In January, a surge of investing coordinated by the Reddit channel r/WallStreetBets (WSB) caused many hedge funds to lose billions of dollars, The Daily Targum previously reported. Many people from WSB used Robinhood, a commission-free investing application, to process their transactions.
The ease with which people can now invest in the stock market raises questions about the differences between gambling and investing as it relates to platforms like Robinhood and the future of these platforms.
When you're investing, you're making educated decisions about future earning potential on a stock over the long-term, said Lia Nower, professor and director of the Center for Gambling Studies and the Addiction Counselor Training Program in the School of Social Work. Gambling is when you are staking (money) on an outcome of random chance.
She said that although both actions involve the element of risk, investing revolves more around making informed choices, whereas with gambling, people are making bets more for the action than for the long-term earning potential.
For the average individual, investing in stocks might be riskier than for a financial advisor or wealth manager. After all, the financial advisor has been trained and has years of experience looking over balance sheets and other facts, said Devin J. Mills, assistant professor in the Department of Community, Family and Addiction Sciences at Texas Tech University.
Mills said that while stock trading is a form of gambling, since one hopes their investment is going to increase in value, the definition of gambling itself should not be conflated with the extent of the risk. Stock investing does not have to be as risky or riskier than other forms of gambling, he said.
People gamble for a variety of reasons including social and financial circumstances or for the high they may get from the act itself, Mills said.
It is also possible that (the coronavirus disease) COVID-19 increased interest with additional discretionary funds and no sports or casinos or traveling People might have been looking for something to do, he said. It will be interesting to see if this trend persists after COVID-19 becomes less of an issue.
Since the beginning of the COVID-19 pandemic in March 2020, retail accounts on trading platforms have greatly increased, with Robinhood recording three million new accounts in its first quarter, according to The Wall Street Journal.
From an analysis done by JMP Securities, more than 600,000 people downloaded Robinhood on Jan. 29 amid the rising of the GameStop stock, whereas its previous best day in March was 140,000 downloads, according to CNBC.
Nower said that the popularity of day-trading itself is not new but that it is now experiencing a resurgence due to WSB and Robinhood.
In the past, she said the infrastructure for investing greatly slowed down the speed at which someone can take risks, but now, people can take risks 24 hours a day right from an application on their phones.
With the ease of stock trading on these platforms, Nower said this likely means that more people are not fully researching the product or understanding it to invest for the long-term, but instead are conducting a flash mob, pushing the needle on a particular stock.
She said that although this method may work at times, there are people that spend years learning how to properly buy and sell stocks.
I would like to caution anyone to learn about options trading and the platforms before they start, Mills said. Trading options spreads is not risk-free. There is no financial security or trading strategy that is risk-free.
Robinhoods success and longevity depend on a number of factors, including future government regulation and recent high-profile negative press, Nower said.
Following the surge of the GameStop stock, Robinhood placed temporary restrictions on the trading of certain stocks by retail investors, or everyday users, but continued to allow insiders to trade as per usual, according to the Targum.
The app is now facing dozens of lawsuits from several states, and its CEO, Vlad Tenev, is expected to testify on Thursday in front of the U.S. House Committee on Financial Services, according to The Verge.
There is also a court case brought by the parents of Alex Kearns, a 20 year old who died by suicide when he saw his Robinhood account balance was at negative $730,000 and was not able to get into contact with Robinhood employees about what he actually owed, according to CNN.
Nower said she anticipates more regulations for Robinhood and similar platforms coming in the future.
This type of behavior can really destabilize the financial markets for the country. So it's not like there's not a risk in general to a lot of people's 401(k) (plans) and a lot of things that could get wiped out, depending on how unstable the market becomes, she said.
Read the original post:
- Gambling Addiction and Problem Gambling: Learn How to Stop ... - December 12th, 2016 [December 12th, 2016]
- Remote Gambling Association (RGA) - December 16th, 2016 [December 16th, 2016]
- William Hill Casino Club - Up To 150 Casino Bonus - December 19th, 2016 [December 19th, 2016]
- Gambling - The New York Times - December 31st, 2016 [December 31st, 2016]
- Trusted Online Gambling Sites Since 1996 - Online.Gambling.org - January 7th, 2017 [January 7th, 2017]
- Casino Gambling Web | Best Online Gambling News and Casinos ... - January 11th, 2017 [January 11th, 2017]
- Gambling Addiction and Problem Gambling - helpguide.org - January 15th, 2017 [January 15th, 2017]
- Industry: Crackdown on illegal gambling in the Philippines now ... - GamingTodaySlotsToday - February 7th, 2017 [February 7th, 2017]
- Military should screen for gambling disorder, GAO says - Virginian-Pilot - February 7th, 2017 [February 7th, 2017]
- Gambling with people's autonomy | Liberties | Risk | spiked - Spiked - February 7th, 2017 [February 7th, 2017]
- Bill introduced to lower age for legal gambling in Nevada - Las Vegas Review-Journal - February 7th, 2017 [February 7th, 2017]
- FIFA YouTuber Pleads Guilty To Gambling Charges [UPDATE] - GameSpot - February 7th, 2017 [February 7th, 2017]
- Gambling Stock Roundup: Macau Sales Rise Again in January, Nevada Records a Drop in December - Yahoo Finance - February 7th, 2017 [February 7th, 2017]
- Super Bowl sets gambling record at Nevada sports books - Reuters - February 7th, 2017 [February 7th, 2017]
- Older gamblers face worse odds for addiction - Times Herald-Record - February 7th, 2017 [February 7th, 2017]
- How to Handle Gambling Wins and Losses This Tax Season - TheStreet.com - February 7th, 2017 [February 7th, 2017]
- GAO report recommends military members be screened for ... - wtkr.com - February 7th, 2017 [February 7th, 2017]
- The Newest Challenge in Gambling: Finding Growth - Motley Fool - February 7th, 2017 [February 7th, 2017]
- Raising a question about gambling prohibition - Dothan Eagle - February 8th, 2017 [February 8th, 2017]
- A Creepy Dude Is Your Inner Gambling Addict in These Horrifying PSAs From Tom Tagholm - Fishbowl NY (blog) - February 8th, 2017 [February 8th, 2017]
- Super Bowl Betting Tally Helps Make the Case for Legalized Sports Gambling - TheStreet.com - February 8th, 2017 [February 8th, 2017]
- MLB commissioner admits the league is rethinking its stance on gambling - FOXSports.com - February 8th, 2017 [February 8th, 2017]
- Why I love fake gambling and in-game casinos according to a psychologist - PC Gamer - February 8th, 2017 [February 8th, 2017]
- YouTubers fined for running illegal FIFA 17 gambling site - Ars Technica - February 8th, 2017 [February 8th, 2017]
- Deducting Gambling Losses on Your Taxes - TheStreet.com - February 9th, 2017 [February 9th, 2017]
- Gambling pot grows for Madison County - Utica Observer Dispatch - February 9th, 2017 [February 9th, 2017]
- How Vietnam Is Changing Its Gambling Rules To Win Foreign Investment - Forbes - February 9th, 2017 [February 9th, 2017]
- No truth to alleged link between missing Spencerport teen, illegal gambling - 13WHAM-TV - February 9th, 2017 [February 9th, 2017]
- The world's biggest gamblers - The Economist (blog) - February 9th, 2017 [February 9th, 2017]
- Idaho House Panel Introduces Bill Limiting Indian Gambling - Boise State Public Radio - February 9th, 2017 [February 9th, 2017]
- Pennsylvania Omnibus Gambling Bill Presented to House - Casino.Org News - February 10th, 2017 [February 10th, 2017]
- Gamblers caught in Hat Yai open-air casino bust | Bangkok Post: news - Bangkok Post - February 10th, 2017 [February 10th, 2017]
- Men Fined Over FIFA Gambling Operation - Card Player - CardPlayer.com - February 10th, 2017 [February 10th, 2017]
- Rob Manfred may change MLB's stance on gambling - SB Nation - February 10th, 2017 [February 10th, 2017]
- Do you have a mobile gambling/gaming problem? - KMTV - February 10th, 2017 [February 10th, 2017]
- OUR VIEW: Transparency needed in gambling operations - Pacific Daily News - February 11th, 2017 [February 11th, 2017]
- New York State transformation into the gambling big leagues nearly complete with opening of newest casino - The Daily Freeman - February 11th, 2017 [February 11th, 2017]
- Kenya: Gambling in Kenya Gets Out of Hand - AllAfrica.com - February 11th, 2017 [February 11th, 2017]
- Gambling Responsibly - New York Times - February 11th, 2017 [February 11th, 2017]
- Duterte targets illegal gambling in the Philippines - Yahoo News - February 12th, 2017 [February 12th, 2017]
- US Grabs Biggest Global Gambling Industry Win Share in 2016 - Casino News Daily - February 12th, 2017 [February 12th, 2017]
- UFC 208 odds, gambling guide - MMA Fighting - February 12th, 2017 [February 12th, 2017]
- Calendar urges gamblers to cut their losses l Dayton, Ohio - Dayton Daily News - February 12th, 2017 [February 12th, 2017]
- Gambling Manga "Akagi" Begins Countdown to Conclusion - Crunchyroll News - February 12th, 2017 [February 12th, 2017]
- Football's gambling problem: You better, you better, you bet - Football365.com - February 13th, 2017 [February 13th, 2017]
- States are gambling with law enforcement safety - The Hill (blog) - February 13th, 2017 [February 13th, 2017]
- AFL's gambling ads concern for Cats star - Wide World of Sports - February 13th, 2017 [February 13th, 2017]
- Celeb Gambling Ring Members Fear They've Been CAUGHT On Wiretaps Making Illegal Bets, Source Claims - Radar Online - February 13th, 2017 [February 13th, 2017]
- Highway Patrol: Raid of Warren bar uncovers illegal gambling - WKBN.com - February 13th, 2017 [February 13th, 2017]
- Scary graph shows how Australians are the biggest losers - NEWS.com.au - February 13th, 2017 [February 13th, 2017]
- Bato: War on illegal gambling won't be bloody - Philippine Star - February 13th, 2017 [February 13th, 2017]
- Last holdout Lakewood to vote on repealing video gambling ban - Northwest Herald - February 14th, 2017 [February 14th, 2017]
- AFL's gambling ads a concern for Geelong Cats star Harry Taylor - The Age - February 14th, 2017 [February 14th, 2017]
- Online Casinos Generate A Third Of UK Gambling Dollars - CardPlayer.com - February 14th, 2017 [February 14th, 2017]
- Darlington deputies bust gambling house in Hartsville | News ... - SCNow - February 14th, 2017 [February 14th, 2017]
- Kim Jong Un's gambling half-brother reportedly assassinated - CBS News - February 14th, 2017 [February 14th, 2017]
- BitcoinCasino.us Ensures Instant Payouts and Responsible Gambling - newsBTC - February 15th, 2017 [February 15th, 2017]
- Gambling operators are cashing in on teens' addiction to online games - The Canberra Times - February 15th, 2017 [February 15th, 2017]
- Americans Lost $116.9B Gambling In 2016: Report - CardPlayer.com - February 15th, 2017 [February 15th, 2017]
- Levine: Rick Hahn, White Sox Gambling On Right Trades At Right Time - CBS Local - February 15th, 2017 [February 15th, 2017]
- Wesfarmers considers pokies exit in bid to tackle problem gambling - ABC Online - February 15th, 2017 [February 15th, 2017]
- Massive felony gambling raid in Marietta | WAGA - FOX 5 Atlanta - February 15th, 2017 [February 15th, 2017]
- 'War on gambling' starts with small fry - Inquirer.net - February 16th, 2017 [February 16th, 2017]
- Edgeless Casino Introduces Revolutionary Transparent 0% House Edge Online Gambling - newsBTC - February 16th, 2017 [February 16th, 2017]
- FF12: When is gambling illegal in Kansas? - KWCH - February 16th, 2017 [February 16th, 2017]
- Osage woman accused of stealing, gambling mother's money - Waterloo Cedar Falls Courier - February 16th, 2017 [February 16th, 2017]
- 'Operation Parlay' Leads To Gambling Raid, Arrest - Patch.com - February 16th, 2017 [February 16th, 2017]
- Pete Rose defends legal gambling: 'Who am I hurting?' - Yahoo Sports - Yahoo Sports - February 16th, 2017 [February 16th, 2017]
- Cops bust alleged gambling ring being run out of Cobb storefronts - Atlanta Journal Constitution - February 16th, 2017 [February 16th, 2017]
- Dunlap: State Rep. Gets It Right With Sports Gambling - CBS Local - February 16th, 2017 [February 16th, 2017]
- Gambling Addiction Treatment Center, Rehab - Non Gambler - February 16th, 2017 [February 16th, 2017]
- Problem Gambling Online Resources - Drugfreeinfo.org - February 16th, 2017 [February 16th, 2017]
- Attleboro seeks gambling grant for new dispatch center - The Sun Chronicle - February 17th, 2017 [February 17th, 2017]
- House gambling bill teed up for next week - SaintPetersBlog (blog) - February 17th, 2017 [February 17th, 2017]
- Firms oppose Bill regulating gambling - Daily Nation - February 17th, 2017 [February 17th, 2017]
- Tim Simona faces NRL deregistration after alleged breaches of gambling rules - The Sydney Morning Herald - February 17th, 2017 [February 17th, 2017]
- Washington State Gambling Commission - February 17th, 2017 [February 17th, 2017]
- Online Casino USA Friendly Online Casinos for 2017 - February 17th, 2017 [February 17th, 2017]
- Records: 70 gambling machines seized, two arrested in Alamo raid ... - KGBT-TV - February 18th, 2017 [February 18th, 2017]
- Florida House Goes Conservative on Gambling Expansion with New ... - Casino News Daily - February 18th, 2017 [February 18th, 2017]