Ish Lukhey was 16 years old and working a part‑time job at a gas station when he opened his first brokerage account under his mom’s name. His interest stuck, and by the time the pandemic shut down in-person classes, he was a freshman in college. Cooped up in his parents’ house in Minnesota, Lukhey continued trading, but now on his own account with Robinhood Markets Inc.
At the height of the Reddit-fueled r/wallstreetbets frenzy in early 2021, when retail traders drove a surge in meme stocks such as GameStop Corp., the conventional wisdom was that someone like Lukhey would eventually grow bored of watching lines on a screen once classes, dates and parties resumed. But Lukhey, like many others, didn’t stop. He joined the subreddit r/TheRaceTo100K, a community for those pursuing a $100,000 net worth, which has more popular seven- and eight-figure variants. The now 23-year-old fashion retail salesman had found a community that encouraged his ambition to trade his way toward starting his own business and buying a house.
“With how expensive life is, it is difficult for people to accomplish the goals that they want to accomplish,” Lukhey says. “You used to be able to with just one high or medium-to-high income. And I think as people start to realize that, then you have to look at, what are the vehicles to increase my net worth?”
Gambling is a perennial human passion; even our ancient ancestors were casting animal anklebones to see which side they landed on. But in modern US history, the line between investing and gambling has rarely been more blurred. The share of stock volumes of retail investors has doubled over the past 15 years, Bloomberg Intelligence estimates. Once quaintly dubbed mom-and-pop, they’re also a major driver behind the record option volumes, especially in short-term contracts, where bets look cheap but are far more volatile. Cryptocurrency remains a $2.5 trillion-plus asset class even after multiple high-profile scams and selloffs. Sports betting is effectively legal across all 50 states, and if you want to wager on which nicknames the US president will use on his enemies, or how often Elon Musk posts on X each week, you can do that too.
Social media and the gamification of trading have played a decisive role. But to Lukhey and others, riskier bets are a rational response to the state of the US economy, in which wealth inequality is worsening, the dream of homeownership is increasingly out of reach, and artificial intelligence is expected to replace many high-income jobs. In that context the point is less entertainment than advancement.
For many, simply holding an index fund — widely touted as a safe path to wealth — isn’t enough, Lukhey says. Even with the S&P 500 returning roughly 11% annually during the past two decades — a strong run that’s boosted the wealth of older Americans — those gains mean little for people starting from zero.
“A 10% return will be a little bit nicer with higher capital to start,” Lukhey says. “But for what I’m trying to do in my financial goals, I had to see much higher returns than that.”
In what he calls “campaigns,” Lukhey likes to buy call options on large-cap stocks that overreact on the downside to bad news. Mastering these derivatives isn’t simple. From YouTube and other internet resources, he taught himself theta, gamma and delta — the Greek letters used in options pricing. “I lost money, especially starting out,” he recalls. “You have to pay the tuition, and it’s been great since then.”
Some might call him a degen — online shorthand for “degenerate,” reflecting a culture of risk-taking — and his attitude “financial nihilism,” an idea popularized by podcaster Demetri Kofinas. In a 2025 survey by the Financial Industry Regulatory Authority, which oversees brokerage firms, about a third of investors — and 62% of those under age 35 — said they need to take big risks to reach their financial goals. Among that younger cohort, 29% reported buying meme stocks or other viral investments, 43% traded options, and 22% invested using borrowed funds. In another study, by insurer Northwestern Mutual Life Insurance Co., 80% and 75% of Gen Zers and millennials, respectively, said they’re drawn to speculative investments because they feel financially behind.
The psyche of the degen is consistent with behavioral economics. According to what Nobel laureate Daniel Kahneman and Amos Tversky dubbed prospect theory, people overestimate low probabilities and become more risk-seeking when they feel they’re falling behind. A 2025 academic paper titled “The Inflation Gamble” showed that demand for lotterylike stocks — highly volatile shares prone to rare, outsize gains — rises with costs of living. In classic economics, inflation should make such bets less attractive as the value of future incomes becomes less certain.
Some recent studies suggest this kind of risk-taking may be especially popular among people who are just narrowly cut off from homeownership. Researchers Seung Hyeong Lee at Northwestern University and Younggeun Yoo at the University of Chicago observed that financial surveys show crypto holdings among homeowners rising steadily with wealth. Among renters, however, participation peaks in the middle-income bracket. Similarly, as local housing becomes less affordable, households in the lowest and highest income quintiles pull back from risky assets, while those in the middle — likely with some savings but not enough to buy a home — lean in.
To test that idea, the scholars built a statistical model to trace how behavior shifts as the likelihood of homeownership changes among Americans born in 1990. Their findings suggest that once renters give up on buying a home, they consume more, work less and take on more financial risk.
“It seems like they’re trying to gamble their way into housing once they start to realize that the traditional method of working hard, saving for it, making a safe investment is no longer guaranteeing you the path to the American dream,” says Yoo, who’s 30. “What’s going to happen when all this generation gives up as a whole?”
Others view the affordability crisis less as a cause than an excuse — one that’s allowed retail brokerages to tap into a natural human appetite for gambling, making it feel fun, accessible and lucrative. Robinhood once celebrated a user’s first trade with animated confetti, a practice it abandoned after criticism that it had turned investing into a game.
Some trading platforms have tried to appeal to the financially insecure directly. In a TikTok ad, Kalshi Inc. showed a young woman with the caption “POV: I was about to be unable to pay my rent, but I got two years of rent through Kalshi’s predictions. It’s amazing!” The ad drew backlash, and the company’s head of enforcement Robert DeNault says it came from a third-party provider and Kalshi cut it after learning of it.
A 2024 Federal Reserve working paper showed that, as a whole, millennials are better off than Gen X. But research published in the American Journal of Sociology also found that wealth disparities have widened over time, with inequality among millennials exceeding that of comparable baby boomers. To Timothy Fong, a clinical professor of psychiatry at the University of California at Los Angeles, who treats addictive behaviors such as gambling disorders, the rise of degens stems less from the need for financial stability than from the desire to enjoy the moment and emulate the luxurious lifestyles that have become ubiquitous on social media.
“Young people view financially risky things as a solution,” Fong says, and “not as something to be cautiously stepping into.” Even so, he agrees that amid climate change, AI and affordability concerns, a kind of doomerism may be contributing to the embrace of risk.
Preston Coots remembers the first time he hit it big. On his 19th birthday, he was doing some yard work for his mom when a microcap stock he discovered on Reddit — Genius Brands International (now Kartoon Studios Inc.) — spiked 10% within 20 minutes of him putting his entire life savings of $3,000 in it.
Coots, who lives in Phoenix, had bought his first stock only shortly before that experience (it was Walt Disney Co., because Disney+ was about to be released), and he’d never gambled or gone to a casino. “When you hit a jackpot or whatever they call it there, that’s probably what it feels like,” the now 25-year-old recalls. “I felt like a genius. I just created money out of nothing.”
For years he chased the same high with penny stocks, crypto and options. As losses deepened he took more risks, even putting his Covid-19 stimulus check into his Robinhood account and borrowing from his brother. Coots got wiped out again last year, when US tariffs spurred a stock market selloff. He still prefers picking stocks to investing in indexes, which he says he worries are too concentrated in the AI boom.
When his recent gains took his six-year return to a cumulative 30% or so, Coots posted the chart on r/wallstreetbets. During the same period, investing in the S&P 500 would have roughly doubled his money. “It was a bit of a flex even though my performance is actually terrible,” he says. “I hope somebody sees that and says, ‘I’m going to stop doing degenerate stuff.’ ”
Academic evidence on retail trading is almost uniformly discouraging. Individuals tend to trade too frequently, incur high transaction costs and fall prey to hype and overconfidence. Research by Brad Barber, a professor emeritus of finance at the University of California at Davis, shows retail investors often buy into surging assets at their peak. A 2014 paper he co-authored found less than 1% of day traders are consistently profitable. Even in newer arenas such as prediction markets, early evidence by other academics points to a similar pattern: a preference for long-shot bets, often accompanied by costs that erode gains.
“A lot of these behaviors are fueled by social media type of addictive behaviors: stimulating the rewards that come with a quick gain,” Barber says.
The market environment of the past decade has made distinguishing luck from skill more difficult, feeding the familiar meme of a man pointing at himself in the mirror and insisting, “It’s not the bull market. You really are a genius.” The question now is whether another prolonged downturn would deflate retail trading as it did after the dot-com bubble.
> “There’ll be a lot of people looking for ways to earn more money, right?”
Reid Johal, a Canadian who divides his time between Vancouver and Sydney, first discovered crypto in 2016 when he visited a cousin in Bellevue, Washington, who worked as a security officer but was mining Bitcoin at home. To Johal, who’s 26 and now trades full time, the rise of retail trading has made the market more reactive to hype and trends in a way that benefits speculators like him.
“When you have stuff on TikTok and trading narratives and momentum and stuff like that, you can kind of just trade without needing to understand complicated cash flows or have any sort of degree,” he says. “It’s a momentum market.”
He considers financial trading this generation’s lottery ticket — the “new age American dream,” he calls it — which will become even more popular as AI spurs job losses. “Will people all come to trading?” he wonders. “There’ll be a lot of people looking for ways to earn more money, right?”
Allison Schrager, a senior fellow at the Manhattan Institute policy think tank, points out a contradiction at the heart of the phenomenon among Gen Zers. Away from the trading apps, they’ve been documented as being more risk-averse: They date and drink less and are less likely to move, change jobs or start a business.
While some economists attribute the behavior to a lack of opportunities in today’s economy, Schrager sees it as part of a multigenerational trend in which productive risk-taking has declined in part as society grows wealthier. Instead, she says, the proliferation of speculative investment products has enabled a dash for long-shot bets, which can easily backfire.
“My concern is, if this is how people are channeling their risk-taking activities, and these have a low probability of paying off, you do sort of entrench that,” says Schrager, who’s also a columnist for Bloomberg Opinion. “I’m worried it will leave people sour and taking less productive risk.”
Coots and Lukhey, who’ve been trading on Robinhood for several years now, see it differently. They both consider their activities an intermediary step to their true ambitions. For Coots that’s a startup in lunar infrastructure. For Lukhey it’s a bit more vague — “investing in an opportunity that comes my way that’s tangible as opposed to just the numbers on the internet,” he says. But he also wants to retire early.
“I want to have the freedom in my life to pursue anything that I would like to pursue,” Lukhey says. “In a capitalistic society, you have to buy your freedom.”
Lee and Wang cover cross-asset markets from London and New York, respectively.