Semi-OT. BBC article on daytraders. [See the last paragraph for possible impact on GSTRF]
Monday, February 8, 1999 Published at 23:13 GMT
news.bbc.co.uk
All in a day's work
A new trading day dawns on-screen for many US investors
BBC North America Business Correspondent
Richard Quest reports on the boom in share trading
over the Internet in the US and problems it's
causing in an overloaded electronic 'day trade'
market.
What's in a day's work?
In the case of 25-year old Nicholas Birbas, a working
day means making around $10,000. That's the amount
he expects to earn from trading on the Internet.
He is is part of a new breed of investor who knows
nothing about the companies, doesn't care about the
balance sheet and even less whether it will still be
around next year.
Mr Birbas, and thousands like him, have learned the art
of trading on line. They spend all day in the internet chat
rooms like Tokyojoe or Silicon Investor swapping tips
and gossip. Then they trade buying and selling hour by
hour, watching for every small movement in the price.
"I just play on momentum"
he says. "When I see the
volume taking off,
fundamentals don't mean
anything at that point. I get in
and get out and just keep
doing that.
His ideal trade is around
2000 shares at $20 (for an
investment of $40,000) Then
he waits for the stock to rise
$3 or $4 and sells: An instant
profit of around $8000. Bibas
is a former waiter. "I used to make $500 or $600 a week,
I was on my feet all day, it was stressful. It wasn't good.
Now I work from home and make around $50,000 a
month."
The number of people investing like this is growing.
There are 5m Internet investment accounts in America.
And the number is forecast tripple in the next three
years. Although most don't 'day trade' there are certainly
more people investing more often.
Trading overload
And that's created huge problems for the systems. Last
Thursday, E*Trade, the largest online broker, had a
computer breakdown that effectively paralysed
thousands of accounts. No-one could buy, or more
importantly sell, positions they already held. It created
frustrations, anger, losses and without doubt law suits.
The US authorities are now worried. The New York State
Attorney General has launched an investigation into
on-line investment problems. And the main regulator the
Securities and Exchange Commission is only too aware
that investors are about to get burned.
Nancy Smith, the head of investor education and the
SEC said: "What is happening is that investors are
pouring their money into anything that has 'dot com' after
it. Nobody knows where it is going to end, who is going
to be standing at the end of the day."
Greenspan's warning
It was a point neatly made by the Chairman of the US
Federal Reserve Alan Greenspan, who on Capitol Hill
two weeks ago warned that some Internet stocks would
clearly succeed and make money but 'most would fail,
undoubtedly."
For those involved in the 'day trades' this is all in the future. Today there is another stock that's being ramped
and more money to be made.
And even if the Internet stocks bubble does burst they're
not worried. They can turn their new-found tools to other
sectors - bio-tech, cellular communications - merger
companies - after all, tomorrow is another trading day. |
