THREAD,
Here is a copy of a letter to the "Wall Street Editor"
Allan Sloan of NEWSWEEK that I sent to him in regards to a
very emotionally biased article he wrote in the most recent
issue of NEWSWEEK. The intro was by myself and then followed
by a classic post from this thread.
The last part is his actual reply that I recieved today...
OZ
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Allan,
You should show less bias in your reporting. Do most people
lose money? YES.Can a well prepared, highly trained person
pull money out of the markets on a regular basis with almost
never a losing week? ABSOLUTELY. Should Day Trading shops
control their advertising (not make it sound so easy)? YES..
I myself am up 700% for the year. This is while maintaining
my day job and using a swing trading strategy. I will soon
leave my job and do this full time. Even with all my years
of trading experience, and subsequent success, I still have
not hurried into this "NEW" career. This is the proper way
to enter this business. Slowly and gradually. People that
jump into this business are by very nature of their JUMPING
style born to be losers and donaters to the trading gods.
===================================================
The following is a post from the DAYTRADING
FUNDAMENTALS THREAD by a fellow daytrader. Do you really
think the NASD and SEC are on a moral crusade or maybe just
trying to protect their turf. (can you at least consider
this)
regards,
Oswald S. Castillo
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"To understand what the SEC's war on daytrading is about
you must understand that the greatest monopolist of
information processing in the United States is not
Microsoft, it is the SEC. Just as Microsoft, the SEC
licenses the means of information flow, the difference
between them being...that the SEC can impose more
economic pain on those who threaten its monopoly.
Daytrading, which relies strictly on what is in the
market itself for information (rather than the order of
the integrated disclosure system) and the Internet whose
sources of information are democratic, anarchic and
wonderfully subversive are metaphors for the freedom to
identify as irrelevant the Commission's view of the
information which should be available to market
participants." This, by Saul Cohen, came from the link to
Momentum Securities that is posted next to the Fox news
article. There is a link, at the bottom of the Momentum
home page, to Saul Cohen's articles titled "The Empire
Strikes Back" parts 1 and 2. Cohen was featured on CNN's
Moneyline program the other night, and allowed to give a
brief rebuttal to the SEC's recent derogatory
publiccomments directed towards daytraders.
Unfortunately Cohen is generally not a plain spoken man
(he's an attorney for the Electronic Trader's
Association) and his writing and speaking style somewhat
obscure his very important message: That there is an
immense and concerted institutional effort to rein in
daytraders rather than cater to, or capitulate to, them.
And the SEC leans toward acting in the best interest of
the institutions rather than the people of this country.
They want "the people" to be happy with whatever returns
the mutual fund industry can deliver to them, while
reserving the larger profits for the institutions
themselves who are shepherding the herd's money.
Notice how Saul appropriately capitalizes the I in
Internet? What has happened in just the last few years,
thanks to the Internet, is the profit potential of the
institution has been eroding thanks to the volatility
provided by the new major players in the arena: the herds
themselves. Technology has beefed up the herd and it is
scaring the shepherds. Notice how reluctantly Goldman
Sachs and ilk are to enter the fray of Internet-based
information dissemination and trading? They obviously
would rather fight than switch, as the old tobacco
marketing slogan went. But faced with the mutiny of their
customers, their choices are quickly narrowing. They can
either lower their commissions and lose huge revenues, or
keep them high, and still lose evenues. What else do they
have up their sleeve (to use the gambling lingo they sooo
love)...Ah yes, the arm of the SEC. So the SEC is using
all the elbow grease they can to scrub the truth out of
the real story behind daytrading, and to try and somehow
wrest control back, away from the people's keyboards, and
into the hamfists of the institutions again. Capitalizing
on anything they can, from negative plugs in
sensationalized "news" articles, to press releases released
to coincide with workplace violence news stories, the
institutions and SEC are battling in a concerted effort to
use regulations to put daytraders out of business. But if
what they say is true---why bother to use regulations? If
what they say is true, won't daytraders all be out of
business soon? No, because their disinformation campaign
is false. The ranks of daytraders are growing, and only if
the market is once again rigged to give advantage back to
the institutions will the number of daytraders decline.
Yeah, it makes the institution's job harder, and profit
lower, because ECN's and the daytraders that use them
serve democracy by reducing spreads. Just like the
Internet makes it harder in general for multinational
corporations to take advantage of people. The
disinformation campaign is the main weapon available
in countries with free speech laws, to combat the
democracy provided by the web and ECN's. We will see
more and more restrictions proposed by the beltway
lobbyist puppets. A popular angle is "in the interest of
the children", or in the case of middle class adults
experimenting with daytrading, the angle is "to save them
from hurting themselves with this new powerful
technology". Watching the powers-that-used-to-be scramble
to recapture control is comical, and I have relished
reading the laughable parade of recent press missives on
daytrading, but am sobered, recalling these words of
Abraham Lincoln:
"The money power preys upon the nation in times of
peace, and conspires against it in times of adversity. It
is more despotic than monarchy, more insolent than
autocracy, more selfish than bureaucracy. It denounces,
as public enemies, all who question its methods or throw
light upon its crimes."
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SLOANS REPLY
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I don't care about daytrading one way or the other. As far
as I'm concerned, if people are foolish enough to think that daytrading is an easy way to make a living, they're free to
do what they want. I think the advertising is horribly
misleading and the day-trading firms prey off suckers--do
you have any idea how lucrative margin loans are for a
brokerage house?--but I've never said or implied that people
shouldn't be allowed to day-trade. I was just explaining how
difficult it is to do well. And, other than the tone I took,
which you undeerstandably don't like, I don't think there's
much in the article that you would disagree with.
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Allan Sloan Newsweek
Wall Street Editor sloan@panix.com
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