More Men Are Getting Addicted to Playing the Stock Market

Summary

WSJ What’s News – "More Men Are Getting Addicted to Playing the Stock Market" Summary

Released on December 20, 2024, the Wall Street Journal’s "What’s News" podcast episode titled "More Men Are Getting Addicted to Playing the Stock Market" delves into pressing issues ranging from the impending U.S. government shutdown to the alarming rise in stock market-related gambling addictions, and the paradox of increasing mortgage rates despite declining interest rates. This comprehensive summary captures the episode's key discussions, insights, and conclusions.

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1. Impending U.S. Government Shutdown

The episode begins with an in-depth discussion on the escalating risk of a U.S. government shutdown. Host Katie Stetsch Farrick outlines the precarious situation as lawmakers scramble to avert a shutdown set to commence at midnight.

Key Points:

• Bipartisan Efforts Falter: Despite reaching a bipartisan agreement to fund the government through mid-March, the deal unraveled due to opposition from President-elect Donald Trump and influential figures like Elon Musk.
• Republican Strategy Shifts: House Speaker Mike Johnson is actively engaging with GOP members to formulate a new plan, considering the potential of breaking the funding package into separate votes to secure passage without Democratic support.

Notable Quotes:

• Gunjan Banerjee [00:38]: "There's a real sense on the Hill that this is a taste of what could be the chaos to come under a Trump administration and Congress."
• Gunjan Banerjee [03:36]: "Depends on how long the government is shut down for, of course."

Impact of a Shutdown:

• Individualized Consequences: While critical operations and Social Security checks remain unaffected, non-essential federal services will operate with limited staff, causing inconveniences such as longer lines and reduced agency functions.

Conclusion: The uncertainty surrounding the shutdown remains high, with lawmakers negotiating under tight deadlines and exploring various strategies to prevent immediate shutdowns, albeit with potential minor disruptions.

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2. Rise in Stock Market Gambling Addiction

A significant portion of the episode sheds light on the growing trend of gambling addiction among stock market participants. This phenomenon is attributed to the lure of high-risk trades, meme stocks, and cryptocurrencies, which blur the lines between investing and gambling.

Key Points:

• Addiction Symptoms: Individuals exhibiting signs of compulsive trading report mood swings, sleeplessness, depression, and strained personal relationships. Some have even faced suicidal thoughts due to excessive trading.
• Contributing Factors: The accessibility of trading platforms like Robinhood and Webull, combined with the introduction of riskier financial instruments such as short-term options, has facilitated addictive behaviors.
• Challenges in Addressing the Issue: Unlike traditional gambling apps where the nature of the activity is explicit, financial trading can be misconstrued as legitimate investing, making it harder to identify and treat as an addiction.

Notable Quotes:

• Katie Stetsch Farrick [06:08]: "Investors hooked on the stock market's riskiest trades."
• Sam Goldfarb [06:35]: "When you are on a Robinhood app... you could be gambling on options on cryptocurrencies, but you could confuse it with investing."

Industry Response:

• Robinhood’s Position: Vlad Tenev, CEO of Robinhood, asserts that the platform has implemented safeguards and educational resources to help consumers make informed decisions. He emphasizes equal access to trading for professional investors and individual users alike.

  Vlad Tenev [08:09]: "Robinhood has safeguards in place to help consumers make informed decisions."

Future Outlook: Experts anticipate that this issue will intensify as financial markets become even riskier and trading platforms become more user-friendly, making it easier for addiction to develop unnoticed.

Conclusion: The intersection of financial trading and gambling addiction presents a complex challenge, necessitating heightened awareness, better regulatory measures, and more robust support systems for affected individuals.

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3. Paradox of Declining Interest Rates and Rising Mortgage Rates

The episode further explores the contradictory trend of decreasing federal interest rates juxtaposed with increasing mortgage rates, which has significant implications for the housing market.

Key Points:

• Federal Reserve’s Rate Cuts: The Fed has been gradually lowering interest rates since September in an effort to stimulate economic growth.
• Mortgage Rate Dynamics: Contrary to expectations, 30-year mortgage rates have risen from approximately 6.1% to 6.7%, with projections indicating further increases.
• Underlying Causes: Mortgage rates are more closely tied to the 10-year U.S. Treasury yield rather than the federal funds rate. Investor sentiments about the economy’s future and inflation expectations play a crucial role.

Notable Quotes:

• Vlad Tenev [09:22]: "If the Fed is cutting rates now, the 10-year treasury yield can still go up if investors are worried about the next 10 years."
• Vlad Tenev [10:38]: "People really got used to the super low mortgage rates... mortgage rates look very high compared to that period."

Economic Implications:

• Housing Market Slowdown: Elevated mortgage rates deter potential homebuyers, leading to decreased demand and potential cooling of the housing market.
• Investor Sentiment: Mixed emotions prevail among investors—optimism about economic strength and pessimism regarding persistent inflation contribute to the complexity of rate movements.

Conclusion: The disconnect between federal interest rate cuts and rising mortgage rates underscores the intricate interplay between different economic indicators and investor expectations, presenting both challenges and uncertainties for the housing market.

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4. Additional News Highlights

Beyond the primary topics, the episode touches upon significant developments in various sectors:

• Donald Trump’s Asset Management:

  • Transfer to Trust: Donald Trump has transferred all his shares in the parent company behind Truth Social to a revocable trust. This structure allows him to modify beneficiaries and manage assets flexibly.
  • Financial Implications: The stake is valued at over $4 billion based on recent stock prices, with Trump maintaining control as the trust’s director and beneficial owner.

• Netflix’s Sports Streaming Venture:

  • Securing Rights: Netflix has acquired U.S. streaming rights for the next two Women's Soccer World Cups in 2027 and 2031.
  • Strategic Move: This acquisition marks Netflix’s significant push into live sports streaming, enhancing its portfolio and competing with established sports broadcasters.

Conclusion: These additional stories highlight strategic maneuvers by prominent figures and corporations, reflecting broader trends in media and asset management sectors.

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5. Upcoming Content and Production Credits

The episode concludes with a brief overview of future content and acknowledgments of the production team:

• Future Episodes:

  • Weekly Markets Wrap-Up: A detailed analysis of market movements.
  • What’s News Sunday: A deep dive into the optimism surrounding the new presidential administration and its impact on mergers and acquisitions (M&A) activity.

• Production Team:

  • Produced by Pierre Bienname and Anthony Bancy.
  • Supervising Producer: Michael Cosmitez.
  • Theme Music: Michael Lavalle.
  • Development Producer: Aisha Al Muslim.
  • Deputy Editors: Scott Salloway and Chris Insinsley.
  • Head of News Audio: Falana Patterson.

Closing Remarks: Host Alex Osola thanks listeners and reiterates the value of staying informed through the Wall Street Journal’s offerings.

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Conclusion

This episode of WSJ’s "What’s News" provides a comprehensive exploration of critical economic and social issues impacting the nation. From the brink of a government shutdown and the nuanced dynamics of mortgage rates to the troubling rise of gambling addictions in the stock market, the discussions offer valuable insights into current events and their broader implications. Additionally, notable corporate and political developments are highlighted, ensuring listeners remain well-informed on multiple fronts.

Transcript

[Alex Osola]

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[Katie Stetsch Farrick]

Lawmakers are still working on a deal that would prevent a US Government shutdown at midnight.

[Gunjan Banerjee]

There's a real sense on the Hill that this is a taste of what could be the chaos to come under a Trump administration and Congress. And even though Republicans pledged unity and said their communication was really well calibrated, there were some real lessons this week that that might not be the case.

[Katie Stetsch Farrick]

And people who play the stock market are increasingly showing signs of gambling addiction. Plus, interest rates are going down. So why are mortgage rates going up? It's Friday, December 20th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. The clock is ticking for lawmakers to come to an agreement that would avoid a government shutdown starting at midnight tonight. Congress has been working to pass a bill all week. Congressional leaders on Tuesday reached a bipartisan deal to fund the government through mid March, but it fell apart after opposition from President elect Donald Trump and Elon Musk and then a new slim down spending plan from Republicans that was endorsed by Trump failed a House vote last night. House Speaker Mike Johnson huddled with rank and file GOP members today to work on a new plan while also reopening communications with Democrats who were still ang the collapse of the bipartisan deal. The latest discussions among the Republicans focused on holding separate votes on different portions of the package rather than one catch all bill. Wall Street Journal congressional reporter Katie Stetsch Farrick joins us now from Washington. Katie, where are we?

[Gunjan Banerjee]

We are trying to control a bunch of moving pieces right now. My colleagues and I have been running the halls of Congress asking Republicans, Democrats, really anybody, for a sense of where things are heading. The word that we keep hearing from lawmakers is fluid and we are doing our best to make sense of where this could go. Right now we have the sense that there could be one vote later tonight on a bill that's very similar to the one that failed last night, but does not have the debt ceiling aspect to it. Unless you do some really technical maneuvering. Speaker Johnson can't put a bill up for vote the same day and allow it to pass with the simple majority, it will need two thirds, which means Democrats will have to be on board somehow.

[Katie Stetsch Farrick]

Sounds like there's a lot up in the air right now. So if this new agreement goes to a vote and it doesn't pass, that's it. The government's shutting down, right?

[Gunjan Banerjee]

12:01Am I mean, I've covered Congress long enough to never say never. When lawmakers are up against a deadline, you really don't know what's going to happen. And there's been, of course, some discussion among House Republicans that there could be a small technical shutdown, one that maybe lasts over the weekend that's on the table. They might miss their midnight deadline, but in a way that folks don't feel the impact.

[Katie Stetsch Farrick]

What exactly does a government shutdown entail if it does happen?

[Gunjan Banerjee]

Depends on how long the government is shut down for, of course. And the impacts are felt more severely the longer it goes. While critical operations are protected and while Social Security checks still come out, anyone who's interacting with the federal government in any way right now will be inconvenienced. There'll be longer lines because agencies will operate on a very limited staff. And we may see really narrow limited impacts that mean a lot to a small amount of people. But it's really unclear. It'll be really individualized what impacts are felt.

[Katie Stetsch Farrick]

That was Katie Stetschveric, who covers Congress for the Wall Street Journal. Katie, thanks for that update.

[Gunjan Banerjee]

Thanks for having.

[Katie Stetsch Farrick]

In US Markets, stocks came roaring back, but the gains didn't prevent major US Indexes from ending the week lower. The dow rose about 1.2%. The S&P 500 and the Nasdaq both gained about 1%. A car has rammed a German Christmas market in Magdeburg in eastern Germany, leaving at least two dead and more than 60 wounded, according to local officials. They said the suspect, a 50 year old doctor from Saudi Arabia who had been in Germany since 2006, had had been detained. You can follow more about this developing story on WSJ.com coming up, how playing the stock market has led some people to a gambling addiction. That's after the break.

[Alex Osola]

This episode is brought to you by aws. Amazon Q Business is the new generative AI assistant from aws. Many tasks can make business slow, like wading through mud. Help. Luckily, there's a faster, easier, less messy choice. Amazon Q can securely understand your business data to help you streamline tasks like summarizing quarterly results or doing complex Analyses in no time. Q Got this. Learn what Amazon Q Business can do for [e-mail] learnmore.

[Katie Stetsch Farrick]

There's a new type of addict showing up to Gamblers Anonymous meetings. Investors hooked on the stock market's riskiest trades. Some got pulled in by meme stocks during the pandemic, others by a foray into cryptocurrencies. Doctors and counselors say they're seeing more cases of compulsive gambling in financial markets and they expect the problem to worsen. Gunjan Banerjee, who covers markets for the Journal, has been digging into this. So, Gunjan, how do people who are investing in financial markets know that they're addicted? What are the signs?

[Sam Goldfarb]

Investors I spoke with and I interviewed more than 30 for my recent piece for the Wall Street Journal said that often their trading led to mood swings, sleepless nights, and even depression. Some of them said that they had had suicidal thoughts because of their excessive trading. They were often distracted from their loved ones. One of them told me that his marriage almost ended because of his compulsive trading in the financial markets.

[Katie Stetsch Farrick]

Is anything really being done about this problem?

[Sam Goldfarb]

The insidious thing about gambling in financial markets is that often people don't even know that they are gambling. Think about it. When you're on a FanDuel app, when you're on a DraftKings app, it's very clear that what you are doing is sports betting, right? When you are on a Robinhood app, when you're on a webull app, any financial brokerage app, you could be gambling on options on cryptocurrencies, but you could confuse it with investing. And that makes this a really, really pernicious problem and one that doctors, counselors, treatment centers around the country, Tomi is really, really tough to track. One thing they all said, though, was that they expect this problem to get worse because the markets have gotten riskier and the ease of access is greater than ever before.

[Katie Stetsch Farrick]

How did we get here?

[Sam Goldfarb]

A lot of investors and traders discovered trading during the meme stock mania of 2021. They may have had, you know, one giant win that really lit up their portfolio, got them excited, gave them that dopamine rush, and they tried to chase that more and more and more. And what's happened along the way is that Wall street has made it easier to trade. They've introduced riskier and riskier ways to play the markets through things like options activity in options, particularly short, dated options, which tend to be the most addictive. That's on track to hit a record.

[Katie Stetsch Farrick]

This year in the latest episode of WSJ's take on the Week, you spoke about this problem with the CEO of Robinhood, Vlad Tenev. I'm curious if he sees platforms like his as having any respons for this increase in gambling addictions.

[Sam Goldfarb]

You know what Vlad told me when we sat down in person for Take on the Week and what they said for this article when I reached out to them for comment was that Robinhood has safeguards in place to help consumers make informed decisions. They say they offer educational resources so that people can make the right decisions for their investing. I think the way they view it is that they think that individuals should have the same access to trades and investments as professional investors do.

[Katie Stetsch Farrick]

That was markets reporter Gunjan Banerjee. You can hear more from the conversation with Vlad Tenev on the most recent episode of WSJ's take on the Week. Thanks so much Gunjan.

[Sam Goldfarb]

Thank you for having me. This has been great.

[Katie Stetsch Farrick]

Over the past few months, the Federal Reserve has been slowly cutting interest rates. Some people hoped that this could make homes more affordable too, as mortgage rates would follow. Instead, the opposite has happened. According to Freddie Mac, the average 30 year mortgage has climbed to around 6.7% from rough 6.1% since the Fed started lowering rates in September and they're only poised to rise further. WSJ markets reporter Sam Goldfarb joins me now. So Sam, it seems like when interest rates go down, mortgage rates go up. Why is that right?

[Vlad Tenev]

I mean, it doesn't have to happen that way, but it's what's happened this time. Basically it's because the 30 year mortgage rate is not linked to the federal funds rate, which is what the Federal Reserve controls directly. It's linked more closely to the 10 year US treasury yield. And the 10 year US treasury yield is based on investors expectations for what that federal funds rate will be average over the next 10 years. So if the Fed is cutting rates now, the 10 year treasury yield can still go up if investors are worried about the next 10 years. And that's what's basically happened over the last few months.

[Katie Stetsch Farrick]

So does that mean that investors are not optimistic that inflation will cool or they just kind of pessimistic about what the next 10 years holds.

[Vlad Tenev]

It's a combination I would say of optimism and pessimism. Optimism about the strength of the economy. That's one factor that can keep interest rates from falling much further than where they are now. You know, why would the Fed have to cut rates much further if the economy is doing fine and a little bit of pessimism in terms of inflation, kind of like hovering higher than the Fed's 2% target.

[Katie Stetsch Farrick]

Okay, so mortgage rates are at 6.7% or so. What does that mean for the housing market in general?

[Vlad Tenev]

I mean, people just haven't really been wanting to buy homes in this environment. These mortgage rates aren't so super high if you look back before the financial crisis, before like 2008 or so. But people really got used to the super low mortgage rates that follow that period. And mortgage rates look very high compared to that period.

[Katie Stetsch Farrick]

That was Wall Street Journal markets reporter Sam Goldfarb. Thanks, Sam.

[Vlad Tenev]

Thank you.

[Katie Stetsch Farrick]

Donald Trump has transferred all of his shares in the parent company behind Truth Social to a revocable trust in his control. A revocable trust allows the person setting it up to change the successor or move assets in and out. Securities filings yesterday show the president elect gifting the stake worth more than $4 billion based on yesterday's closing price. Trump then received the stake as the director and beneficial owner of the trust. And Netflix has secured the US rights to stream the next two Women's Soccer World Cups in 2027 and 2031. The value of the deal wasn't given. It's a major step forward for the streamer's bet on live sports and marks the first time that Netflix has bought all of the rights for such a high profile international competition. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up what's news in markets Then on Sunday, we'll be discussing how a new presidential administration is bringing optimism for upcoming pick up an M and A activity that's in what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Bienname and Anthony Bancy with supervising producer Michael Cosmitez. Michael Lavalle wrote our theme music. Aisha Al Muslim is our development producer. Scott Salloway and Chris Insinsley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osola. Thanks for listening.