The Stock Market Is the New Casino
Unfortunately we’ve reached a point where the stock market is a huge game. Thanks to no trading fees and fun to use platforms, people can enter the market with $5. While we’ve preached to invest in the market, we’ve failed to accurately describe the high level of research necessary to make an informed decision.
I can easily say with certainty, that if I were to drop an annual SEC filing in front of someone, they’d have no idea what to do. Staring into the abyss of pages and information.
That is where the real research happens, understanding the financial health of an organization. There you find financials, risks, forward looking statements. Then you take it a step further and listen to the conference calls and follow the questions analysts ask. After that, you can slowly begin formulating an opinion.
Now, people throw open Twitter and find their favorite person, investing how they say. Taking their word for gold. More recently, a group of Reddit users driving confidence and feeding FOMO.
We see the good side of people making money, but what happens in a casino is a vast majority of individuals lose money. People extend their finances too far in hopes of following the trend. What people fail to realize is once you see the market moving, it’s too late.
With the pandemic and physical casinos closed, people turned to an easily accessible stock market to satisfy their needs.
I argue that we need to begin educating people that while a very small few get rich quickly, that is almost not going to be the case for you. Unless you understand money psychology and have a high risk tolerance, chasing the next GameStop is not for you.
Instead, take the time to understand a company and know why you’re investing. Why risk your hard earned money? The market doesn’t care who you are and will chew you up and spit you out. It will destroy every dollar you put in if you let it.
Slow down and read some articles. Gather different points of view, both the good and the bad. If you like something, read why it’s not liked.
If you decide that’s too much work, then passively invest into mutual funds or ETF’s. Stop trying to chase the next hot stock just because Twitter and the Internet gets excited. Breath, and understand why you’re investing your money.
We need to stop turning the stock market into a game, and start educating people on how to properly value and select stocks. The stock market is not the casino.
