by Sasha C. Russell, Communications Specialist, Massachusetts Council on Compulsive Gambling
A couple weeks ago, my husband and I decided to go see The Wolf of Wall Street. My interest was sparked by the trailer and the reviews from family, friends and critics describing the movie as a “must see.” Please know that, although this is not a review of the movie, there may be some spoilers throughout.
You may wonder how day trading, often known as an investment, is gambling. According to Gamblers Anonymous, gambling is any betting or wagering on an event where the outcome is unknown or uncertain, where the stakes are high enough to cause significant concern or illicit an emotional response. Anytime you invest in the stock market, you are taking a chance. I imagine that day trading can be appealing to people at risk for problem gambling because results happen day-to-day, rather than long-term like in your 401k, or other similar investment plans.
Back to the movie. What I found most frustrating about the movie was that it’s a true story. It’s essentially a story about a man, named Jordan Belfort, who starts a day trading company, and takes advantage of people (starts with the poor and moves up to the rich), all the while making tons of money, and knowing full-well that he is potentially ruining the lives of others while making his own better.
He recognized that it was easy to teach people to “sell” and take advantage of others. In his book, with the same title as the movie, Belfort explains,
“And what secret formula had Stratton discovered that allowed all these obscenely young kids to make such obscene amounts of money? For the most part, it was based on two simple truths: first, that a majority of the richest one percent of Americans are closet degenerate gamblers, who can’t withstand the temptation to keep rolling the dice again and again, even if they know the dice are loaded against them; and, second, that contrary to previous assumptions, young men and women who possess the collective social graces of a herd of sex-crazed water buffalo and have an intelligence quotient in the range of Forrest Gump on three hits of acid, can be taught to sound like Wall Street wizards, as long as you write every last word down for them and then keep drilling it into their heads again and again—every day, twice a day—for a year straight.”
In the movie, Leonardo DiCaprio makes a similar statement while portraying Belfort, as well as referring to himself as a “degenerate gambler,” drug addict, and sex addict – essentially summing it up to being just another guy on Wall Street. However, when I look at those traits, I don’t see high-class business men, instead I see the faces of everyday people who are struggling with co-morbid addictions.
One unique thing that I have observed that separates a gambling disorder from any other disorder is the element of hope that’s attached to gambling. In the end, much of gambling is about the action – but hope is usually where it all starts. The hope that you’re going to make enough to pay off all your debt, the hope that you will be able to live comfortably, the hope that this will solve all your problems, the hope that you may never have to work again – hope is there, but hope can be easily taken advantage of.
Watching Belfort play off the element of hope saddened me. However, despite Belfort taking advantage of people who were either struggling with some level of gambling problems, or at risk of developing a problem, he obviously had his own struggles.
Recently I came across an interesting article by Peter Kenter of the Financial Post, “Addicted to Trading: When Online Investors Become Gamblers.” In the article, Michelle Nogueira, Addictions and Problem Gambling Counselor, Homewood Community Addiction Services, explains, “Online trading fits the profile of problem gambling when it compromises, disrupts, or damages important areas of peoples’ lives. If there’s a preoccupation with online trading, a loss of control and continuation of the behavior in the face of negative consequences, then it’s crossed the line into problem gambling.”
She also noted that traders with a gambling problem present a unique challenge to treatment. “In their minds, gambling is bad, but they see their activity as investing —something positive. Heavy trading losses are seen as a part of their education.”
Other similarities between experiencing problems with gambling and experiencing problems with trading, are the loss of time and the need for excitement and action. The loss of time – whether missing school, work, or other activities – is a huge factor for people who are experiencing both of these problems. As for excitement and action, Bill L., a participant in the Council’s Wisdom Exchange Program for people affected by problem gambling, explains that even though he wanted to win, it didn’t always matter. He said, “I just wanted the action.” The same is true for people experiencing problems with trading.
In Kenter’s article, Martin Jeffery, Financial Planner, Investia Financial Services, recalled a client who quit his job to become a day trader. Jeffrey said, “I don’t recommend individual stocks to clients, but when I looked at some of his transactions I noticed that he often bought and sold the same stock on the same day, every time it fluctuated by 10 cents. I asked him why he didn’t just hold that stock and save himself the transaction fees. He told me that holding the stock wasn’t exciting enough for him.”
Unfortunately, there are not many direct resources for people who feel they are having problems with trading. This is partially due to the paradox that Noguira discusses, when talking about “investing” one doesn’t necessarily feel as though they are “gambling,” and therefore, may not know the proper channels to seek help, should their trading become a problem.
The Council recognizes online trading as a form of gambling, and should that activity become a problem for you, your loved one, or a client of yours, please do not hesitate to call our 24/7 helpline: 800.426.1234. We understand the problem. We can help.