Okay, which one of you ratted me out?
February 1, 1999
These Days, Online Trading
Can Become an Addiction
By REBECCA BUCKMAN
Staff Reporter of THE WALL STREET JOURNAL
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." |
