Trading Addiction on the Rise

By Ben Dolan

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I’m trying to set appropriate boundaries for my kids when it comes to technology. Ben and Anna, my teenage twins (14), have cell phones (not the ones they want!) with limited access to internet and no social media. Their school doesn’t allow cell phone use during the day, and we have limits on phone time at home. Our hope is to introduce technology in small bites, encourage them to utilize it appropriately, while avoiding the addictive nature of many apps while their brains are still developing.

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But kids are not the only target of addictive technology. In a December 20^th article in the Wall Street Journal, Gunjan Banjeri notes the increase of men attending Gambler’s Anonymous meetings driven by an addiction to trading apps. According to Banjeri, many of these apps make trading easier and more accessible, leading to an increase in trading activity, especially riskier trades.

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Banjeri notes that certain trades promising huge gains, like investing in options contracts that expire the same day, are growing in popularity. Certain apps, like Robin Hood, make it extremely easy to make these types of trades: “Similar to wagering on how many points Mavericks point guard Luka Dončić will score in the first quarter of an NBA game, traders are increasingly using options to speculate how stocks will fare during the trading session, rather than at the closing bell.” 

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As you might expect, the addiction to trading, and especially to riskier trades, has led many to suffer huge financial losses. Often, when losses begin, the investor will trade more and more to try and make up for the recent losses. This starts a spiral which leads to even larger financial pain, depression, anxiety, and neglect of family duties. According to those Banjeri spoke with at Gambler’s Anonymous, many of these individuals end up not just in bad financial shape, but suicidal. 

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One way to protect your loved ones from the onslaught of advertising promoting these platforms (and the deluge of online sports gambling apps) is to share the cautionary tales Banjeri, and others, publish. Another way is to have sincere conversations with those you love about how they handle their finances, especially with regards to investment philosophy. If a family member states an inclination toward short-term profits seeking, you may want to suggest (in a tone that conveys how much you care about them) they think more long-term.

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In my opinion, good investing is not about short-term speculation, and it is not exciting. It’s boring! Investing success requires a long-term approach to ownership in businesses that have attractive balance sheets. It requires patience, keeps costs low, is diversified, and reduces taxes.