A major deviation from the fundamentals that build wealth: understanding the company’s performance, assessing the quality of management, and analyzing profits. Instead, prediction markets encourage investors to put everything in the red.
This reflects a broader trend in parts of the industry to combine investing with additional features such as entertainment. As someone who feels strongly that self-directed investors deserve platforms that serve their interests first, I think it’s time we have an honest conversation about where this is headed.
What is at stake
Artificial investing has grown. These platforms are no longer the “play money” accounts that advisors of previous generations once dismissed. Accounts increased from 2.3 million in 2020 to more than 11 million in 2023, with total assets exceeding 1 billion. Today, 45% of Canadian investors use these platforms. The success is undeniable, making the growing growth we’re seeing DIY gardening take on the game a cause for pause.
The concern is not that speculative markets as a standalone idea, but as part of an investment portfolio, can be damaging. In all-or-nothing markets, no new wealth is created. The money just goes from 71% losers to 29% winners. And the house always takes its square.
The best online retailers, rated and compared
There’s also this implication: platforms use the same psychological tactics that keep people scrolling through social media. Most of us already understand how care-based platforms work—should investing follow the same path?
Gamification increases engagement. Leaderboards compare you to other sellers. Badges for your tenth trade. Animated festivals when you buy stock. Push notifications create urgency.
In practice, these factors encourage over-trading, which can destroy returns through poor timing, currency conversion costs, and tax implications.
A real danger
The risks go deeper than mere platform features. Young investors today are under a lot of pressure: housing feels out of reach, retirement seems out of reach, and headlines about AI migration and economic uncertainty create constant pressure. In that area, platforms that generate quick wealth through frequent trading may feel like the only answer.
Article Continues Below Advertisement
X
But it’s the opposite of what we know works. The tried and true method starts early, stays consistent, and fixes the noise. It’s boring, but it works.
When disruptors introduce affordable prices and better experiences, they do the industry a favor. But for those who are new or less experienced, the integration of investing, prediction markets, and social media increases the risk. We may have one or two market corrections in seeing a generation lag far behind.
Red flags to watch for
So, what should investors be watching? Of course, not all platforms are the same. Ask yourself: Does this help me invest, or is it more motivating for me to trade? If your investment platform feels more like a slot machine than a financial instrument, it’s worth asking what behavior it’s encouraging.
Understand what is being offered. Commission free trading sounds great, but don’t confuse this with the “all trading is free” mentality. Investment platforms are complex and expensive to develop and operate. To cover costs and return money to supporters, these platforms need new sources of income. In this market place, speculative products (such as crypto and options) are easier to scale and appear to be more exciting than traditional offerings. These products encourage very risky investment practices (margin borrowing, buying and selling multiple times), which may not be very profitable for investors. Knowing how these factors work, and why they exist, is how you stay in control.
High quality
Spotting the red flags is part of the answer. Investor success, not short-term dopamine, should be our focus. This will not fix itself; it requires leadership from both sides of the industry.
For established companies, there is a need to continue to accelerate product development. The same technology that can move investors away from extreme trading can also move them toward smarter decisions: AI that encourages reflection instead of reaction, and gaming that rewards long-term thinking over quick hits.
For disruptors, it means staying true to their original mission of making investing accessible, not cashing in on speculation.
Real wealth is built through discipline and consistency over time. That’s what we have to prepare for.
