It’s been two years this week since the meme stock phenomenon took Wall Street by surprise. The craze put the spotlight on retail investors and their collective efforts to outsmart "the Suits."

"As a casual Reddit user, I saw GameStop blow up and it caught my attention,” one investor, who asked to remain anonymous, told Yahoo Finance.

On January 22, 2021, struggling video game retailer GameStop (GME) started its parabolic rising, gaining 51% in a single trading session. Retail traders, prompted by chatter on the Reddit message board r/wallstreebets, piled onto the stock.

With the rally in GameStop shares, some hedge funds were forced to cover short positions and a "working class vs. hedge fund" inspired meme craze was born. Rocket ship emojis ?????? and "to the moon" became staples of threads about GameStop, and later, movie theater chain AMC (AMC).

“I saw AMC getting a similar cult-like following so I joined in,” said the Reddit user. “I never believed the hype about the shares going to millions like they did, but I bought 100 at around $8.50. I got lucky and of course it squeezed, so I sold in batches between $32 and $55.”

But many others weren’t so lucky.

“I bought AMC for $49 per share in June 2021 thinking it would be the next Tesla (TSLA). I panic-sold AMC in January of 2022 to cut my losses. It most certainly wasn’t the next Tesla,” a retailer trader who sells stock market inspired clothing and home goods, told Yahoo Finance.

AMC fell to about $16 a share in January of last year when this trader sold. The stock currently sits just below $6 per share.

“I was so stressed out and lost so much, my wife threatened to divorce me,” the trader added.

Activity related to meme stocks has tapered off significantly since this phenomenon took off, according to data provided by Vanda Research. Net buys for GameStop stock for example, are a fraction of what they were two years ago, after reaching $87.4 million on Jan. 27, 2021. On that same date, net buys for AMC reached $170.9 million; net buys for AMC these days, in contrast, haven't exceeded the single-digit millions since late August.

The following day, Jan. 28, 2021, Robinhood (HOOD) and other trading platforms temporarily suspended the ability for retail traders to buy more shares in a handful of these meme stock names.

Hedge fund Melvin Capital, at the center of a massive bet that GameStop shares would fall, lost billions of dollars during the meme frenzy. The phenomenon attracted millions of retail traders, and ultimately prompted congressional hearings and greater scrutiny over payment for order flow, a way in which some trading platforms make money.

Retail traders 'still feel the pinch' from losses

The reason for buying meme stocks has evolved over time.

YouTuber host Matt Kohrs, who's gained a following for his commentary on finance, crypto, and stocks, says he still owns shares of both despite their decline.

“I vehemently believe the David vs Goliath, mixed with a little 'chip-on-my-shoulder' mindset exists in the retail trading community today," said Kohrs. "As you may expect, there has been some natural evolution."

The sophistication level of retail investors has also evolved, according to Dan Raju, CEO of brokerage platform Tradier.

“The pandemic has had a graduation effect on all the traders who have come in,” said Raju. “They all got a crash course on highly volatile markets and how to basically work through them."

On the flip side, fund managers have also become more attuned to potential retail investor moves.

“What we’re seeing is that this phenomenon is not happening to the same scale," said Vanda Research’s Marco Iachini. "After a year or so that these strategies were discovered in a way by the masses, you also have many smart hedge funds and so forth, that have learned to figure out ways to basically front run retail investors."

"The game is not as easy as it was where, en masse, you just go and buy stocks, pump it, get the dealers to hedge, and buy more of it, and hopefully get out in time, and play a game of hot potato," Iachini said. "Now you have many smart fund managers and whatnot that can participate in this game and do it faster and better than you, and leave those retail buyers probably with the losing end."

"It's hard to prove this in the data because it's all aggregated, but we do think that this is what's happening right now. These bouts are not as strong, they're not as long lasting as in the past, and the volumes are much lower, partly because — retail investors, the majority of them are feeling the pinch from the losses from the last year or so."

'I watch the cults from the sidelines'

Retail traders on Reddit and Twitter repeatedly point to a "rigged" system, and the need to register their shares through the Direct Registration System, or DRS. These are some of the kinder replies received on my Twitter feed when asking if anyone had sold their meme stock positions.

One Reddit user who reached out anonymously told me: “I've backed away from meme stocks, and I watch the cults from the sidelines. Each of them has their own leaders, and tin-foil conspiracy theories as to what is happening and how the money they lost due to a bad trade is everyone's fault."

A slowing economy, tighter monetary policy by the Federal Reserve, an end to the pandemic stimulus checks, and a bear market in stocks put pressure on most sectors of the S&P 500 last year. And meme trades were no exception.

Vanda Research calculates the average retail trader portfolio is down about 35% as a whole.

“What we’ve learned throughout the year, as the P&L worsened, the speculative activity has also waned,” Iachini said.

YouTuber Matt Korhs adds, “I would never say stock frenzies are over. History suggests they appear when you least expect it — They are inherently an unpredictable phenomenon."

However he does believe there will be fewer stock and crypto frenzies this year, for many of the reasons mentioned above.

Of course "meme short squeezes can still be played," Twitter user Matthew Landau tells Yahoo Finance.

"Only with money that an individual is willing to lose, and understanding [the] risk," he adds.

Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube