With the wild moves in GameStop GME’s stock,
and AMC Entertainment AMC,
or last week with cannabis makers, it is not illogical for some to view the stock market as a casino, a description recently used by Senator Elizabeth Warren, the Democrat from Massachusetts.
In an interview with Axios that aired on HBO, Stacey Cunningham, the president of the New York Stock Exchange, part of the Intercontinental Exchange ICE, said,
said she rejected that comparison.
“The markets are not a casino. They are highly regulated and closely monitored … We run a market that offers investors opportunities to come in, invest in the companies they believe in, that they think will grow, and then share in that wealth creation . – NYSE President Stacey Cunningham
Casinos, it should be noted, are also highly regulated and monitored, although unlike the stock market, there are no long-term positions that can be built into, say, a blackjack game.
Academic research suggests that stock trading and more traditional gambling have quite a bit in common. An article published in January says there is 3.5 times more gambling in stock markets than in more traditional locations such as casinos and lotteries.
The paper – from Alok Kumar from the University of Miami, Houng Nguyen from the University of Danang, and Talis Putnins from the University of Technology Sydney and Stockholm School of Economics – says the US and Hong Kong have the highest per capita levels of what they call stock market gambling in the world. They identify so-called lottery stocks by looking at the volume divided by the market capitalization and looking for unusually large ratios.
That’s not to say that all stock market investing is gambling. The researchers say that about 15% of the stock market volume in the US is related to gambling, a percentage that goes up to 30% in the stock markets of China and Thailand.