Dear Valued Clients and Friends,
In this week’s Dividend Cafe:
- We look at the dynamic of investing becoming increasingly conflated with gaming and gambling, and why it is doing more damage than people realize
- We analyze the societal and cultural dynamics that have long moved us to “amuse ourselves to death.”
- And we explain how those of us who are innocent in this process, not tempted by the insanity of the moment, have to be careful. The reasons why may surprise you, and disappoint you!
Let’s jump into the Dividend Cafe …
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Not Going There
There was a temptation to bypass my planned topic this week and lean into all the drama out of Davos, essentially repeating much of what I already said Tuesday about it all, and unpacking why markets dipped so much Tuesday and why they rallied so much after that. I suppose there may be some readers who wish I would, but I strongly suspect a larger population is as exhausted by it all as I am. Now look, I don’t have the luxury of avoiding market-sensitive topics or economically relevant subjects just because I am sick of them (well, okay, I do have that luxury, but I don’t take advantage of it in the Dividend Cafe – that’s what I am trying to say). If I thought there was more to say today about tariff threats that go away, market volatility around geopolitical uncertainties, and the particulars of the drama around Greenland, Europe, Davos, and President Trump this week, I would say it. But I think I’ve said most of what needs to be said (for now), and I think you’ve heard most of what there is to be heard. And for those who sell quickly on escalations around that stuff, I truly believe they deserve the whipsaw that comes. And then I think they become better investors.
“But as for me and my house …”
Gamification of Markets
With that said, today’s Dividend Cafe doesn’t talk about Greenland, Denmark, or any of the adjacent subjects to this recent distraction. It talks about something that is in a lot of ways much, much sillier (can you imagine?), and yet in the ways that matter, much more serious. If I thought today’s subject was a mere fad that would pass and was restricted to a very small subculture of folks who were just touching the hot stove for a brief period in their youth, I could easily ignore it. Odd behavior from an immaterial niche that doesn’t touch what me or our clients do should not take up oxygen in the Dividend Cafe. However, I am convinced that this has gotten serious, and I want to address it as best I can.
That subject is the “gamification” of markets – the ethos that treats investing like a game … The earnest belief that the entertainment of it all is the point. There is a conflation of cultural degradation and an investing quasi-philosophy that needs to be put out to pasture. So today we get serious in the Dividend Cafe, about a whole lot of people who are anything but.
Amusing Ourselves to Death
Neal Postman’s 1985 classic, Amusing Ourselves to Death: Public Discourse in the Age of Show Business, may be the single most prophetic, prescient, and depressingly accurate social critique ever written. His basic premise at the time was that television had crowded out serious discourse in society, and that more serious spheres like religion, politics, and education were having to compete as entertainment vehicles to keep the attention of a society that had become addicted to the cheap amusement television democratically provided. This. Was. 1985. It is frightening to think what he would have written had he known that what was a few hours of NBC sitcoms on Thursday night would become the all-encompassing 24/7 world of reels, TikTok videos, streaming, YouTube, cable, and absolutely universal access to “entertainment” on a screen every waking moment. But the broader point which Postman made was not about the penetration of the medium or even the sophistication of the technology – it was that the serious spheres in society were responding to the competition for attention by dumbing themselves down.
Many have read Postman’s critique over the years as a criticism of television, but I always read it as a criticism of institutions that sacrificed their own depth to keep a place at the table. Postman does argue (I believe accurately) that a print-based medium promoted constructive critique, logical thinking, and some form of cerebral exercise that tickled more of our rational faculties than electronic media do. His regret was the lack of “critical reflection” but also sustained attention spans. I will just say that it, ummmm, aged well.
What was socially provocative about Postman’s work was the suggestion that people’s own desire to be distracted with little mental effort was only part of the problem … the enabling of this weakness from those who should know better was dulling our senses, weakening our resolve, and causing us to present serious messages as bite-sized, trivial amusements. In short, Postman said we were “amusing ourselves to death.”
Money and Dopamine Fixes
Neal Postman’s point in a broader cultural context is not as complicated today as it once was. If there is someone out there who believes that the wide adaptation of a screen-based society has made us smarter social animals, I’d like to meet them. But Dividend Cafe can only devote so many resources to cultural criticism. Tragically, Postman’s points from his 1985 work translate quite fluidly to a major concern in financial markets, as well. Truncated attention spans and a need for constant entertainment have not merely hijacked the way people take in religion and politics, leading to a WWF view of political discourse and a shopping-mall consumerism understanding of church life. Those exact same dynamics have directly fed the “gamification” of markets – and the results promise to be as good for investors as they have been for our civic and ecclesial life.
Capital allocation is a serious sphere of public life. Whether it be one is being done with the money (debt and equity capital that provides investment in the production of goods and services that meet humans needs and wants), or how that process feeds peripheral needs (the return on that invested capital providing solutions for the financial goals of risk-taking investors), it is not a game, and attempts to treat it as such lead to irrational decision-making. Overtly speculative activity gets “normalized” when the needed traditions, norms, and disciplines of serious investing behavior are subjected to this spectacle.
What Are We Talking About?
Practically speaking, there are a number of things we could point to that illustrate the dynamic I am describing. Much attention was given to Robinhood implementing confetti and other screen effects when its customers placed a stock trade, and all things being equal, I do believe it is a symptom of the problem, but compared to where all this has gone, was reasonably benign. I think it was stupid, and I think the idea that a grown adult enjoys being treated like a seven-year-old when they conduct a financial transaction is, I suppose, disappointing, but if this is all we were talking about, I don’t think I would fear for a generation of investors.
Conceptually, I am referring to the idea that speed, entertainment, and the social nature of investing should be the priorities, not behavior, risk, or market function. We do not see this “gamification” limited to the periphery of small investor transactions on Robinhood. Video games (a $190 billion per year industry) and sports betting (a $120 billion per year industry) have become increasingly structural in society, and the social behaviors, thought processes, and activities embedded in such activities have bled into investing at a rapid pace. From chat board activity to platform incentives for quantities of trades to investment products that can’t possibly make sense outside of rank gambling (short-dated options, crypto manias, NFTs, various ETF products that defy common sense), the lines between a video game/gambling culture and the investment/financial world have been blurred to a point of great concern.
It has been a few years since the meme stock craze of a few years back, but there exists in various chat boards (and in painting a picture of some underground chat board it may seem to belittle the fact that there can be millions of people engaged in this at any given time, not merely a dozen anti-social basement dwellers) a significant aspiration for something funny to happen that leads to investor profits. A story takes hold in social media, and investors pounce. That “social” word is important here – there is a sort of [electronically] social dimension to this that creates a [bad] substitution for community, and the fun of it all transcends the investment dynamics.
That financial products have evolved from this cultural moment should be no surprise to anyone who understands markets. It is what markets do: meet demand by creating products aligned with trends and aspirations. In this case, the chicken or the egg is easy: the societal obsession with entertainment has driven product evolution, not vice versa.
Isn’t it all harmless?
For you and me, there is a sense in which it is. If John Doe buys GameStop stock while day-trading single-day options on a dog digital coin he flipped into from a movie theater stock where the CEO did an interview playing video games while not wearing pants, why should you and I care?
(Before I answer that question, I want you to ask yourself if I just made up those four or five examples in the preceding paragraph. No, I want you to ask yourself if I even could make those things up if I tried.)
But back to the point at hand – why does the behavior of others matter to us? I believe that it essentially does not matter to us. Someone else treating their portfolio like a video game does not make me treat mine like one, and it is a free country. As long as there will be no bailouts for meme stock frenzies, the crypto world, the NFT world, or anyone who got confetti on their screen from a trading app, I couldn’t care less what they do (in a legal or economic sense; the human in me still cares, but I digress). The problem, though, is that this gamification is becoming increasingly conflated with real investing. When Wall Street responds to this low-brow demand with product evolution, it legitimizes it and moves the overton window of normalcy and responsibility. When society’s broad mentality shifts from viewing investable markets as a venue for capital allocation and risk management to one for entertainment, personal identity, and social community, it systematically increases the formation of bubbles and distorts price discovery.
I certainly do not want people to amuse themselves to death, but I also do not want them to amuse themselves to bankruptcy. But furthermore, I do not want the culture to do what it already did with screen viewing – allowing that which is not real to “feel” real. I do not want reality distorted to the point that fundamentals are lost, personal responsibility is lost, or sober-minded investing activity feels “old-fashioned.” I have no fear that the laws of nature will change. Gravity remains a scientific law even when people play around.
Objects may not change just because we put on bad glasses. But that doesn’t mean the object will look right.
History Repeats
On October 24, 1929, the New York Times quoted a prominent Wall Street veteran about the stock market crash, which was then playing out in real-time:
“It will send back to work many people who have been sitting around brokerage offices for a year or so on the trail of easy money,” he said. “I have heard thousands of reports of merchants, farmers, and men and women in all walks of life literally giving up their businesses to watch the stock market. Most of them will, by necessity, have to go back to earning their living in normal ways.”
The things I describe in today’s Dividend Cafe do not perfectly repeat what you see here from 1929, but the rhymes are unmistakable. Substitution of work, discipline, savings, thrift, and normal behavior for speculation, excess, and the “thrill of it all” is not new. The technology and the massive social alienation behind much of it today are unique, but the human weaknesses at its root are not new. One would only need to change a few words from that real-life 1929 New York Times blurb to be thoroughly contextualized to a 2026 article.
Be on Alert
Besides the fact that human beings tend to be human and all of us are susceptible to an overton window moving that distorts the proper function of markets, there is also another problem with this gamification of markets moment:
The grifters are out in full force.
My friend Louie Gave recently wrote:
“In his seminal book, The Great Crash, 1929, John Kenneth Galbraith coined a term to describe dubious dealings that often develop the longer a bull market lasts: ‘the bezzle.’ The idea behind ‘the bezzle’ is that when times are good and money flows freely, con-artists and grifters will raise capital for schemes that, more often than not, have little economic purpose but separating the gullible from their hard-earned cash. As Galbraith put it, the ‘inventory of undiscovered embezzlements’ grows in times of rising markets and when the markets collapse, such schemes are suddenly exposed and lead to large losses for investors. Galbraith identified a sweet spot after the embezzlements have been committed and before they are found out: ‘Weeks, months, or years may elapse between the commission of the crime and its discovery. This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.’
Essentially, this is when things ‘feel’ the best. To reference previous U.S. bull and bear markets, while Bernie Madoff was spending money on Florida yachts, New York apartments, and Rolex watches, his victims were at the same time spending money on Saint Barts and Saint Moritz holidays, ‘safe’ in the belief that their past savings were compounding nicely.”
Behind one person’s “fun” and another person’s “social” experience investing … behind one person’s Reddit chat board belonging, and another person’s meme stock owning of a guy in a suit they don’t like … there is someone else laughing on their way to the bank. The vulnerabilities that exist in this gamification moment are not merely passive. Active bad deeds happen because people are primed for them. And you show me one goofy person gambling online in their mom’s basement, and I will show you a bad actor at another computer, ready to place a trade.
And when you don’t know who the patsy is, you are the patsy.
Conclusion
Investing is not a game. I resist any attempt to infantilize decisions around capital allocation. I do not begrudge people having fun with a few bucks on Draft Kings or a slot machine or a poker game. I do begrudge the conflation of entertainment and financial management, and I do because I consider the stakes high, the objectives important, and the underlying realities inescapable.
And underneath the “gamification of markets” is the Neal Postman point of forty years ago. I prefer we put a stop to this “amusing ourselves to death” bit in the culture, and I am quite certain that any society that cannot take investing seriously will not take family, church, or state seriously, either. And to that end, I will work until the day I die.
Chart of the Week
If I thought this chart needed any more explanation, I would give it.
Quote of the Week
“Wall Street never changes. The pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.”
– Jesse Livermore
* * *
And just like that, it is time for the last week of January. Markets never sleep. And this week, neither have our traders, as we embarked upon a book-wide rebalance of our client portfolios. Next week’s Dividend Cafe looks at the “gift” of rebalancing and the long-lost art of risk management that gave it birth. In the meantime, we await your questions anytime, and wish you a wonderful weekend!
With regards,
David L. Bahnsen
Chief Investment Officer, Managing Partner
The Bahnsen Group
thebahnsengroup.com
This week’s Dividend Cafe features research from S&P, Baird, Barclays, Goldman Sachs, and the IRN research platform of FactSet
