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

Environment Canada predicts mainly sunny weather for the weekend, with highs of 24 C. (The News files)
Sunny weekend in forecast for Maple Ridge and Pitt Meadows

Highs of 24 predicted for both Saturday and Sunday

Have an opinion you’d like to share? Submit letters to the editor through our website, via email or the postal service. (Heather Colpitts/Black Press Media)
LETTER: Pandemic fight in stark contrast to Second World War unity, Maple Ridge man says

What if people of the Allied nations thought only of themselves during battle to defeat Hitler?

The draw for May’s Shop Local & Win contest takes place June 4, 2021. (Special to The News)
Open your wallet close to home and win

Maple Ridge - Pitt Meadows Chamber of Commerce hosts shop local competition

Brian Malfesi and his partner Vincent Jourdenais have qualified for the Tokyo Olympics. (Special to The News)
Maple Ridge kayak racer qualifies for Tokyo Olympics

Malfesi is first B.C. sprint paddler to race for Team Canada at Olympics in 33 years

Conservative Leader Erin O’Toole. (THE CANADIAN PRESS/Sean Kilpatrick)
Chamber of commerce for Maple Ridge and Pitt Meadows hosts Conservative leader

Erin O’Toole and MP Dalton part of online Zoom meeting on Monday

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

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

Astra Zeneca vaccine waits for injection in a Feb. 3, 2021 file photo. A Langley man has become the second B.C. resident to suffer a blood clot following an injection. (AP Photo/Frank Augstein)
B.C. man required emergency surgery after AstraZeneca vaccination

Shaun Mulldoon suffered ‘massive blood clot’ after jab

Chilliwack’s Kile Brown, performing as drag queen Hailey Adler, dances and lip syncs in front of hundreds of people during the inaugural Chilliwack Pride Barbecue at the Neighbourhood Learning Centre on Aug. 24, 2019. Monday, May 17 is International Day Against Homophobia, Transphobia and Biphobia. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of May 16 to 22

International Day Against Homophobia, Talk Like Yoda Day, Sea Monkey Day all coming up this week

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

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

Mandarin Garden in Abbotsford had two event tents set up for outdoor dining. One of the tents, valued at more than $5,000, was stolen early Friday morning (May 14). (Submitted photo)
UPDATE: Dining tent stolen from Abbotsford restaurant is located

Owner says it would have cost more than $5,000 to replace the rented event tent

Most Read