In 1999, shares in Puma Technology, for instance, changed hands an average of once every 5.7 days. Despite NASDAQ’s grandiose motto-”The Stock Market for the Next Hundred Years”-many of its customers could barely hold on to a stock for a hundred hours.
THE FINANCIAL VIDEO GAME Wall Street made online trading sound like an instant way to mint money: Discover Brokerage, the online arm of the venerable firm of 38 Commentary on Chapter
Stocks on Speed
DoubleClick
CMGI Amazon.com e*Trade
Inktomi RealNetworks Qualcomm BroadVision
VeriSign Puma Technology
Average length of ownership (in days)
Source: Steve Galbraith, Sanford C. Bernstein & Co. research report, January 10, 2000. The stocks in this table had an average return of 1196.4% in 1999. They lost an average of 79.1% in 2000, 35.5% in 2001, and 44.5% in 2002-destroying all the gains of 1999, and then some.
FIGURE 1 1Morgan Stanley, ran a TV commercial in which a scruffy tow truck driver picks up a prosperous looking executive. Spotting a photo of a tropical beachfront posted on the dashboard, the executive asks, “Vacation?” “Actually,” replies the driver, “that’s my home.” Taken aback, the suit says, “Looks like an island.” With quiet triumph, the driver answers, “Technically, it’s a country.” The propaganda went further. Online trading would take no work and require no thought. A television ad from Ameritrade, the online broker, showed two housewives just back from jogging; one logs on to her computer, clicks the mouse a few times, and exults, “I think I just made about $1,700!” In a TV commercial for the Waterhouse brokerage firm, someone asked basketball coach Phil Jackson, “You know anything about the trade?” His answer: “I’m going to make it right now.” (How many games would Jackson’s NBA teams have won if he had brought that philosophy to courtside? Somehow, knowing nothing about the other team, but saying, “I’m ready to play them right now,” doesn’t sound like a championship formula.) By 1999 at least six million people were trading online-and roughly a tenth of them were “day trading,” using the Internet to buy and sell stocks at lightning speed. Everyone from showbiz diva Barbra Streisand to Nicholas Birbas, a 25 year old former waiter in Queens, New York, was flinging stocks around like live coals. “Before,” scoffed Birbas, “I was investing for the long term and I found out that it was not smart.” Now, Birbas traded stocks up to 10 times a day and expected to earn $100,000 in a year. “I can’t stand to see red in my profit or loss column,” Streisand shuddered in an interview with Fortune. “I’m Taurus the bull, so I react to red. If I see red, I sell my stocks quickly.” By pouring continuous data about stocks into bars and barbershops, kitchens and caf
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
0 comments ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment