In this photo provided by the New York Stock Exchange, traders work on the floor, Thursday, April 15, 2021.(Courtney Crow/New York Stock Exchange via AP)

In this photo provided by the New York Stock Exchange, traders work on the floor, Thursday, April 15, 2021.(Courtney Crow/New York Stock Exchange via AP)

Confused about stock trading? Ask your children what they’re doing on Roblox’s Adopt Me

Apps like Robinhood have ggamified’ financial trading

The stock of GameStop, a video game retailer, was trading around US$20 before becoming a household name in early 2021. It suddenly rose to nearly $350 per share, without any fundamental changes for the company – and brought the wild world of cyber-investing into the spotlight.

Apps like Robinhood have “gamified” financial trading and provided bored and COVID-isolated gamers with a financial outlet for their speculative urges.

There’s nothing special about what’s happening in a historical financial sense. Trading is fundamental to human society, whether it’s physical or digital. Some evolutionary psychologists even believe humans’ need to deal with the complexity of trading between early societies affected the development of the modern human brain.

Figuring out the value of an asset is hard, and perceptions of value can differ widely for different investors. That’s why so many people will jump on a hot trend or stock – it’s easier to follow a crowd that’s already decided there’s some value to be had there.

The problem with that approach is that value is so subjective. In free markets, the price of a stock is really whatever someone is willing to pay for it.

But speculating and trading are not the same thing as investing, as anyone who lost money on an ill-advised GameStop bet can tell you. Research and due diligence are much safer ways to evaluate the potential value of a company than strategies predicated on message boards and hope. Once you understand a firm’s underlying value and what drives it, you’re in a much better position to figure out if its stock is suitably priced.

The online Reddit chat rooms that power the trading in GameStop started with enthusiasts but have grown to include sophisticated players willing to take advantage of the inexperienced. That’s also nothing new, which is why financial markets are highly regulated. The unscrupulous have been relieving the trusting of their valuables since well before stock markets appeared in the coffee and teahouses of Europe in the 1500s to finance the exploration and trade to “new worlds.”

Speculating on these apps isn’t unlike children’s games like as Roblox’s Adopt Me game – which also became hugely popular during the pandemic. The game lets players trade pets with each other. The most rare and in-demand pets are the most expensive. All pets have a rating that helps kids ballpark their value – not unlike a brokerage analyst or a credit rating analyzing a company.

Players don’t always agree with that assessment of value though, and that’s what “makes a market.” There are great opportunities to acquire amazing pets that a player considers far more valuable.

But anyone who isn’t aware of the ratings or a pet’s true value can make a bad trade and accidently give away something really good – or agree to a trade that leaves them with a dud.

Not unlike what’s happening with Robinhood and GameStop.

You can learn more about Adoopt Me and what it teaches us about real-life trading here.

Romina Maurino is a freelance journalist and the editor of The Financial Pipeline.

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Financial Pipeline

Just Posted

An artist’s rendering of the new emergency services building. (Photo submitted by Town of Creston)
Creston’s town council provides update on future emergency services building

Construction on the facility is expected to be complete in spring 2022

North Okanagan business Hytec Kohler set up a COVID-19 vaccination clinic at the Spallumcheen plant Friday, May 14. (Jennifer Smith - Morning Star)
More than half of eligible adults in Interior Health vaccinated

Over 365,000 vaccine doses have been administered throughout the Interior Health region

New Border Bruins owner Dr. Mark Szynkaruk reps team colours with his young sons and wife Tracey. Photo courtesy of the Grand Forks Border Bruins
KIJHL’s Border Bruins sold to Grand Forks doctor

The league announced the sale Friday, May 14

You can help pollinators on their quest by planting native species in your garden. (Pixabay)
E-Tips: Hello from the Creston Climate Action Society

Welcome to the first official E-Tips column

On April 27, town officials gathered at 1505 Cook Street to break ground at the site for the new emergency services building. From left to right: Councillor Arnold DeBoon, Mayor Ron Toyota, Councillor Joanna Wilson, Assistant Fire Chief Laura Dodman, Councillor Jen Comer, and Councillor Jim Elford. (Photo by Kelsey Yates)
Breaking ground for the new Creston Emergency Services Building

On April 27, town officials gathered at the construction site with shovels ceremoniously in hand

Daily confirmed COVID-19 cases reported to B.C. public health, seven-day rolling average in white, to May 12, 2021. (B.C. Centre for Disease Control)
B.C. preparing ‘Restart 2.0’ from COVID-19 as June approaches

Daily infections fall below 500 Friday, down to 387 in hospital

Bradley Priestap in an undated photo provided to the media some time in 2012 by the London Police Service.
Serial sex-offender acquitted of duct tape possession in B.C. provincial court

Ontario sex offender on long-term supervision order was found with one of many ‘rape kit’ items

Rich Coleman, who was responsible for the gaming file off and on from 2001 to 2013, was recalled after his initial testimony to the Cullen Commission last month. (Screenshot)
Coleman questioned over $460K transaction at River Rock during B.C. casinos inquiry

The longtime former Langley MLA was asked about 2011 interview on BC Almanac program

Letters to the Editor. (Black Press file photo)
Letter to the Editor: Petition on Proposed RDCK Bylaw Amendments

“If these proposed bylaw amendments are implemented, the Trails Society may be forced to close Riverside Wilderness Park to public access.”

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Steven Shearer, <em>Untitled. </em>(Dennis Ha/Courtesy of Steven Shearer)
Vancouver photographer’s billboards taken down after complaints about being ‘disturbing’

‘Context is everything’ when it comes to understanding these images, says visual art professor Catherine Heard

Trina Hunt's remains were found in the Hope area on March 29. Her family is asking the public to think back to the weekend prior to when she went missing. (Photo courtesy of IHIT.)
Cousin of missing woman found in Hope says she won’t have closure until death is solved

Trina Hunt’s family urges Hope residents to check dashcam, photos to help find her killer

Chief Public Health Officer Theresa Tam listens to a question during a news conference, in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Restrictions will lift once 75% of Canadians get 1 shot and 20% are fully immunized, feds say

Federal health officials are laying out their vision of what life could look like after most Canadians are vaccinated against COVID-19

Most Read