend and speculate — are down to throw a little money at your stock for old times’ sake. 

To understand the mall-stock renaissance, and arguably to understand the meme-stock mania in general, we have to look at a force in finance that’s only beginning to be understood. It’s a force that has, over the past three decades, fundamentally reconfigured the retail, consumer, and brand environment. It’s a force that, over the past two decades, has completely shifted the direction and momentum of the American music, movie, and culture industries. It’s a force that, over the past decade, has fueled one of the most consequential realignments in American politics, one infatuated with a desire to return the country to a perceived lost greatness. 

And it’s a force that, in the past several years and the years to come, is poised to be a potent force in markets and investing. 

We have to understand nostalgia.

The science of nostalgia

Earlier this year, journalist Andrew Van Dam analyzed the results of a YouGov poll asking respondents which decade they believed was the peak for a number of different factors, such as which decade had the best television, the best movies, the best fashion, economy, and so on. The results were a bit of a mixed bag, until Van Dam aggregated the respondents by which decade they were born in. 

There, the trend is unmistakable: people think communities were closest when they were aged 4 to 7, the best decade for families was when the respondent was aged 8 to 11, the best television, movies, and economy happened when respondents were aged 12 through 15, and the the best music, fashion, and sports happened when respondents were aged 16 through 19. No good music comes out after someone hits age 35. All the best stuff happened when you were young and cool. It’s all downhill from there. 

The best times, essentially, always happened about 15 years ago. 

Nostalgia has been the subject of a surge of interest in science over the past several decades. For centuries it was viewed with the kind of aspersion one would cast at an illness. The word itself is decisively negative in etymology, derived from the Greek nostos, meaning “homecoming,” and algos, meaning pain, grief, or distress. The French army medical manual cited it as a legitimate ailment that the Swiss had a predisposition for, and it became used to describe intense homesickness by the 1800s. The Union army saw it as a serious medical problem during the Civil War, discussed in the way a modern soldier might consider PTSD, a reputation that persisted at least through the Second World War. 

Over time, that softened a bit, and by the 1980s the concept became what it is today — you know, the reason that all Christmas music is from the 1950s, the whole Norman Rockwell aesthetic, the desire of charismatic politicians in every country the world over to make their nation Great Again, and a basic yearning for the wonderful past, whether it’s imagined or not. 

It’s only recently that we’ve begun to understand it. 

“Nostalgia has a huge amount of scientific literature in the last two decades,” said Evan Weingarten, a USC professor who studies well-being and how people derive utility from experiences, and who has a special interest in nostalgia in particular. 

In 2006, a landmark study from Tim Wildschut and Constantine Sedikides sought to tease out exactly what nostalgia was, to disentangle it from homesickness or happiness or sadness, and figure out ways that we might be able to define nostalgia and study it specifically. 

The research that ensued began to surface a number of interesting properties of nostalgia, Weingarten said. One is that threats can trigger a sense of nostalgia: dozens of studies have found that things like loneliness, negative mood, and loss of control can invoke nostalgic moods and decision-making. The literature also shows that nostalgia has lots of different effects — things like optimism, feeling more social connectedness, and a willingness to do things like donate and help other people. It’s also very universal. Western cultures are nostalgic, non-Western cultures are nostalgic, men are nostalgic, women are nostalgic, and while some people are more prone to it, it’s a universal susceptibility. 

It’s also complicated. It’s not just a positive feeling, and it’s distinctively different from happiness. Even if you feel happy while you’re feeling nostalgic, those are different things. 

“Nostalgia is a multifaceted emotion where there’s a lot of things going on,” Weingarten said. “There’s past-focused consideration of a previous time that you can’t recapture. That is a bit unique, and tends to be a bit social. It’s more than just positive affect.”

In particular, one model for understanding nostalgia that’s become popular is that it’s homeostatic. That is, nostalgia has a way of evening out strong feelings. 

“If you feel lonelier, or maybe a negative mood, or maybe through some other sort of threat, like feeling like you’ve lost control of your life, what ends up happening is you end up either feeling more nostalgic or having a stronger preference for nostalgic-laden objects or services,” Weingarten said. “Nostalgia acts as kind of a homeostatic corrective because nostalgia is positively linked to these things like optimism and social connectedness.” 

That’s what makes nostalgia so potent. You can feel happy for all kinds of reasons, and sure, maybe you’d make different decisions one way or another based on that mood. Happiness strikes. But nostalgia? Nostalgia lurks. Nostalgia waits for you to feel isolated, to feel threatened; nostalgia waits until you’re all alone. That’s when it gets you. 

And when nostalgia does get you? Well, that’s when things get expensive. 

Nostalgia and consumers

The impact of nostalgia on consumer behavior is a somewhat modern notion. As recently as the 1980s, merchandise from film and television properties for children were mostly aimed at those children. The Disney Store of the early 1990s was not for adults. It was full of the dolls and clothing aimed at kids; the parents were just providing the wallet. 

Fittingly, the Trinity Test of nostalgia and commerce happened in a mall. It was called the Warner Bros. Studio Store, and as I wrote in my book, “You Are What You Watch,” it permanently changed the way consumer brands adapted to sell merchandise to the grown-up versions of the kids who loved their work — in this case “Looney Tunes” — as children. 

Warner Bros. was the first to outright target adults as the primary consumers of merch, taking the ambitious position that 80% of their wares would be for the adult baby boomers who grew up on Bugs Bunny and only 20% for kids, inverting the traditional ratio. The Tasmanian Devil biker jackets, the Tweety Bird gardening sets, the Marvin the Martian coffee mugs, the Foghorn Leghorn polos, and the Daffy Duck ties were sold to grown-ups who felt nostalgic for the imagery of their youth and were finally affluent enough to afford it. 

Within five years of launch in 1991, the official WBSS stores were doing $1 billion a year in sales, adjusted for inflation, and vastly more in their licensing department, a smashing international success that burned out in the early 2000s after the disastrous AOL-Time Warner merger. 

The playbook was immediately lifted by every rival in the industry, and the nostalgia play remains one of the most enduring ones there is. It’s why adults spend millions of dollars on apparel and accessories for their Hogwarts house, why Lucasfilm and Marvel made back their multibillion-dollar acquisition costs within years of being bought by Disney. Adaptations, reboots, spin-offs, and remakes accounted for more than half of the domestic box office over the past three decades, and recently have begun to utterly consume cinema screens at the expense of original concepts. In 2023, original ideas accounted for a 30-year low of 30.4% of the domestic box office. You see it in music, too: something like two in five songs take samples or interpolations from songs you already love. Bands have realized this — did you catch how quickly the new My Chemical Romance tour sold out? Seems like the emo kids have some disposable income to throw around. Perhaps instead you can check out the When We Were Young festival, unless that’s too on the nose.  

The reason for this is understandable when looking at the market in the aggregate. Original concepts in movies are slightly less likely to earn back enough money to cover their production and marketing costs than sequels are. In a risk-averse environment, a movie is less likely to flop if you can stoke audience nostalgia rather than having to convince an audience to take a shot at a new idea.

Content slingers target the adult market much the same way the infamous thief Willie Sutton targeted banks: because that’s where the money is.

Companies realize that the nostalgia play is catnip for their older fans. The phenomenon of the Disney adult has been pretty thoroughly explored, but companies cultivating a nostalgia-driven fandom go well beyond pop culture. When you get down to it, how different is Berkshire Hathaway’s annual meeting than, say, D23, or San Diego Comic-Con?

Which brings us back to markets. Sure, people will be willing to buy a collectible or preorder tickets to a movie that indulges their nostalgic instincts. But would they buy a stock? 

Is investment all about the money?

People might make investments for all sorts of reasons beyond capital gains, and the factors motivating investors can be tied up in lots of motivations that aren’t profit seeking. These needn’t even be “Rickey Henderson framing and not cashing a million-dollar check” levels of placing emotional weight over financial acumen; sometimes we just buy stuff because it makes us feel nice, and that certainly applies to stocks. 

The Green Bay Packers are, famously, the only NFL franchise that is publicly owned, with 5,204,625 shares owned by 538,967 stockholders, none of whom get a dividend on that investment or even have a say in how the team is run — but who nevertheless own a chunk of their team, an investment as a merchandising opportunity that taps into the deep reservoir of emotion that an NFL team might engender.  

This applies to other companies as well, blue chips included. The hobby of Scripophily has fans who buy up famous, iconic, or infamous stock certificates, physical manifestations of an investment that was at one point or another important or intriguing to them. Several companies that have established fan bases made a business at one point or another selling commemorative stock certificates. Disney is probably foremost among them, but bona fide stock certificates can be be had on the secondhand market for all sorts of companies with devoted fan bases if you know where to look, whether it’s Houdini Pictures or Harley-Davidson or, er, WorldCom. 

Still, owning a commemorative stock certificate is one thing, but what is it if not a physical manifestation of a broader investment? It’s a souvenir, sure, but the emotional weight behind the trinket is that an investment was, for one reason or another, meaningful. A dollar is a dollar, sure, until it’s not. How much do you think the framed first dollar on the wall of the barber shop is worth to the owner? 

Clearly, the appeal of these collectibles reveal that in some cases, investing is about a little more than money. 

And sometimes, it’s nostalgia pulling those strings. 

Plenty of companies were able to coast off their blue-chip status and mid-century esteem to maintain fanbases well beyond the eras in which they were profit machines. Think about the industrial conglomerates of yore, like GE or IBM, some of which have since disintegrated, fractured, or spun off into general business services.

In an era when indexes have accumulated increasing sophistication, covering large tranches of the economic system handily, easily building out synthetic approximations of the state of the American economy, why is it that some people of a certain age still care about the Dow Jones Industrial Average, a clunky basket of a paltry 30 assets? 

This is real money we’re talking. In August of 2020, Amgen, Salesforce, and Honeywell all got added to the Dow, and their stocks got a bump from the move. But why do the cable networks and newspapers that cater to the generation that came up using the Dow as a shorthand for American industry still, decades later,  breathlessly cover the twitches in the index or the milestones it hits? Perhaps they’re appealing to a nostalgic instinct in viewers, harkening back to a day when the Dow was the driveshaft of the American economic engine. You know, a time that took place when the viewers were in their mid-20s and early 30s?

In this way, the megamall — the apex ecosystem of American consumerism in the 1990s and 2000s — is merely this next generation of traders’ nostalgia play. The institution that defined what was a successful retail company is still, in the bones of the generation of retail traders in their 20s and 30s, defining the companies that have an emotional stake in our financial acumen. It’s probably not a coincidence that some of the stocks that went supernova during the meme-stock frenzy — GameStop and AMC among them — are mall stocks, the companies where the generation that has the money today cashed in their allowance and babysitting money in 2004. 

It was a brutal couple years for retail, but now companies like Abercrombie & Fitch and Build-A-Bear have at times gone parabolic on vibes alone. Nostalgia isn’t the only thing driving investors; it’s also consumer behavior. The two companies now earn way more than they did during their heydays in the aughts.

Observe that it’s not all mall stocks — just the ones that really appealed to teens. I didn’t see Filene’s or Lord and Taylor getting bankruptcy-averting WallStreetBets chatter. Young-adult nostalgia is the main undercurrent of this phenomenon. Sometimes, it’s just that simple: you like the stock. 

But perhaps it’s something about the very nature of nostalgia at play here.

Nostalgia, we know, is not necessarily a good feeling or a bad feeling, but it can be stoked by a number of emotional states that, over the past five years, became pervasive. 

Among those susceptible to indulging in nostalgic feeling, we know based on the current state of the scientific literature that social isolation or loneliness can stoke the fire of nostalgia and prime people to give in to nostalgia’s embrace. We also know that nostalgia can be enjoyed in particular as a social experience, a thing that one shares with others. 

Is it really that much of a surprise that the months preceding the meme-stock frenzy in 2021 and the mall-stock revival more recently were some of the most isolating, stressful, and disorienting of this generation of investors’ lives? Is it really a coincidence that the dry powder of stimulus money combined with the combustion of the social fabric provoked a nostalgia-driven explosion in speculative investment in assets that felt good to buy, even if their P&L was DOA? It wasn’t just stocks: we saw it in other investment frenzies around then, too, from the massive spike in the secondhand prices of “Pokémon” cards, the rash of record-setting sports memorabilia auction sales, to the huge nationwide dive into collectibles. 

Nostalgia is a powerful force in consumer behavior and retail sales. We know this. The reboot-driven box office proves it; the mere existence of the fashion trend cycle proves it. The fact that there are several stores in America devoted to selling adults merchandise related to a school for wizards — that also proves it.

The idea we have to consider is that perhaps it’s not just about T-shirts, reboots, and “Pokémon” cards anymore. 

As consumers feel less and less friction in investing in markets, as social behaviors of large groups of otherwise isolated buyers define asset prices more and more, and as the nostalgic tinge of retail spills over into retail investing, how traders felt about a company when they were 16 in a mall food court actually begins to become pretty important for assessing the value of an asset. 

Perhaps you think times are bad, that inequality is up, that the world is worse — and you yearn for a time when things were simpler. In that case, join me, and look backward. Look to the mall. 

Even if that grim picture does describe your worldview, don’t worry. In 15 years, you’ll look back on this time, but you’ll only see it through the gauzy, soft lens of nostalgia. And guess what? You’ll probably consider this time the very best in your life. That’s just the way it works.