I bet you or someone you know bought a meme stock or meme coin in the past year. It was all the rage and probably induced some feelings of FOMO (fear of missing out). Even if you weren’t involved, you probably saw a headline on the news or even browsed r/wallstreetbets to see what was happening.
GameStop Corp. (GME), AMC Entertainment Holdings Inc. (AMC), and Blackberry Ltd. (BB) are a few well-known examples of meme stocks that gained fame in the past year. Meme stocks refer to stocks that rise in popularity among investors, often through social media platforms like Reddit.
There has also been a surge in cryptocurrency activity, which has caught the eye of many investors. The allure of fast wealth has led many to chase the “high” associated with volatile investments and opportunities. While some have maximized their gains, many have also gone into debt, damaged relationships, and put their responsibilities on the line. The American Psychiatric Association has not provided a formal classification for “cryptocurrency addiction.” While treatment is available, it is generally not covered by most insurance companies.
Unlike traditional stock investing, cryptocurrency trading can take place at any time, 24/7. It is done online, and its effects can be felt instantaneously, just like gambling. Cryptocurrency prices are also incredibly volatile, which can result in immediate feelings of reward, a burst of dopamine. But it can also result in instant loss, and it certainly can be addictive, leading to lost sleep, increased stress, and a brain worked into overdrive.
Trading has also never been easier, with mobile apps available around the clock. It’s hard not to see these activities like video games. Flashing lights, colorful displays, ease of access… Sound familiar?
Previously, stock trading and cryptocurrency were not extended to gambling addictions because this type of activity was thought to be associated with more skill-based decision-making and with the fundamentals of sufficient investment practices. Generally, long-term investors increase the value of their portfolio by buying during “low periods” “bear markets”) and hold.
However, new investors entering these high-stakes activities may do so with limited knowledge and without long-term projections, and/or buy and sell at the wrong time. For example, Dogecoin, a popular meme coin, was created as a joke but has become a popular cryptocurrency. Consequently, this type of activity has been likened to gambling due to its short-term, risky, and impulsive nature.
From zero to hero, some individuals have generated considerable wealth from meme stocks and meme coins. However, some have also fallen as quickly as they’ve soared and lost a big portion of their savings, time, energy, and relationships.
Indeed, the lavish lifestyle of bullish markets is enticing, but those who have lost significant time and money should serve as a cautionary tale to potentially interested parties. As these platforms become more advanced, we may see definitions and classifications of gambling expand. What do you find pushes your positive reward into overdrive?
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About Leanna Lui
Leanna MW Lui, HBSc, completed an HBSc global health specialist degree at the University of Toronto, where she is now an MSc candidate. Her interests include mood disorders, health economics, public health, and applications of artificial intelligence. In her spare time, she is a fencer with the University of Toronto Varsity Fencing team and the Canadian Fencing Federation.