Once upon a time, investing was a thoughtful, deliberate, and steady endeavor… that was only a decade ago! Back in those “old days,” the investment manager would pore over annual reports, trading charts, and asset allocation metrics. That has changed. This is the age of gamified investing (in other words, applying what are typical elements of game playing to investing, typically as a technique to encourage additional engagement in buying and selling stocks or derivatives). With the rise of commission-free trading apps, slick and easy user interfaces, and endless streams of dopamine-fueled content, the stock market is looking more and more like a game of betting on movement and momentum than the underlying companies or investments.
In full disclosure, I am currently reading 1929 by Andrew Sorkin and am captivated (and appalled) by the similarities between then and today. Now, don’t get me wrong, I am not predicting a 1929-esque market crash. What I am saying is that this is not the first time investing was seen as a “can’t lose” game.
Warren Buffett once warned, “The stock market is designed to transfer money from the active to the patient.” If that is true, a meaningful money transfer may be heading our way from the active, as today, patience is in short supply. I am concerned that investors are being drawn into behavior that’s increasingly reactive—and sometimes downright impulsive. To be clear, innovation and access are very likely a good thing. Lowering barriers to entry has allowed millions to participate in markets once reserved for the well-connected. But with this accessibility comes risk: namely, that people start treating investing like gambling. Or worse, that they don’t see the difference at all.
Mathematician and author (and former options trader) Nassim Nicholas Taleb puts it bluntly: “The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” When human behavior meets a gamified platform, that overreaction can be magnified.
Investing Meets the Infinite Casino
It’s not just investing platforms. The explosion of online sports betting, crypto speculation, NFT trading, and real-money fantasy leagues means many consumers now have a casino in their pocket. Note: this is not me on a soapbox or judging behavior, merely trying to make a connection that I believe is relevant and one worth acknowledging if we are going to invest in today’s marketplace. For example, according to the American Gaming Association, U.S. sports betting revenue surged past $10 billion in 2023—a staggering 75% increase year-over-year (1). And I would be willing to bet (yeah, I went there) that the increase is only continuing.
The more time we spend with markets that look like games, the more our behavior reflects that. When the lines between investing, speculation, and entertainment blur, even the most well-meaning investors can be nudged into behaviors that might not serve their long-term interests.
So What Does This Mean for Markets?
The gamification of investing may not lead to systemic collapse—but it does introduce new dynamics into the market ecosystem. Meme stocks, short squeezes, and flash crashes fueled by day traders and highly active investor momentum are becoming more common. That’s not inherently bad—it’s just… different.
What we’re seeing is a triple-edged sword: more volatility, more opportunity, and more risk of significant drawdown. I am no blade master, but is a triple-edged sword even a thing? Not sure it is, but too late—my electronic quill has already committed it to electronic paper!
Volatility is clearly on the rise. When a coordinated wave of Reddit-fueled traders can send a sleepy stock up 200% in an hour, markets begin to resemble the betting window at a horse race more than pricing mechanisms. That kind of movement isn’t just unpredictable—it can also distort price discovery (once a key element of free market trading) and increase risk for all participants. But let’s not ignore the flip side: opportunity. Markets thrive on mispricing, and speculative fervor can create windows for investors who stay rational while others chase the rush.
That reminds me of a quip about the stock market I recall hearing years ago: “There’s no such thing as a good or bad idea—only good or bad prices.” Chaos, oddly enough, can be fertile ground for disciplined investors.
And then there’s the less-fun part of volatility: increased drawdowns. Easy-to-use trading platforms can encourage leverage, concentrated bets, and emotional decision-making. When the tide turns—as it inevitably does—investors who confuse risk with entertainment can find themselves in free fall. As Charlie Munger put it with his usual brief but sharp manner: “It’s not supposed to be easy. Anyone who finds it easy is stupid.”
The takeaway? Gamified investing introduces greater swings in both directions. For professional investors, it creates a more dynamic playing field, but that new, dynamic playing field can feel like a rollercoaster—fun on the way up, unsettling on the way down.
Final Thoughts
Long-term investing is unlikely to be a viral sensation. It may be an impossible task to get millions of readers excited about rebalancing their portfolios. But it’s in the boring stuff—asset allocation, diversification, discipline—where real wealth is built. As philosopher Søren Kierkegaard wrote, “Boredom is the root of all evil.” He probably didn’t have a financial advisor. In markets, a little boredom might just be the antidote. Also, you know how hard it was to make that “o” in his name look like this “ø”?
I am not advocating for boredom, just pointing out that looking to your investment app for a dopamine hit while you are in the airport terminal or at the grocery store might not be a great investment strategy. That same mindset does not play out well, historically speaking. At East Franklin Capital, we help investors focus on fundamentals—not fads. Reach out for a conversation grounded in strategy, not hype.
