Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Richnorth who wrote (28890)	2/23/1999 11:13:00 PM
From: Alex	Read Replies (3) \| Respond to of 116836

Stock trading nears pace of '29 crash By David Rynecki, USA TODAY NEW YORK - Stocks are changing hands at a pace not seen since the year of the 1929 crash as more investors confuse brains with a bull market and turn into traders. Driven by a combination of phenomenal returns, low trading costs and easy access, the anything.com frenzy has heightened speculation across Wall Street. Turnover on the New York Stock Exchange in 1998 reached 76% - the highest level since it hit 119% in 1929 - and surged to an annualized 89% in January. Nasdaq activity topped 212% last year - more than twice the 1987 rate. Traders swarmed after Amazon.com, Dell Computer, Cisco Systems and a host of Internet upstarts. The shift in and out of stocks shows just how fickle investors have become. In what used to take years, entire generations of shareholders can be replaced in months by traders who have higher demands and little patience. "In a long bull market, everyone is a genius," says professor Terrance Odean at the University of California at Davis. "If you get people with a short-term perspective, they are not going to hang around if something goes wrong." Turnover - the rate at which annual volume exceeds shares outstanding - has risen consistently since the 1970s when fixed commissions were halted and lower costs began luring more people into the market. Recent soaring Internet stocks have helped turn buy-and-hold investors into short-term players. Even institutions are chasing shooting stars. Consider: •Among Nasdaq issues, Amazon.com turned the equivalent of its shareholder base over 50 times last year and Dell Computer flipped 6.7 times. On-line flea market eBay turned over 3.6 times in less than four months public. •NYSE issues were slightly more tame, with Compaq Computer changing hands 1.7 times and America Online 2.5 times. IBM, which has 923 million shares compared with eBay's 40 million, had a 0.9 rate. It is possible that in many cases only a fraction of available shares are trading. Much of the Internet frenzy, for example, is attributed to the low supply and high demand. But, says Morgan Stanley Dean Witter's Phil Roth, "The bigger the turnover, the more likely it is that a stock is being held by traders and the more dangerous it becomes for investors." Roth says the booming trading culture has thrust individual investors into a league in which they won't prosper for long. "The more trading they do, the more decisions they'll have to make and the worse they'll perform," he says. usatoday.com