Americans Mesmerized by Stock Market
Filed at 12:52 p.m. EDT
By The Associated Press
NEW YORK (AP) -- Claaang! A big brass bell signals the start of trading on the New York Stock Exchange. In the cramped tourist gallery, Linda and Tony Mallia and two excited grandsons are watching.
Fixing a cup of coffee at his gas station in tiny Springer, N.M., Jim Caldwell is tuning his TV set, watching. Colleen Astles, a nursing student from Georgia on vacation in Florida, is munching a bagel, and watching.
The longest bull market in history is mesmerizing Americans. Following the market and trading its stocks are national pastimes.
Kristin Smith, a cellist from Arkansas, is visiting the stock exchange, too. She has no stocks, but she acknowledges a vested interest. ''As the stock market goes, so do our fortunes,'' she says. ''It's really a seat of power.''
Stand with her at the corner of Wall and Broad Streets, and feel the allure of Pure Capitalism.
Twelve TV trucks wait daily outside the imposing marble building; more than 20 arrive when the news is really big. Visiting the NYSE was easy a few years ago. Now, tourists stand in lines that snake around the block.
First in line today are the Mallias, New Yorkers clutching the portfolio list of the grandsons who wait with them. They file into the gallery overlooking the trading floor. ''It's really wild-looking,'' says Ms. Mallia. Later, they wait three-deep at the gift counter to buy souvenir pens.
Stocks attract more than America's tourists. Investors check and recheck their numbers, following every winner and loser. Some carry pagers that scroll the stock ticker. Others quit their jobs to hunker over computers and trade all day.
With the rise of do-it-yourself retirement plans, Americans from janitors to CEOs control their financial futures. And with four years of double-digit returns, they're putting their money in stocks.
Jim Caldwell, 33, a ''low-risk kind of guy,'' invests in mutual funds, hoping to earn a little something to leave his three children. He follows such specific sectors of the market as voice recognition technology. ''It's kind of a hobby,'' he says.
Nowadays, like Caldwell, 43 percent of American households own stock, either directly or through mutual funds and pension accounts. Edward Wolff, an economist at New York University, charts the rise from nearly 25 percent in 1983.
About 160 billion shares changed hands in 1997, up 27 percent from the previous yea -- on the NYSE, its main competitor Nasdaq, the smaller American Stock Exchange and five tiny regional exchanges.
The bull market that preceded the 1929 crash also attracted many Americans. Books on investing and betting on stocks grew popular, says John Steele Gordon, historian and author of the upcoming book, ''The Great Game: The Emergence of Wall Street as a World Power.''
Still, at no other time has the market touched as many Americans as today. The poorest 40 percent of U.S. households now invests an average of $1,600 in stocks, up from $300 (in today's dollars) in 1962. Children are investing, too: Stein Roe's $1 billion Young Investor Fund has ballooned to 190,000 shareholders from 4,000 since it was created five years ago.
No matter that the wealthiest 10 percent of Americans still dominate, owning 82 percent of the value of all stocks. The stampeding market has made it possible for all to dream.
Online brokerages, trying to wrest control from Wall Street's elite, feed investor hopes with catchy ads. ''Someone's going to win the Lottery. Just Not You,'' warns an ETrade magazine ad. ''We just think waiting for those magic numbers to hit might take a while. At ETrade, we're used to things moving faster.''
A Discover Brokerage television ad, now nominated for an Emmy award, features a tow-truck driver boasting of his online-trading prowess. The punch line? He just bought an island.
''Some advertisements more closely resemble commercials for the lottery than anything else,'' scolds Securities and Exchange Commission Chairman Arthur Levitt. ''We ... should not get manic about the mania.''
Yet new millionaires do fuel the excitement. The 401(k) millionaires who never expected their retirement funds to fatten to seven figures. The paper millionaires, those 20-something Internet upstarts who sell their companies' stock. The investor millionaires who caught Amazon.com's meteoric run-up to $221.25 in April, then got out before it halved.
But in order to win, investors need to learn. And nowadays, they're hungry for market lore.
More than 108 new business and finance magazines -- nearly triple those of the early 90s -- are now published. Nearly 7,500 Web sites are geared to investing. Amateur investment clubs abound, doubling to 37,000 since 1995.
Mets fans now absorb a half-hour of financial buzz at each home game. Three other ballparks may match the 30-foot-long electronic signs in Shea Stadium's outfield.
New York's Times Square, so recently a porn pit, flashes the country's newest fetish: big stock zippers. Nasdaq plans a 14,000-square-foot sign at a reported cost of $25 million.
Each week, CNBC, a cable network entering adolescence, reaches 7 million homes -- plus offices, restaurants, airports, prisons, college dorms, hospital rooms.
Its reporters are unwitting celebrities. CNBC Anchor Sue Herera is shocked by the fame once reserved for rock stars. She's so besieged that she registers at hotels under her maiden name and asks her husband to pick up Chinese take-out.
''I'm trying to get out of there with my food, and the cook's asking, 'What's with Intel?','' she recalls, laughing, over a lunch of roast salmon near the network's studios in Fort Lee, N.J.
Meanwhile, in five cities, CNBC is televising its ''Power Lunch'' segment, attracting a crowd at each stop. Colleen Astles drove 30 miles from Woodstock, Ga., to Atlanta to see the filming. Each day, she checks her stocks via the Internet and catches three hours of CNBC.
''I'm watching it right now!'' she says, from vacation in Sarasota. ''If you buy a car, it depreciates. You buy Microsoft, and for the most part, it goes up, if you're in it for the long run.''
The long run -- that's the mantra of stock market gurus. Buy, then hold on to it. But the hopeful get antsy.
''You get crazed. You see the numbers always,'' says Ms. Mallia, the grandmother visiting the NYSE. ''Our broker told us to turn off CNBC.''
The longer a person has an Internet trading account the more trades he makes, according to NFO Worldwide, a research group based in Greenwich, Conn.
''People think if they're not active in the market, they're not doing the right thing. They feel they have to move,'' says Muriel Siebert, the Wall Street doyenne who in 1969 became the first woman to own a seat on the NYSE. She frets: ''It's been too easy.''
Nonsense, argues Tracey Curvey, head of the online brokerage at Fidelity Investments. The explosion of financial information is creating smarter investors, and technology offers them the opportunity to control their futures, she says. ''It's really about convenience and control, not about obsession.''
But for many, there is that thrill.
Zach Mader, a 20-year-old who studies the business of farming at the University of Nebraska at Kearney, believes there's money to be made in today's market, especially if you hold on.
Why, then, does he trade three, four, five times a week and follow 60 or 70 stocks each day? ''For the thrill,'' concedes Mader, who says his dad, a farmer, at first tried to discourage him from investing. ''It's kind of a gamble.''
Mader is keeping his head, not letting investing eclipse his studies. But others aren't. Last winter, National Discount Brokers, of New York, linked its Web site to netaddiction.com, a group that helps trading addicts.
In New York, uptown from the stock exchange, is Tradescape.com, an office strewn with soda cans, pizza boxes and coffee cups. There, day-traders, some of the market's most hard-core thrill-seekers, sit before computers.
The 6 million investors who trade online in their spare time far outnumber the estimated 5,000 day-traders nationwide. But both groups represent the extremes of market frenzy, propelling its success -- and notoriety.
Such day-traders are indelibly linked to Mark O. Barton, the day-trader with reported losses who killed 12 people in Atlanta, including nine at two trading firms.
At Tradescape, 180 traders, up from last year's 25, play the market's tiniest ups and downs. Jorge Linares, eyes glued to the screen and fingers tapping, buys 100 shares of Healtheon Corp., an Internet health care company, at $55.25. Seconds later, he sells at $55, losing a total of $25.
''It has the little rush, like the casino,'' says the 23-year-old, who has a new bachelor's degree in economics and art history. He watches as the stock falls to $53.37 1/2 and is jubilant that he didn't lose more.
This morning, he's already lost $3,000. ''I wouldn't want to do this when I'm 30, with a family and a wife,'' he says, typing constantly. ''When you're fresh out of school, you can take the most risk.''
Claaang! The bell sounds. The market closes.
On this day, Jim Caldwell saw Apple Computer rise $1.56 1/4 to $60.75. Colleen Astles tracked Home Depot, up $1.43 3/4 to $64.25. At the exchange, Linda Mallia watched Lucent Technologies as it rose $1.62 1/2 to $65.25.
Hey, tomorrow's another trading day. |
