Shreyas Hariharan wrote a great post, Investing as Entertainment. Highly encourage you to read it (go on, I’ll wait).

In the post, Hariharan makes the case that there is a big difference between “investing for retirement” and “investing for sport.”

Robinhood isn’t competing with Interactive Brokers and Charles Schwab. It is competing with Netflix and TikTok. DeFi has built an even better casino than Robinhood and Wall Street. Besides the profits and the novelty, people are attracted to DeFi because it is entertaining. DeFi is an e-sport.

Hariharan makes a super point.

Real investing is about accumulating new capital very slowly. It is about using the power of compound interest. As Charlie Munger reminds us, when he was younger his goal was to get rich SLOWLY. Real investing is very, very boring.

In fact, the best strategies for real investing start with the word “passive.” Even the best funds for retirement investing are called “passive” funds. It is about getting low fees so you can get rich … but get rich slowly.

But now-a-days, many people don’t want to be passive. They want to be part of the story.

Watching a movie, while incredibly rewarding, is very passive. And people that like watching movies or curling up with a long book are likely highly correlated with people that engage in long-term passive investing.

By contrast, playing video games is very active. You are part of the story. Sometimes, you ARE the story. And people that play video games are likely highly correlated with people that want to be more part of the story when investing.

When you are part of the story, then you are very likely betting and not investing.

Most people bet on sports because they want to be part of the story. It is really fun. Very few of us will ever get to hang out with LeBron James, but we all can bet on basketball games. We even can run a fancy parlay bet and make watching the NBA finals even more fun.

Super fans love to bet … because they are now no longer just passive spectators … betting transforms them to active participants. And that is what more people that play video games regularly want to be. Being passive is boring.

This is why people even bet on the Academy Awards or the Grammys … the primary goal is not to make money but to be part of the broader story.

Which brings us back to Hariharan’s astute point … betting on stocks is fun. It is entertaining. Yes, some people do get rich by betting on stocks but most just do it because it is fun. They get to be part of the action. They might never get to hang out with Elon Musk in person but they can buy an option in him.