You can’t watch a sporting event today without being bombarded with gambling. And it’s not just on sporting events. Just asked your nephew. Gunjan Banerji reports in The Wall Street Journal:
Lucas Sommer woke up around the time the stock market opened and, still bleary-eyed, opened his Robinhood app.
He had a hunch it would be a good day for stocks, so he scooped up some options contracts that would profit if the tech-heavy Nasdaq Composite Index rose that day.
By the time he was toweling off from a shower, though, the market had ticked down and his options had taken a big hit. “That’s a $1,000 shower,” he recalled thinking. Soon after, the options he bought for $3,000 were worth $80.
Sommer, a 38-year-old digital-advertising entrepreneur in Portland, Ore., is one of the many amateur investors who have moved beyond the meme stocks that turbocharged markets in recent years to even riskier financial instruments that often act more like scratch-off lottery tickets.
Trading is booming in options that expire in as little as a day, or sometimes just hours. For a small upfront fee, investors get the chance for a big payout almost immediately. The downside, as with the lottery, is getting back zero.
Action Line: Your Survival Guy adheres to The Prudent Man philosophy of investing and prioritizes compound interest. Great fortunes don’t need to be gambled for short-term results when slow and steady can win the race with peace of mind and comfort. If you want to discuss what those principles mean for your investing future, let’s talk.
P.S. Read more in “What Happened to Day Trading?“
E.J. Smith - Your Survival Guy
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