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

Letter writer concerned there was a lack of notice by School District 83 regarding the May 12 board meeting on the district’s Long Range Facilities Plan. Discussion at the meeting is expected to focus on Salmon Arm schools, including the J.L. Jackson campus. (Google maps image)
Letter: Public provided little notice on Salmon Arm school facilities meeting

Writer questions what constitutes proper communication

School District 83 trustees host a special meeting on Wednesday, May 12, to once again discuss the district’s Long Range Facilities Plan. (File photo)
School trustees host special meeting to tackle Salmon Arm facilities

Afternoon online meeting planned for Wednesday, May 12

The Sprig of Heather restaurant at R.J. Haney Heritage Village and Museum features a 40-by-40 foot covered pavilion in the heart of the public garden. (Photo contributed)
Salmon Arm’s RJ Haney Heritage Village preps for opening of new attractions

No date set yet, new highlights will be Sprig of Heather restaurant, Children’s Discovery Centre

A topographic (3D) perspective captured from Google Earth, to create a perspective of the approximate proposed cut block outlines on Mount Ida in relation familiar local landmarks. (Alex Inselberg image)
Salmon Arm council’s concerns eased over Mount Ida logging

Fire chief explains proposed cut complements wildfire risk reduction efforts

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
65 new cases of COVID-19 in Interior Health

Overall, B.C. is seeing a decrease in COVID-19 cases

B.C. Labour Minister Harry Bains in the B.C. legislature, May 13, 2019. (Hansard TV)
VIDEO: B.C. to provide 3 days of sick pay for COVID-19 absences

Province will support employers on cost, labour minister says

B.C. Agriculture Minister Lana Popham takes questions in the B.C. legislature in 2017. (Hansard TV)
UPDATE: B.C. will fund another year of fresh fruit, vegetables, milk in schools

John Horgan government working on school meal program

A nurse prepares a dose of the COVID-19 vaccine in Kelowna on Tuesday, March 16. (Phil McLachlan/Black Press Media file)
More than 40% of Central Okanagan residents have received 1st vaccine dose

Local clinics have administered 81,247 first doses to Central Okanagan residents

Surrey RCMP is releasing sketches of a suspect in an “indecent act” at the Coyote Creek Elementary playground on April 30, 2021. Police said the suspect was clean-shaven “during some interactions” and on “other occasions had stubble outlining a goatee and mustache.” (Images: Surrey RCMP handout)
Vancouver mayor-elect Kennedy Stewart addresses supporters in Vancouver on Sunday, Oct. 21, 2018. THE CANADIAN PRESS/Darryl Dyck
Vancouver mayor says there’s no time to redo details of drug decriminalization plan

Kennedy Stewart says a federal election could see the small window of opportunity close on the city’s bid for an exemption from criminal provisions on simple possession of small amounts of drugs

Michelle St. Pierre, UBCO’s 2021 graduate student researcher of the year, is hoping to change the discussion surrounding the therapeutic use of psychedelic drugs. (UBCO photo)
UBCO researcher examining therapeutic use of psychedelic drugs

Michelle St. Pierre has been researching the use of psychedelics since 2015

Premier Mike Horgan received his first dose of a COVID-19 vaccine. (Facebook/John Horgan)
More than 50% of people eligible in B.C. have received 1st vaccine dose

‘We’ve made extraordinary progress together over the past few weeks,’ says Premier Horgan

Have you seen David Melanson?
Kamloops RCMP searching for missing Vernon area man

David Melanson was last seen in the Kamloops area

Most Read