If you’ve turned on the news in the past couple of weeks, you’re sure to have seen an absolute frenzy over Gamestop ($GME), Robinhood, and Reddit. This viral battle’s basic premise is that a Reddit community is trying to fight the financial status quo and disrupt the hedge funds and institutions that dominate the investing world.
But as stated in the name of the subreddit, r/WallStreetBets, this whole craze is mostly reminiscent of gambling. Users of the community actively disclose to newcomers that their actions are highly volatile, risky, and are considered gambling. Is this financial revolution where retail investors fight the status quo just a gamble?
News Highlights
- Retail investors are opting for riskier investments in the popular Robinhood app.
- Gamestop’s stock jumped from $17 a share to $320 in less than a month.
- The event has raised discussion over whether investing in GME is investing or pure gambling.
Robinhood App – The Game Changer
Robinhood is a legitimate trading application that takes zero commission, making it very appealing to retail investors. Robinhood changed the game when it came to giving people financial control over their assets. Users can invest in what they like, how much they like, and whenever they want.
The app itself has come under fire recently for limiting purchases of GME stock to one per person. Although the app is traditionally sound and legal, the company’s founder, Vladimir Tenev, faces multiple lawsuits from retail investors and organizations regarding his decision to stop trading for tickers $GME and $AMC.
GameStop Stock – Investing or Gambling?
It’s important to understand that there is a lot of conflicting information regarding the subject. Many claim there is evidence of massive market manipulation efforts from hedge funds and mainstream media outlets.
What is clear, though, is that investing in Gamestop (NYSE: GME) currently is a massive risk and has similarities with gambling, even if it’s disguised as a financial investment.
Many hedge fund managers agree with this statement, like former CFO of Goldman Sachs, Marty Chavez, who claims that the whole fiasco is purely gambling.
The Gamble of Day-Trading
Retail investors are seeing through this concerted effort by financial institutions to discredit the actions of those holding GME. A quick look at the r/WallStreetBets page shows users encouraging each other to maintain, and many posts sustain alleged evidence that Wall Street is practicing illegal market manipulation tactics.
Users believe that, although risky, their investments are valid and backed by due diligence. So the consensus sways depending on which party you talk to.
According to mainstream media, banks, and financial institutions, the GME situation is a risky gamble that will die down soon enough. According to retail investors and members of the WallStreetBets subreddit, it’s a movement to fight the status quo and is a valuable investment.
Is Online Gambling Addiction Increasing?
Addiction to online gambling has been on a significant rise due to the COVID-19 pandemic. The National Council on Problem Gambling specifically said that measures need to be taken to address the worrying trend.
According to a Post Crescent report, people under lockdown have resorted to gambling online, and the effects of this burgeoning addiction could be significant.
Once individuals begin to struggle with gambling habits, it’s tough to recover from it if they play online. It can be too easy to sign up to another website and begin the whole process again.
Responsible Online Gambling
There are many resources dedicated to helping people struggling with a gambling problem. OUSC’s responsible gaming page can provide more information.
Set A Budget
Most real money online casinos allow you to set a deposit limit to help you control your budget. If you feel like you are suffering financially because of gambling, we strongly suggest you set a limit.Define Time Limits
Time can go by quickly if you’re too entranced in gambling, so many online gambling sites can help by allowing you to set a time limit.Don’t Chase Losses
Chasing your losses refers to increasing the amount you wager upon losing. It is one of the most dangerous habits compulsive gamblers do.Stay Grounded
Be realistic with how much you can expect to win and how much you should bet. If you are chasing a dream to win a million dollars, you’ll fall into a trap trying to reach that goal.
The Need for Responsible Gaming Practices
The situation between Robinhood, r/WallStreetBets, and hedge funds is complicated. There is a lot of backstory and bad blood between individual parties. There is also a lot of misinformation populating the Internet, so readers must do their own research. A worrying aspect of all this is that compulsive gambling habits can seep into these investors’ lives and become problematic.
If you find yourself struggling with online gambling, feel free to check out our extensive resource page on the matter to find out what you can do to help yourself or a loved one.
