Yes, stuck in lockdown with the ‘beast from the east’s’ younger sibling raging outside, many people have had more time on their hands than ever before.
And thanks to the proliferation of the smartphone, they have cheap and easy access to the stock market. Trading stocks may well be the next logical step on from completing Candy Crush.
This ease of access is the democratisation of investment at work. It was not that long ago that investing was the preserve of the very wealthy, something that your average Joe or Josephine were not privy to. But these days almost anyone can trade stocks with a tap of a button, and often it costs just pennies.
Smartphones, technology and disruptive companies have made investing simple and cheap. Slick apps make it easy and even – dare I say it – fun; and that means more people do it.
This phenomenon is not unique to the investment world: we have seen it before with budget airlines bringing worldwide travel to the masses, or the proliferation of car finance allowing drivers to leave the forecourt with a top-of-the-range motor for a small monthly cost.
Start of a worrying trend
But if those factors have led to the democratisation of investing, they have also led to its gamification, and that may be a more worrying trend. When something is done quickly and easily, we put less thought into it.
And if we have been successful in our first attempt — as have many GameStop first-time investors — we get overconfident and assume our winning streak will continue.
Unfortunately, this rarely turns out to be the case. Indeed, a Brazilian study of 20,000 people found that as the success of day traders dropped, the more days that individuals continued to trade.
That means that people appeared to become worse at trading the longer they did it. The academics then homed in on those people in the group who traded for more than 300 days — 97 per cent of them lost money. A similar study in Taiwan put the proportion of successful day traders at just 1 per cent.
However, the forum bods cry that this is not just about profit-making. It is about showing those hedge funds who is boss, it is anti-Wall Street, and it is proving to Goliath that David has the power to move the market. And while those are all very noble sentiments, they have little to do with Josephine’s pension pot.
If we are to take anything from the GameStop fracas, it is not ‘how to stick it to the man’, but ‘how do we keep hold of investors’ interest this time?’
