2020 was a difficult year for most markets and an amazing one for others. The S&P 500 market barometer closed the year 16% higher, having bounced back from the 31% drop in March with a vengeance. Some stocks are now soaring at multi-year highs; others are staving off bankruptcy with every tool at their disposal. In both of these cases, investors are circling these tickers with dreams of massive returns, powered either by continued success or a prosperous turnaround.

A handful of these popular stocks will not be found in my personal portfolio anytime soon, because their risks far outweigh the potential rewards. You should follow my example and stay far away from AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) in 2021. If you already own them, this would be a good time to sell your shares and walk away.

A sad gamer rests his face in one hand, holding a console controller in the other.

Image source: Getty Images.

Game over, man. Game over!

The holiday season of 2020 is behind us and GameStop had new gaming consoles from Microsoft (NASDAQ:MSFT) and Sony (NYSE:SONY) on the shelves. The latest swing around the console market's multiyear cycle of refreshed hardware and new flagship games is here. That's supposed to save GameStop's bacon.

I'm not so sure that it will, though. GameStop is caught between a rock and a hard place, where many gamers are moving out of the console market to focus on mobile games instead. And when you do want to pick up some fresh titles for your PC or your favorite console, there's no real need to visit a local store anymore. Every major console offers a direct-download game store nowadays, and the PC market is served by download platforms such as Steam, Origin, Uplay, and the Windows Store. GameStop's storefronts are becoming more and more obsolete every day.

Sure, the company runs its own digital storefront but it's unclear why gamers should rely on that option in a sea of comparable or superior alternatives. Once the honeymoon period with limited supplies of the PS5 and Xbox Series X consoles has passed, I expect GameStop's financial results to fade out in a hurry.

Activist investor firm RC Ventures has built a 13% ownership stake in GameStop. Manager Ryan Cohen wants GameStop to abandon the physical store network and build something amazing in the online gaming market, using the power of GameStop's well-worn brand name to hit the ground running. The idea is so crazy, it might even work -- but only if GameStop listens to Cohen's newfangled ideas of game-streaming services and GameStop-branded Esports tournaments. Nothing the company has done in recent years makes me believe that they will consider a completely different business model, short of teetering on the brink of bankruptcy.

GameStop's stock tripled in 2020 but it's a castle in the clouds with no real substance. This company is not executing a fantastic turnaround but enjoying the upside of the console product cycle for a short while with no real changes going on under the hood. Please don't touch this toxic stock until management really commits to a radically different long-term plan.

Two youngsters sleeping in their seats in an otherwise dark and empty movie theater.

Image source: Getty Images.

Roll the end credits

Movie theater chain AMC wasn't exactly in great shape before the COVID-19 pandemic closed the curtains on all of its theaters in March. When the theaters opened up again, they only had a handful of big-budget titles to show as the major Hollywood studios either delayed their big launches to 2021 or skipped the cinema circuit altogether in order to premiere directly on digital video-streaming services instead. AMC is burning more than $100 million of cash per month and has been forced to raise cash through dilutive stock sales and costly debt arrangements just to keep the lights on.

The company is negotiating their deals with debtholders and landlords, hoping to stretch its dwindling cash supplies just a little bit longer. With effective coronavirus vaccines on the market, AMC wants to make it until the movie industry at large springs back to life again, powered by the usual slates of blockbuster titles and generous foot traffic to theaters. But the company is running out of time, and "close but no cigar" isn't good enough.

If AMC is forced to file for bankruptcy before the movie market turns up again, that's the end of the road for current shareholders. The AMC shares you own today or buy tomorrow are going to zero. The company itself will likely be back in some form, but under new management and with a different capital structure behind it, including a completely new stock offering.

Remember when General Motors (NYSE:GM) went bankrupt in 2009? The old GM stock dropped to zero, replaced by a brand new stock offering under a slightly different company name. The old General Motors Corporation has no financial connection to the new General Motors Company, LLC. I could tell you a similar story about the Eastman Kodak (NYSE:KODK) you see today carrying no connection to the pre-bankruptcy Kodak stock under the EK ticker. GM still makes Chevrolets and Cadillacs, and Kodak produces printing supplies and pharmaceutical materials, but their original shareholders were left with absolutely worthless ticker stubs.

That's the future I see coming AMC's way, and soon. Your AMC stock is going to zero, even if the chain itself manages to stay open beyond the imminent bankruptcy filing. Don't risk it, dear Fool.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.