Gamifying investing can have real-life consequences

“Marketplace Morning Report” host David Brancaccio speaks with Ciamac Moallemi, a professor at Columbia Business School. “The long side, the buyers of the stocks, are being organized in kind of a decentralized way amongst a group of relatively unsophisticated investors on social media platforms like Reddit,” Moallemi said. “Usually these are two groups of sophisticated investors who would be competing against each other. But here it seems the mass of uninformed investors has sort of taken over and beaten the pros.” But Moallemi said a handful of short squeezes “isn’t necessarily that disruptive.” What’s most concerning, he said, is the broader phenomenon of amateur investors delving further into risky derivatives, which feeds the “gamification of finance.” “This is the type of strategy, where, quite often, you will lose everything that you invest,” he said.

Marketplace’s Nancy Marshall-Genzer has more.