Retail investors are playing the stock market for ‘entertainment,’ says behavioral finance pro

Retail investors are playing the stock market for ‘entertainment,’ says behavioral finance pro
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“Entertainment investing” is having its heyday.

That’s according to Dan Egan, managing director of behavioral finance and investing at Betterment, who used the term on CNBC’s “ETF Edge” on Monday while explaining retail investors’ recent rush to the stock market and trading platforms like his.

“In March and April, we were definitely seeing people getting a little bit more conservative, especially around having cash positions or emergency funds and wanting those to be available on shorter notice,” Egan said.

A survey of 5,005 U.S. investors conducted by Betterment found that 78% did not take money out of the markets from March to mid-April. Of the 20% who did, nearly half said they would only reinvest when the market was either fully corrected or had begun to correct.

As lockdowns continue into the summer, “people are either voluntarily or involuntarily saving a lot of that money, and they need something to do with it,” Egan said. “We’re starting to see what I would call ‘entertainment investing.’”

With professional sports, film and television productions, indoor activities and other entertainment options largely on hold due to the pandemic, people have been looking for a sense of community, he said.

“The stock market is in the news. People talk about it. It’s more accessible than it’s ever been,” Egan said. “We are definitely seeing people treating it a little bit like a form of entertainment, where they want to come in and be able to talk about what they have and haven’t invested in and how it’s been doing.”

Source: CNBC

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