FYI (see last paragraph):
Anybody we know?: "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."
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