I just do not know what is going on. Besides valuation, risk of cornering the market is another reason to allocate less to the USA. Rule of law was the main reason of outperformance of the US markets in my opinion.
It should be investigated who exactly bought GME: quants, hedge fonds, just retail guys? I believe it was illegal to go long with the only reason of forcing someone else to buy at a higher price. The typical retail investor can just plead being dumb enough, but if sophisticated investors bought they should be punished. Especially, if they also tried to push the stock via spreading false rumors like short interest is so and so, when in reality no one afaik has the data.
[disclosure: lost some money betting on the price of GME to go down, at time of posting: no position, but may change any minute].
Why is buying a stock for whatever reason illegal? What does any of this have to do with the rule of law? Also, if you think the stock is manipulated, why deal with this stock at all? Nobody forces you to play here.
Spek, not endorsing the op, but stock cornering was a huge issue in the lead up to the 1929 crash. Much of the 40/34 act and the creation of the SEC was to ensure manipulation was not going to happen. There were stock pools, covert groups acting in concert, which was made illegal (or it had to be disclosed if you were acting as a group).
I don't know the specifics of what kinds of options trades would be illegal, but clearly someone buying huge money in short term calls is at least reason enough to raise an eyebrow about manipulation.
It's true that we are all free to avoid names that appear manipulated, and no disagreement, but I do share the general view that lack of a level of consistently enforced rules is a very bad sign for US markets.