These Stocks Are More of a Gamble Than An Investment

As with seemingly everything in markets these days, it all ties back to the Reddit Wall Street Bets message board.

No, we’re not talking about GameStop (ticker: GME). Rather, Castor Maritime (CTRM). The dry-bulk commodities transportation firm was trading around 20 cents earlier this year until it was swept up in momentum as users of the message board recommended the company, sending shares as high as $1.95.

The stock was identified as a potential gamble using methodology from recently published research paper—from Alok Kumar of the University of Miami, Houng Nguyen of the University of Danang, and Talis Putnins at the University of Technology Sydney and Stockholm School of Economics. The group proposed looking at the average volume over 30 days compared to market cap as a way of determining what they called lottery stocks. “We assume that gambling in stock markets involves disproportionate amount of trading in lottery-like stocks,” they said.

Castor topped the research group’s list of New York Stock Exchange- and Nasdaq-listed companies that were potential “lottery stocks.” Barron’s added to a filter to the list to look at companies with market caps of at least $500 million and published the list in January.

We ran our version of that screen again this month. Castor Maritime topped our list this time.

Sundial Growers (SNDL), the cannabis stock, and Genius Brands International (GNUS), the children’s media company, appear high on the list too. The top NYSE-listed stock was AMC Entertainment (AMC), the movie chain operator that, with GameStop, became a poster-child for the so-called meme stock revolution.

And what about GameStop itself? It’s not in the top 20, but the methodology does put the video-games retailer high: Out of more than 3,000 stocks, GameStop ranks 128th as a lottery stock.

The stock scoring lowest in the lottery stock rankings was Google owner Alphabet (GOOGL).

Ranking	Company
1.	Castor Maritime
2.	Sundial Growers
3.	Genius Brands International
4.	TherapeuticsMD
5.	Ideanomics
6.	AMC Entertainment
7.	Ocugen
8.	Ebang International Holdings
9.	ElectraMeccanica Vehicles
10.	Workhorse Group
11.	Jiayin Group
12.	Invesco Mortgage Capital
13.	ChromaDex
14.	Transocean
15.	Gevo
16.	Bionano Genomics
17.	Clovis Oncology
18.	Nano Dimension
19.	W&T Offshore
20.	Tellurian
Source: FactSet

Australia is in the midst of a ‘baby recession’ with preliminary estimates showing the number of births in 2023 fell by more than four percent to the lowest level since 2006, according to KPMG. The consultancy firm says this reflects the impact of cost-of-living pressures on the feasibility of younger Australians starting a family.

KPMG estimates that 289,100 babies were born in 2023. This compares to 300,684 babies in 2022 and 309,996 in 2021, according to the Australian Bureau of Statistics (ABS). KPMG urban economist Terry Rawnsley said weak economic growth often leads to a reduced number of births. In 2023, ABS data shows gross domestic product (GDP) fell to 1.5 percent. Despite the population growing by 2.5 percent in 2023, GDP on a per capita basis went into negative territory, down one percent over the 12 months.

“Birth rates provide insight into long-term population growth as well as the current confidence of Australian families,” said Mr Rawnsley. “We haven’t seen such a sharp drop in births in Australia since the period of economic stagflation in the 1970s, which coincided with the initial widespread adoption of the contraceptive pill.”

Mr Rawnsley said many Australian couples delayed starting a family while the pandemic played out in 2020. The number of births fell from 305,832 in 2019 to 294,369 in 2020. Then in 2021, strong employment and vast amounts of stimulus money, along with high household savings due to lockdowns, gave couples better financial means to have a baby. This led to a rebound in births.

However, the re-opening of the global economy in 2022 led to soaring inflation. By the start of 2023, the Australian consumer price index (CPI) had risen to its highest level since 1990 at 7.8 percent per annum. By that stage, the Reserve Bank had already commenced an aggressive rate-hiking strategy to fight inflation and had raised the cash rate every month between May and December 2022.

Five more rate hikes during 2023 put further pressure on couples with mortgages and put the brakes on family formation. “This combination of the pandemic and rapid economic changes explains the spike and subsequent sharp decline in birth rates we have observed over the past four years,” Mr Rawnsley said.

The impact of high costs of living on couples’ decision to have a baby is highlighted in births data for the capital cities. KPMG estimates there were 60,860 births in Sydney in 2023, down 8.6 percent from 2019. There were 56,270 births in Melbourne, down 7.3 percent. In Perth, there were 25,020 births, down 6 percent, while in Brisbane there were 30,250 births, down 4.3 percent. Canberra was the only capital city where there was no fall in the number of births in 2023 compared to 2019.

“CPI growth in Canberra has been slightly subdued compared to that in other major cities, and the economic outlook has remained strong,” Mr Rawnsley said. “This means families have not been hurting as much as those in other capital cities, and in turn, we’ve seen a stabilisation of births in the ACT.”

These Stocks Are More of a Gamble Than An Investment

And the no.1 Is a Reddit favourite.

Continued stagflation and cost of living pressures are causing couples to think twice about starting a family, new data has revealed, with long term impacts expected