House of cards

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   By Guest Blogger Ryan Lewenza

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Thankfully, I never caught the gambling bug. I’ve never been to Las Vegas, nor have I ever gotten much of a rush from gambling, despite growing up in a city with a large casino. Maybe it was having a hard-nosed father who constantly stressed the importance of financial responsibility and saving for the future. Or perhaps it comes from watching friends and acquaintances get swept up in gambling, only to see it take a devastating toll on their lives. Whatever the reason, it never appealed to me, and I feel fortunate for that.

These days, however, I seem to be in the minority. Gambling has infiltrated almost every corner of modern life, whether it’s betting on the ‘ponies’, wagering on the Blue Jays, buying Trump’s meme coin, or speculating in prediction markets. In many ways, the entire investing landscape is beginning to resemble one giant casino.

In this blog, I’ll examine how speculation has become rampant in today’s markets, and why savers and investors are better served focusing on high-quality businesses in the equity markets and building wealth patiently over the long term.

Trump meme coin price chart…ouch!

Source: Coinbase.com

Let’s look at some examples.

One of the hottest trends in finance and online betting right now is the rise of prediction markets, dominated by platforms like Kalshi and Polymarket. Kalshi seems to be everywhere these days. The company operates an exchange where people can trade contracts based on the outcome of future events. Users essentially buy “yes” or “no” positions on questions ranging from “Which party will win the midterm elections?” to “Will aliens be officially confirmed by the U.S. government this year?” or “Will President Nicolás Maduro be arrested by U.S. authorities?”

There are several issues with this growing trend.

First, we are increasingly betting on virtually anything and everything, and that is bound to end badly for many people. While some people will undoubtedly make significant profits, countless others will be speculating on outcomes driven largely by chance, in areas they know very little about. In many cases, the odds are stacked against them from the start.

Second, some of these markets create situations where participants could potentially influence the outcome of the wager itself, posing risks to society. For example, Kalshi at one point offered contracts tied to whether a wildfire would occur by a specified date. It is not difficult to imagine a disturbed individual placing a large bet and then attempting to influence the outcome. Beyond that, there is something morally troubling about betting on tragic events. Someone stands to profit from a family losing its home in a wildfire. What does that say about us?

Third, prediction markets can be vulnerable to insider information. Individuals with privileged knowledge may be able to profit at the expense of ordinary participants. Recently a speech writer for President Trump was charged with placing bets on Kalshi based on inside government information. And a US soldier made over $400,000 on the knowledge that the U.S. was going to make an attempt to grab and arrest President Maduro. This creates an uneven playing field and raises serious questions about market integrity.

Despite these concerns, people are flocking to prediction market platforms in record numbers. As the chart below illustrates, trading volumes have exploded as more investors, speculators, and gamblers enter the market. Whether prediction markets become a valuable forecasting tool or simply another form of gambling remains an open question, but their rapid growth suggests they are here to stay.

Prediction market volume hits all-time highs

Source: Artemis

Next up is the explosion in very short-term options known as zero-day options, or 0DTEs. These are options contracts that expire on the very same day they are traded. In many ways, they’re little more than a lottery ticket on whether a stock, bond, or market index will rise or fall over the course of a single trading day.

Options were originally designed as risk management tools and traditionally traded with expirations 30, 60, or 365 days into the future. Over time, however, there has been a clear shift toward increasingly shorter-dated contracts. The introduction of weekly options marked a significant change, and today the market has evolved to the point where options can expire within a single trading day.

Not surprisingly, trading volumes have exploded, as shown in the chart below. These products were created to give investors the opportunity to trade and profit over a very short period of time. The flip side, and the far more common outcome, is that investors lose their shirts as their options rapidly decay in value and become worthless within hours.

To me, 0DTEs are another sign of the growing speculation infecting financial markets. Increasingly, people are looking for quick hits and instant gratification rather than long-term wealth creation.

Zero-day options as a percentage of S&P 500 option trading volume

Source: Bloomberg Intelligence

Rather than engaging in what is essentially gambling, savers and investors are generally better served by taking a long-term approach to investing in the stock and bond markets. The focus should be on owning high-quality businesses with durable competitive advantages, strong balance sheets, and the ability to consistently grow earnings over time. These are the types of companies that can reward shareholders with steadily rising dividends, providing both income and capital appreciation.

A case in point is Royal Bank of Canada, arguably one of the strongest banks in the world. Over the long term, Royal Bank has delivered exceptional returns for shareholders through a combination of share price appreciation and a steadily growing dividend. As the chart below illustrates, the bank’s dividend has risen consistently over time, alongside the growth in its share price, demonstrating the power of investing in a high-quality business.

Investors can take this concept a step further by owning a diversified basket of high-quality companies through a low-cost ETF. This approach provides exposure to a basket of different companies resulting in a more diversified portfolio.

It may not be exciting, nor provide for scintillating conversation at a dinner party but history has shown that patiently investing in high-quality businesses is one of the most effective ways to build long-term wealth. By remaining disciplined, avoiding speculation, and allowing the power of compounding to work over time, investors can significantly improve their chances of achieving their long-term financial goals.

Or you could invest in Trump’s meme coin, or place a bet on whether the Maple Leafs will make the playoffs next season.

Royal Bank dividends (lower panel) and share price (upper)

Source: Factset, Turner Investments

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

Source: https://www.greaterfool.ca/2026/08/08/house-of-cards-2/