Could Investing Put You at Risk of a Gambling Addiction?
With pubs and clubs shutting their doors due to COVID-19 related restrictions, the average punter has been forced to explore different avenues to make a few extra dollars.
“[There has been a] move to retail investors from small investors.” Explains associate Professor Gerhard Van de Venter, from the University of Technology, Sydney.
“The fear of missing out has caused a lot of people to flock to the market.”
A retail investor is an individual that invests exclusively from his/her own personal account and is not professionally involved within the stock market. The amount of these rookie investors has significantly risen since the outbreak of COVID-19.
“People have been suckered home… [they] constantly have the internet on. This is seen as an opportunity to participate in the market.” Van de Venter explains.
Not only this, but it is believed that the ‘fear of missing out’ otherwise known as ‘FOMO’ may also be driving individuals to tackle investing.
“We are driven by emotions. One of the big emotions that drive us is FOMO… [People] see the reports in the media. The fear of missing out has caused a lot of people to flock to the market.”
With more time spent at home and an increased interaction with news media, individuals feel that they may be missing out on the chance to make a great financial return, igniting the desire to invest in stocks. But is this a smart decision to make?
“Be careful trying to profit on the short term. You should really be looking at the financial market on the long term.” Van de Venter warns punters.
Investing on the stock market is a larger commitment than feeding a $50 note into a poker machine. To have a positive financial return, individuals should research the company they wish to invest in, have a plan of when to cash out and be prepared to let that money sit for a significant period of time.
Living in the digital era has supported the financial market, as access to information of how a company is faring is readily available.
“The average punter sitting at home with access to the internet can get that information at the exact same time as a professional trader.” Van de Venter states.
But is there enough education for new investors in regard to smart investing? Should we be cornered that this behaviour breeds addiction?
“If someone is going to be gambling, would we not rather as a society someone to gamble by buying shared on the stock market, rather than putting money into a poker machine?” Van de Venter questions.
While society’s current view on investing on the stock market involves a small classist bias, there should be a level of precaution administered to new investors hoping to try their luck. This form of financial poker requires more time, information and patience compared to your average Friday night poke. And of course, as Warren Buffet claims, “Never forget rule number one: Don’t lose money.”