Investing Isn't Gambling

Don't put your savings on the line trying to guess what the herd will do next, as we saw with GameStop this week.

Sarah Newcomb 27 January, 2021 | 5:50PM

Gambling

As someone who specializes in consumer and market psychology, watching the GameStop' "microbubble" in real time is fascinating. What's so interesting to me is that the short squeeze that Twitter and Reddit groups have orchestrated is an example of when the value of a stock changes (temporarily) for reasons that are unrelated to the fundamental value of the company. So we're, in a sense, able to watch the pure effect of human psychology on the market value of real assets. It's fascinating and fun to watch.

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About Author

Sarah Newcomb  Sarah Newcomb, Ph.D., is a behavioral economist for Morningstar.

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