GameStop mania fed off angst among young investors, experts say

GameStop’s stock craze and the retail trading revolution it created five years ago were driven in part by financial distress among young investors, experts say. This generational unrest has continued and could have long-term effects on retail investors and the stock market more broadly.

Retail investors increased their shares GameStopIt soared more than 1,600% in January 2021 as amateur traders on Reddit’s WallStreetBets online message board, a brick-and-mortar video game retailer, encouraged each other to participate in beleaguered stocks and leveraged emerging digital investment platforms to trade.

JJ Kinahan, head of retail expansion and alternative investment products at securities exchange Cboe Global Markets, said many young people in their late 20s and early 30s first started participating in the stock market during the GameStop craze.

“This was honestly the biggest event that has ever happened in terms of retail trading in the markets,” Kinahan said.

He said that just two to three years ago, the common question among financial firms was: How do we encourage young people to invest?

“We didn’t think they would all come at the same time,” Kinahan said.

Approximately 4.5% of investors trading GameStop stock opened a brokerage account on or after Jan. 13, 2021, when the GameStop frenzy began, indicating that it attracted “a few” new investors to the market. academic research These investors were generally younger (early 30s on average, compared to 36 for non-GameStop investors) and less experienced.

The paper, by financial researchers Tim Hasso, Daniel Müller, Matthias Pelster and Sonja Warkulat, used data from an unidentified retail broker.

In another article, Jill Fisch, a professor of labor law at the University of Pennsylvania, in the name The GameStop frenzy in January 2021 is “perhaps the most high-profile example of the reemergence of retail investor participation in the capital markets, a marked shift from the increasing dominance of large institutional investors in these markets.”

This involvement has staying power, experts said.

Retail investors accounted for nearly 30% of stock trading volume in September 2025, according to data from Rosenblatt Securities; this rate increased from approximately 21% to 22% at the beginning of 2020.

“The volumes are crazy,” Cboe’s Kinahan said.

One popular narrative is that retail investors who participated in the GameStop phenomenon did so as a rebellion against Wall Street.

By aggregating and pushing up the prices of so-called meme stocks, including GameStop and other similar companies AMC — Individual investors have suffered huge losses among short sellers such as hedge funds who bet against such companies.

researchers in question This may be the first case of “predatory trading” among retail traders, in which a coordinated decision not to sell shares early drives up stock prices and potentially profits.

While there’s likely a “stick-it-your-man” element to the frenzy, some experts said investors are more motivated. Feeling of being left behind economically.

Instead, they said, it looked like a quasi-referendum on the financial distress eating away at Gen Z and Millennials.

“Our research…shows that the behavior of social retail traders is not just about a rebellion against finance or irrational risky bets.” wrote behavioral economists Richard Whittle and Stuart Mills, of the University of Salford and the University of Leeds respectively, in a 2024 article for The Conversation. “It’s about how today’s stock market reflects a new generation of investors who face very different economic pressures than previous generations.”

Whittle and Mills, along with study co-author Gavin Brown of the University of Liverpool, examined posts on the WallStreetBets Reddit forum and found that the average person in the WSB community required a return of at least 36% they feel satisfied with their investment – ​​much higher than the historical 10% return on stocks.

In other words, instead of taking a “dumb money” approach to the stock market, Mills told CNBC, they felt the need to gamble and hit big and get high returns to catch up.

“If you have the expectation that you’re going to be at least as wealthy as your parents, and suddenly the cost of housing is much higher than your family’s, the cost of education is much higher, you probably feel much less wealthy than your parents at that point in their lives,” he said.

Indeed, those who traded GameStop stock — in addition to being young and relatively inexperienced investors — had a history of engaging in risky trading, including lottery-like stocks and high-volatility securities. research By Hasso, Müller, Pelster and Warkulat.

“Speculation is in our DNA,” said William Bernstein, author of “The Four Pillars of Investing.”

There are also parallels between GameStop shares and other volatile assets held, such as cryptocurrency. mostly by young investorsexperts said.

But Eric Robbins, a certified financial planner and associate director of corporate support and research at Penn State Behrend, said GameStop is perhaps the “poster child” of younger investors who are turning to financial markets to “fix” their economic problems and can do so with ease given the proliferation of mobile apps and commission-free trading.

Unfortunately, Robbins said, such a strategy could blow up in their faces; This is often the case for investors trying to time the stock market.

For example, Hasso, Müller, Pelster and Warkulat found that with GameStop, some investors made “significant” profits, while those who came late to the party suffered huge losses. For example, the average investor who bought after January 25, 2021 lost about 13%, they wrote.

He said young investors have a huge perception of investment risk. Robbins said they started investing after the 2008 financial crisis and largely only saw returns from “gang busters.” The only significant decline since then has been He said the slump during the pandemic in 2020 was short-lived.

“Ask any finance professor and you’ll get the same boring answer: For most people, the best way to invest for the long term is to own a diversified portfolio of stocks,” Nobel laureate Richard Thaler, a behavioral economist at the University of Chicago and Owen Lamont, now a senior vice president at Acadian Asset Management, wrote in a 2023 paper. New York Times column About the GameStop saga.

On the other hand, Cboe’s Kinahan said the GameStop frenzy has fueled unprecedented interest in the stock market among young investors who might not otherwise show early interest in building wealth.

Bernstein also said they have many years on their side to correct course if they make a mistake.

“They will learn their lesson,” he said. “There’s nothing like getting hit in the head with a two-by-four financial blow to change your mind.”