By Maxx-Studio @ Shutterstock.com
If the stock market feels more like a casino to you than a place to invest for retirement these days, the FT has some insight to offer.
With all major sports on hiatus and many casinos closed, gamblers are opening stock trading accounts. Net new client accounts have soared at online brokerage firms by almost 800,000 in March and April. Some are even using stimulus money or money they would typically gamble with to bet on stocks.
Gamblers who cannot bet on professional sport because fixtures have been scrapped are flocking instead to the US stock market, creating a new class of customer for online brokerages and adding fuel to the market rally.
The lockdowns that have kept billions of people indoors have halted the world’s biggest sporting events — from US basketball and hockey to European football, Indian cricket and even the summer Olympic Games in Tokyo.
But brokerages that connect everyday investors to the stock market have seen a surge in account openings, as punters seek thrills in unfamiliar places. This has brought new investors to the market, helping to propel a one-third rise in US stocks from the depths of the pandemic sell-off in March.
“People are staying at home, there’s no sports on — so people are trading for fun with the backdrop of improving markets,” said Rich Repetto, senior research analyst at Sandler O’Neill in New York.
Daniel Goodwin, who oversees a team of paralegals for a law firm in Indiana, would typically bet $100 on a handful of sports games every night. A few weeks into the shutdowns, with matches on hold, he fired up a dormant ETrade account with several thousand dollars and began to buy stocks.
“I’m not here for the long run — I just want to throw a thousand bucks at something to see if I can make a few hundred,” said Mr Goodwin, 39, noting that so far he has done well on MGM Resorts and Caesars Entertainment, the casino groups.
“With sports, if I throw $1,000 at something, I lose the whole thing real quick, but here if things go south you can cut your losses.”
Charles Schwab, ETrade and Interactive Brokers — three of the four biggest US online brokerages — each hit record numbers of account sign-ups in either March or April, adding a collective 780,000 new customers. March, the high point, amounted to three times the monthly average of the past two years.
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