According to a new survey from consumer finance website MagnifyMoney, 32% of U.S. investors say they have made trades while drunk. Gen Z members fell into the trap the most of any generation, with 59% confessing to drunk trading, while 9% of baby boomers admitted to trading under the influence.
This can be combined with the rise in “emotionally charged” investing that traders say they would later regret. Per the survey, 66% of Americans admit to making impulsive investing decisions.
The survey gathered data from 1,116 U.S. consumers in June 2021, and broke down their habits by generation.
Kamaron McNair, the author of a MagnifyMoney study published alongside the survey results, said she believes the effortless ability to trade stocks is contributing to more Americans trading while doing other tasks. “One can imagine how trading apps make this easier than in the old days when an investor might have had to call their broker from the bar,” McNair wrote.
Entering trade orders on mobile devices has assuredly made stock trading easier to complete while engaged in other tasks, including imbibing, but why does it seemingly impact younger investors more?
According to the Addiction Center, an informational group for people struggling with substance-use disorders and co-occurring behavioral and mental-health disorders, the gamification interface of trading apps like Robinhood could be a factor.
“The app’s simplicity and graphic design make trading feel like gaming. The platform has drawn in young investors by presenting complex financial instruments like a fun game,” the organization wrote in a post. “Unfortunately, financial experts believe that instead of helping users, the app is purposely downplaying trading risks. They suspect it to be a method to get users hooked to their platform.”
The Addiction Center compares some brokerage-account usage to gambling issues.
“When a new member joins the platform, an image of a digital scratch-off lottery ticket pops up on their screen. The picture is a welcome stub, a gift for joining Robinhood’s community. The app’s stub promises a free share of stock worth anywhere from $2.50 to $200. If the new trader wants the prize, they have to play by ‘scratching off’ the image like a lotto ticket,” the post continues.
Robinhood stopped using the aforementioned scratch-off feature as of Spring 2021, the company confirmed to MarketWatch.
“From the very get-go, we built a simple, elegantly-designed platform to remove historical barriers to investing and open financial markets to millions upon millions of people previously left behind,” a Robinhood spokesperson told MarketWatch about the company’s app interface. “We are proud to expand access to the financial system and enable everyday people to learn and invest responsibly.”
Robinhood went public last month.
The SEC recently said it wants input on new rules governing ‘gamification’ in online trading apps.
The U.S. saw a retail trading boom in 2020 and a subsequent retail investing explosion in 2021 as more people began trading cryptocurrencies and so-called meme stocks including GameStop