These Days, Online Trading Can Become an Addiction
By REBECCA BUCKMAN
Staff Reporter of THE WALL STREET JOURNAL
2/1/99
When 28-year-old Jarrod Anderson of Fullerton, Calif., quit his job in the securities section of a bank last year to trade
stocks full-time on the Internet, he was so confident of success that he borrowed $40,000 from credit cards to build up his
brokerage account.
But the risky plan backfired. After two months tethered to his computer keyboard, Mr. Anderson says in an interview, "it
only took a few trades to really just wipe me out." Now deeply in debt and living at home with his parents, he recalls
dispiritedly, "It was sudden. I remember one day I was lying in bed in the fetal position, saying, 'What the hell did I do?' "
Mr. Anderson believes he simply got too greedy.
But some mental-health professionals say some of today's obsessed "day traders" -- not Mr. Anderson specifically -- may
actually be addicted to online trading. Mr. Anderson, who calls it "more like a hobby" than an addiction, last month divulged
some of his tale of woe on an Internet message board called "Daytrading and Stock Trading Addiction."
Glassy-Eyed Investors
It has become accepted wisdom that using the Web to rapidly buy and sell stocks, particularly volatile Internet issues
themselves, is highly speculative. But now, addictions specialists report, cases of glassy-eyed investors literally hooked on
cheap, easy Web trading are beginning to trickle into treatment centers and call gambling hotlines.
The Sierra Tucson center, a 63-bed behaviorial health-care facility in Arizona, has seen a few online-trading addicts. "We
have had some people who are compulsively using the Internet and also ... stock-market trading," says Michal Gorman, the
center's clinical director.
Mona Sumner, the clinical director at the Rimrock Foundation addiction treatment center in Montana, says some of her
patients are "adding it to their repertoire" of destructive behaviors. Counselors at both facilities say trading junkies, though
still relatively uncommon, normally seek help for other problems, such as alcohol, drugs or traditional gambling.
In New Jersey, the state's Council on Compulsive Gambling held a seminar at a statewide conference last fall that addressed
the issue of compulsive online trading. And Securities and Exchange Commission Chairman Arthur Levitt, who issued a
warning last week about the perils of online trading, acknowledges the druglike appeal of the new medium, which often
mimics professional-style action. In an interview last week, he called it a "kind of narcotic to people who fancy themselves
doing the same kind of thing."
Stumbling Bull Market
Addictions experts expect to see more online-trading addicts once the long-running bull market falters. In general,
compulsive gamblers "come out of the woodwork when the market crashes," explains Arnie Wexler, a certified counselor in
Bradley Beach, N.J., who runs gambling seminars for casinos, universities and other groups. "Up until that point they think
they're investors. And they think they're geniuses lately."
Therapists have been warning for several years about the addictive power of the Internet, from its alluring chat rooms to
fast-moving games to actual gambling sites. And counselors have long recognized that some compulsive gamblers act out by
trading stocks and options, instead of going to Las Vegas or the horse races.
So the rise of the Internet as a financial tool which, unlike a traditional flesh-and-blood stockbroker, is easily accessible and
always available "makes people much more susceptible to getting out of control," says Chris Anderson, who heads the
Illinois Council on Problem and Compulsive Gambling and counsels some online traders in Chicago. "It's like for the addict,
the pusher is right in your living room."
Mr. Anderson, the ex-banker who traded himself into debt, acknowledges that the high stakes and fast action of
sophisticated Web-trading sites, which usually feature constantly scrolling stock quotes and bright graphics, can be
impossible to ignore. "It's like playing missile command with your brokerage account," he says. "You start thinking, with
more information, I could make even more trades and make even more money."
Online Group Therapy
Such sentiments are commonplace on the "Daytrading and Stock Trading Addiction" message board on the Web site Silicon
Investor (www.techstocks.com), which sometimes seems to serve as a form of online group therapy for full-time traders.
The first message on the addiction board, from one Web investor, reads in part: "Are you mortgaging your house to fund
your brokerage? Are you tapping into credit cards to cover your margin calls? Is your family suffering because you are
neglecting their needs? Let's talk."
To be sure, most people who trade online simply use the Internet as a cheap, convenient way to manage their stock-market
investments. And most Americans now believe they must invest in stocks to prepare for retirement. People at risk for
developing an obsessive disorder are likely predisposed to addictive behavior, experts say.
Telltale signs of a problem could be spending 12 or 14 hours a day at the computer, hiding or lying about trading losses or
neglecting jobs or loved ones, says Kimberly S. Young, a clinical psychologist who wrote a book about Internet addiction
called "Caught in the Net." The Sierra Tucson center has treated patients who "spend inordinate amounts of time in front of
the computer screen monitoring their stocks, and every minutiae of every turn in the stock market," reports David Osinga, a
Sierra Tucson therapist.
Consider another message board on the Silicon Investor site. It's called "Working All Day, But Trading Behind the Bosses'
Back."
Paranoid Tendencies
Steven Mather, a 37-year old computer consultant from Tampa, Fla., trades stocks from his laptop for an hour or so each
day, but admits, "I get very paranoid when I can't get to a computer to watch what's happening." He gave up work to trade
full-time from his home for a few months last year-and promptly lost $35,000.
Is he deterred? No. "I'm planning on going right back in," Mr. Mather declares. "But I need more... . I'm not going back
without $100,000." Although he readily acknowledges he's a gambler with a penchant for blackjack and the local dog track,
he doesn't consider his online habit a problem. As he puts it, "I make a lot of money," and he claims to have hundreds of
thousands of dollars stashed in longer-term brokerage accounts.
Some members of the new, growing class of semiprofessional day traders, some of whom zoom in and out of stock
positions in minutes, argue that their frenetic activity doesn't necessarily equate to troublesome addiction. Most try to
approach trading like a career, or running a small business.
One day-trading guru, Harvey Houtkin, says day traders who lose money simply aren't disciplined and get carried away by
emotion. But counselors and clinicians say some of these people may actually be driven by addictive disorders. "It's more
difficult to help someone recognize the problem in stocks ... because the stock market is a socially sanctioned form of
gambling," says Mr. Osinga, the Sierra Tucson therapist.
Sports vs. Stocks
"People think, if you spend 12 hours a day obsessing about sports betting, you've got a problem," adds Keith Whyte,
executive director of the National Council on Problem Gambling. "But a person who spends 12 hours a day obsessing about
the stock market would, in many circles, be lauded."
Some online traders are philosophical about their mania. Thomas Carr, an Oxford-educated professor of philosophy and
religion at Mount Union College in tiny Alliance, Ohio, admits feeling a serious "adrenaline rush" after a string of successful
trades. That engenders "a sense of self-confidence that you might not be getting from your ordinary work, or your family,"
he says. Even though he checks his investments two or three times a day and spends several hours studying market trends
at night, Prof. Carr insists his trading habit is under control. As for those who trade risky Internet stocks even more actively
than he does, he notes: "Eventually, people are going to get caught on the wrong side of those trades ... I can imagine in the
future there will be, you know, stock-traders' anonymous groups." |
