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

Masset Habour Days will be from May 21 to 25 in 2021, in a family-friendly safe environment. A parade in 2018 was a highlight of a previous Harbour Days celebration. (File Photo)
Birds, boats and blooms are featured in 2021 Harbour Days

Community festival runs from May 21 to 25 in Masset

Kayak the humpback whale was found dead on a Haida Gwaii beach on Saturday, May 15, 2021. (Marine Education and Research Society)
Kayak the humpback whale found dead on Haida Gwaii beach

Whale was estimated to be only 18 years old

“Skeena,” by John Hudson and Paul Hanslow is one of five fonts in the running to become the default for Microsoft systems and Office programs. (Black Press Media File Photo)
Font named after Skeena River could become the next Microsoft default

One of the five new fonts will replace Calibri, which has been Microsoft’s default since 2007

A prowling coyote proved no match for a stray black cat who chased it out of a Port Moody parking lot Friday, May 14. (Twitter/Screen grab)
VIDEO: Little but fierce: Cat spotted chasing off coyote by Port Moody police

The black cat is seen jumping out from under a parked car and running the wild animal out of a vacant lot

Announced Tuesday, May 18 by Public Safety Minister Mike Farnworth, the province added gyms, dance and fitness studios to its list of places where face coverings are mandatory (AP/Steven Senne)
Masks now required at all times inside B.C. gyms, including during workouts

The province added gyms, dance and fitness studios to its list of places where face coverings are mandatory Tuesday

Reinhard “Bud” Loewen of Abbotsford has now been charged with 21 counts of sexual assault related to his massage business. (Facebook photo)
Former Abbotsford masseur now faces 21 counts of sexual assault

Bud Loewen of Bud’s Massage Therapy initally faced three charges

Over the years, police have worked with sketch artists to draw what the boys could have looked like at the times of their deaths. (Vancouver Police Department)
DNA breakthrough expected in cold case involving murdered Vancouver boys, 7 and 8

Forensic analysts are working to identify relatives of the children, whose bodies were found in Stanley Park in 1953

Livestock competitions have been part of the Pacific National Exhibiton for more than a century. (Maple Ridge News files)
B.C. provides $50 million to keep major tourist attractions going

Tour bus companies also eligible for latest COVID-19 aid

Derek Descoteau with his trusty dog Harvey. (Photo submitted)
Friends provide continuing comfort for family in wake of unresolved senseless B.C. murder

Case remains before the courts five years after Derek Descoteau’s abrupt stabbing death in Chemainus

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

The top photo is of a real carbine rifle, while the bottom photo is the airsoft rifle seized from a Kelowna man on May 15. (Contributed)
RCMP issue warning: ‘Imitation firearms need to be dealt with responsibly’

A man brandishing his airsoft rifle in public had his weapon seized by Mounties on Saturday

Abbotsford Regional Hospital. (Black Press Media files)
Canada marks 25,000 COVID-19 deaths since the pandemic began

6 in every 10,000 Canadians died of COVID-19 since March 9, 2020

Most Read