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

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

Environmental journalist Candice Batista highlighting green products for the kitchen on the CTV Marilyn Denis Show. (Screenshot)
Eco-conscious Nakusp company highlighted on national TV

Bowl covers from Your Green Kitchen were highlighted

File photo
Paramedic training returning to Castlegar

Emergency Medical Responder and Primary Care Paramedic training to take place in Castlegar

Emerson Potter, a Grade 3 student at Blewett Elementary, advocated for changes to help him use his wheelchair on the school grounds. He’s seen here with his parents Lindsay Thompson and Keith Potter, and Blewett principal Tim Mushumanski (right). Photo: Tyler Harper
‘Pretty awesome’: Nelson-area student advocates for school to improve outdoor accessibility

Emerson Potter, who lives with cerebral palsy, had trouble moving around Blewett Elementary’s grounds

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

On Friday, May 14 at Meadow Gardens Golf Club in Pitt Meadows, Michael Caan joined a very elite club of golfers who have shot under 60 (Instagram)
Crowds at English Bay were blasted with a large beam of light from an RCMP Air-1 helicopter on Friday, May 14. THE CANADIAN PRESS/Marc Grandmaison
Police enlist RCMP helicopter to disperse thousands crowded on Vancouver beach

On Friday night, police were witness to ‘several thousand people staying well into the evening’

People shop in Chinatown in Vancouver on Friday, February 5, 2021. THE CANADIAN PRESS/Jonathan Hayward
Vancouver community leaders call for action following 717% rise in anti-Asian hate crimes

‘The alarming rise of anti-Asian hate in Canada and south of the border shows Asians have not been fully accepted in North America,’ says Carol Lee

Sinikka Gay Elliott was reported missing on Salt Spring Island on Wednesday, May 12. (Courtesty Salt Spring RCMP)
Body of UBC professor found on Salt Spring Island, no foul play suspected

Sinikka Elliott taught sociology at the university

The first Black judge named to the BC Supreme Court, Selwyn Romilly, was handcuffed at 9:15 a.m. May 14 while walking along the seawall. (YouTube/Screen grab)
Police apologize after wrongly arresting B.C.’s first Black Supreme Court Justice

At 81 years old, the retired judge was handcuffed in public while out for a walk Friday morning

Dr. Steve Beerman, of Nanaimo, shows off his Dr. David Bishop Gold Medal, awarded for distinguished medical service. (Karl Yu/News Bulletin)
Queen presents Vancouver Island doctor with award for global drowning prevention

Dr. Steve Beerman receives Royal Life Saving Society’s King Edward VII Cup at virtual ceremony

Tim Miller is selling his 76-foot steel bridge from his property in Burton, B.C. The bridge originates from the railway in Revelstoke. (Contributed)
For sale: a 100-ton 19th century bridge by Arrow Lakes

Bridge is in Burton, B.C. and advertised for $40,000

Former UFV Cascades wrestling coach Arjan Singh Bhullar is now the ONE heavyweight champion after defeating Brandon Vera via TKO in round two on Saturday in Singapore. (ONE Championship)
Former UFV wrestling coach wins MMA championship

Arjan Singh Bhullar captures ONE heavyweight title, first Indian origin fighter to achieve honour

Most Read