Back when Maria S. was married, before she gambled away $3.5 million, she was a stock market addict, a fool for the action. At Advest Inc., the securities firm where she worked, she traded all day, then went home and thought about stocks all night. She wore earphones to bed so she could tune in to the radio and listen to the stock market reports. She didn’t even take them off for sex. “I had the headset on, and I’d be listening to the news while my husband, a gynecologist, was making love to me,” she said. “He’d ask me what I was doing, and I would tell him it was music. I told him it put me in the mood.”
Maria was way ahead of her time. She was a stock market junkie before it was really possible to be one. She could not trade at night. She could not trade at home. So she took up gambling and ruined her life that way instead. Now, at 56, she’s a homeless ex-con who attends regular Gamblers Anonymous meetings in a midtown Manhattan hospital (hence the anonymity). Yet still she fantasizes about stock trades she’d like to make. “Now I play high-stakes bingo because I can’t do what I used to do. I’m broke and I have a felony conviction.”
Most people don’t have that problem.
Accessible now to anyone with an Internet connection and a credit card, the stock market has become a universal distraction, a ubiquitous entertainment, a sanctioned narcotic. You are either plugged into it or made constantly aware of how foolish you are not to be. In hospitals and schools, in dens and kitchens, the amateurs are mainlining stocks. They have one eye on their day job and the other on their stock portfolio, posted in red and green on their computer screens. Once a barometer of the country’s work, the market now is yet another way to play.
Last April, just before TheStreet.com, the financial Web site, was set to go public, Barbra Streisand, who in recent months has achieved some success and media attention as a savvy stock trader, called up the office of TheStreet.com’s chief executive, Kevin English. Ms. Streisand wanted in on the I.P.O. At the time, people were clamoring for shares. But Ms. Streisand had something special to offer: four tickets to one of her concerts in Las Vegas. Mr. English told The Observer he never spoke to her directly, but he said that his secretary, a huge Streisand fan, had another idea: an intimate dinner. So in exchange for an allotment of shares, Ms. Streisand agreed to dine privately with Mr. English, his wife, his secretary and a few others. She was given what Mr. English termed “a very modest amount” of stock at the offering price, through the Friends and Family program.
The offering came and went. The stock popped. But Mr. English never heard from her again. They never got their dinner. Ms. Streisand, however, got a piece of a hot I.P.O.
“I feel a little bit used in that respect,” Mr. English said, “but it was pretty amusing, anyway.”
In all likelihood, Ms. Streisand, who could not be reached for comment, flipped the shares and netted no more than 10 or 20 thousand bucks. But she was in on the action, playing like a Wall Street big shot, drawing on her name, dipping into the favor bank.
Most civilians don’t get to have that much fun, but they manage to get their kicks nonetheless by moving in and out of the market, at work or at home.
“Everyone here just trades all day,” said an executive at a real estate investment firm. “I walk into their offices and bust them all the time. They’ve got the screen up, I walk in, they click it off and pretend to be working. Everyone I know is doing it. It gets to the point where you feel like a loser if you’re not playing the market.”
Some people have quit their day jobs to trade; others are trying, with varying degrees of success, to juggle both. They are entranced by the market’s gyrations and enticed by their ability to profit from them. The market is a soap opera, but one in which they themselves get to be characters. It is pornography in which they can participate. There is the action itself, which is addictive in its own right, and then there is the prospect of money, real money, big money.
“All these guys who say they’re going to become successful traders, it’s like a kid who runs away to Hollywood and thinks he or she is going to be discovered,” said Alexander Elder, a trader, psychiatrist and author of Trading for a Living . “And it happens: Every now and then, someone becomes Marilyn Monroe.”
But look what happened to Monroe.
According to an SIA/Investment Company Institute survey, nearly 50 percent of U.S. households own stock, and nearly 6.3 million of them trade on-line. One-quarter of all U.S. household assets, almost $11 trillion, is invested in the stock market, up from just 10.5 percent of assets in 1988–fueling the Dow’s ability to hover above 10,000, even on bad days. Some $10 trillion worth of stock has changed hands on the Nasdaq and the New York Stock Exchange since last year. And viewership of CNBC business news is up 20 percent.
So far, the obsession is a daytime phenomenon. As it stands now, most investors can only trade during the stock market’s traditional trading hours, from 9:30 A.M. to 4 P.M., though a number of on-line trading networks are now beginning to offer extended trading hours. But soon the New York Stock Exchange and the Nasdaq stock market will extend these hours. By next summer, the trading day could be five hours longer. (There’s also talk of adding morning hours.) A 24-hour American stock market is inevitable. The specter of the endless trading day, of sleepless drones tracking their stocks through the night, threatens to derange anyone with even a passing affection for money. Civilization has not seen such a potentially disruptive development since the mass bottling of spirits.
The end of the day, that quaint little concept, will become extinct with the passing of the millennium. Call it the end of the end of the day.
I trade between patients,” said David Gleitman, a Brooklyn podiatric surgeon. A nurse held a cell phone to his ear as he scrubbed down before surgery. “I’ve been trying to get the anesthesiologist to replace the EKG monitor with a ticker, but we don’t know if that’s gonna fly.” He said he’s been trading on-line for two years. According to his own calculations, he returned 350 percent last year but is up only 20 percent this year. (AOL is killing him.) He made a fortune on Dell Computer Corporation. He also trades three accounts he set up for his kids. “I can compartmentalize. After I’ve finished giving the discharge orders to the patient, I make sure they’re O.K. Then I say, ‘O.K., let’s see what’s going on in AOL.’”
Another doctor, a Manhattan internist who preferred to remain anonymous, admitted, “I have the market on the brain. I sit and watch it go up and down. I’m happy when it’s up, I cry when it goes down. I follow my stocks on the computer in my office. I always have it on Yahoo in the office and on AOL at home. My colleagues in medicine, we call each other during the day to talk about it. You know how every time you press the button, you get the little quotes? You know, you click on ‘refresh’ and get the latest price? So we always say on the phone, ‘Is it a refresh day, or a do-not-refresh day?’”
Despite the bull market, he has known too many of the latter. His biggest debacle was Oxford Health Plans Inc., a managed health care company. He bought OXHP at $7 per share. He held on to it for almost five years as it climbed up to almost $90. But then Oxford got into trouble with doctors and regulators, and the stock cratered. The internist sold it at $5 per share. “I got nauseous–literally, vomiting and diarrhea,” he said. “I just don’t have the stomach for it.” Yet he cannot tear himself away and fears that as the trading day turns into trading night, he will be there, watching the action. “It will just be more time that I’m wasting doing this.”
“Today I almost had a fucking heart attack,” said Tony, a Nasdaq trader for a bulge-bracket brokerage firm. It was Thursday night, Aug. 5, at Moran’s in the World Financial Center and the tall, thin 28-year-old was still recovering from a volatile day on the desk. “Nasdaq was down 65, then it was up 25 points. How the fuck do you explain that? You watch the stocks going up, you don’t know why, you watch them going down, you don’t know why. No one knows what’s going on.”
It was starting to get dark, but the trader kept his sunglasses on. “I have fucking nightmares,” he whispered. “Fucking Amazon dropping 15 points. Then I wake up, and I’m dreaming. But Amazon went up six points today, and I made a lot of money.”
Tony’s nightmare may soon become his reality. He and everyone else who owns or trades stocks will have to deal with the prospect of waking up in the middle of the night to find that their beloved Amazon has betrayed them. Threatened by competition from foreign markets and on-line trading networks, the Nasdaq and the New York Stock Exchange have been weighing plans to extend trading hours late into the evening. The Big Board hopes to have extended hours in place by next summer, the ultimate goal being a full-service, around-the-clock market.
Four committees convened by the exchanges are currently trying to figure out how to make it work. The problems are thorny–staffing, execution, liquidity, settlement, compliance, oversight, the timings of news announcements, the prices used to assess performance. But regardless of how the exchanges end up structuring it, one thing is certain: The well-remunerated 9-to-5 trading day, with the morning paper at one end and happy hour at the other, is doomed to give way to a never-ending march of portfolio angst, a perpetually nagging sense that one is missing the action and squandering opportunities.
In many ways, the financial industry operates around the clock already. Down on Wall Street, town cars idle through the night as the investment bankers churn out their comps upstairs and the guys on the night desk trade in and out of the yen. The real players can trade Europe and Asia, index futures, Globex, foreign currencies or baseball cards at all hours. But the stock market–the economy’s flagship–shuts down at 4. For 17.5 hours a day, most investors can’t trade stocks. And stocks are the things they care about. Yahoo, Gillette, Coca-Cola and Amazon.com are like family.
As it stands now, all the people whose livelihoods depend on the market–traders, day traders, salesman, brokers, specialists, portfolio managers, publicists, CNBC correspondents, stock-table clerks–get a chance to knock off for the day. After the concentrated frenzy of the open marketplace subsides, a reflective calm settles over an entire industry. It is a time for analysis, children, alcohol.
But not for long. Whoever wants to continue living the way they do now will have to do so knowing that others like them are still trading.
“You’ll never be able to relax,” said Park Duncan, a portfolio manager at Hovey, Youngman Associates Inc. “It’s nice to turn off the screen at the end of the day and know that there’s nothing going on behind your back. With all the TV sets in restaurants and bars, I won’t be able to stop thinking about stocks.”
“We turn off the TV during dinner,” said David DeRosa, an adjunct professor of international finance at the Yale University School of Management and a Bloomberg columnist who trades foreign currencies around the clock from his home in New Canaan, Conn. “I actually wouldn’t mind having it on [at all times], but my wife doesn’t, you know.… we wanna talk to each other then. Later, you know, I’m usually flipping around. My family is not even aware of it, that I’m checking prices and stuff.” He has a Bloomberg terminal in his garage office and one in the house as well. “I go to bed like everyone else. But often I’ll wake up in the middle of the night and just go have a look. I’ll wake up at 3, I’ll make a couple of phone calls, look at some screens and then at four go back to sleep.” He said he sleeps soundly between 4 and 6. “If you weren’t addicted to the market, if you didn’t love this stuff, this would be a perfectly miserable existence. It’s like being a livestock rancher in that you can’t go anywhere. The market is your constant companion. I happen to like that.”
Dr. Gleitman said: “My wife knows that when I am on the computer I have to be left alone.” He is aware that he perhaps gets left alone too often. “That’s the thing: I have to spend more time with my family.”
“I find that in terms of focus and concentration and intensity, trading is like making love, ” said Dr. Elder, who is 49 and single. “It’s really best done in private. Traders tend to be very ashamed when they lose money. When a person loses money, it’s as if someone told them their genitals were too small. They just want to cover up, walk away and never see your face again.”
Back at Moran’s, on a different night, a balding bond trader named Paul, dressed in khakis and a pink oxford, was outside drinking a beer. He was thinking about extended hours and his own stocks, the ones he pays too much attention to when he’s supposed to be trading bonds. “It’s gonna suck,” he said. “You’ll have more time to worry. When you personally own a stock and it’s getting the shit knocked out of it, it’s very stressful. If Sun Microsystems gets hit, you freak out.” He ordered a second beer. It was 7 P.M., the sun was still high over the far shore of the Hudson, and Sun Micro was not going to get hit. Not tonight.
Nearby, another trader, who wouldn’t give his name or the company he worked for, agreed. “It’s the worst thing that could ever happen to anybody. We’ll have to work late every night. Whoever wants this, if you want to bitch about something, bitch about not being able to go to the doctor at night.”
As one hedge fund trader put it: “I guess this is good if you’re the dry cleaner and you want to go home and trade after you close up. But hey, guess what, I want my dry cleaner to be open 24 hours a day.”
Maybe the dry cleaner will have to stay open. Delis, restaurants, gyms, drug dealers, call girls: They’ll all have to adjust. Where there are people making money, there is money to be made.
“With the Wall Street guys, it’s usually like a daytime thing,” observed Jessica, who said she oversees 50 employees at Glamour Escorts. She wouldn’t give her last name. “It gets busy at night, but I tend to see moreso the blue-collar guys. I prefer to deal with the suits more. If they extend trading hours, hopefully my clientele from the day will spill over into the evening.”
But the securities industry, for the most part, doesn’t like the idea as much. For brokerage firms it will mean more work, more hassle, without much payoff. In a June 2 letter to New York Stock Exchange chairman Richard Grasso, James Cayne, the chief executive of Bear Stearns, urged caution: “If there is any possibility that longer trading hours could result in erratic prices and poorer quality markets, investor confidence could be diminished and all of our markets … could suffer.”
“The price of a share of stock is not set like the price of a can of peas,” Mr. Cayne wrote in his letter. “Securities prices are set by contemporaneous supply and demand where investors actually benefit from ‘crowding together’ at the same time since supply meets demand. The strength of the N.Y.S.E. auction market in particular is due to the aggregation of customer orders. Could extended trading hours seriously weaken this structure?”
Indeed, even the exchanges themselves would just as soon keep things as they are now. But the exchanges are finding their business threatened by the emergence of alternative trading systems, known as electronic communications networks. Most recently, on Aug. 17, E-Trade Group Inc., the second biggest Internet brokerage, and Instinet, which runs the largest electronic trading network, announced plans to offer extra-hours stock trading to individual investors beginning in September. At risk of losing market share to the upstarts, the Big Board and the Nasdaq will probably have no choice but to lengthen the day.
Retail investors, empowered by technology, emboldened by the long bull market and entranced by its daily fluctuations, are the force behind this change. It is no longer enough for them to watch the game unfold on CNBC. They want to play. The day jobbers want to experience the thrills and spills of the day traders, who are themselves intoxicated by the easy money and instant gratification made available by the unprecedented surge in American equities.
“People have found a new way to gamble that’s really death-defying,” Mr. Cayne told The Observer . “What’s going on is unbelievable.”
“[Extending hours] converts the market into a casino,” said Alan Davidson, a governor of the National Association of Securities Dealers and the president of Zeus Securities.
And, added Mr. Cayne, “It’s not a secret what goes on in a casino.”
What goes on in a casino, besides a lot of really poor risk management, is that people are encouraged to lose track of time, and money. Five-dollar chips don’t feel like real money, and neither do fractions on a computer screen. It doesn’t take long to realize the money is real, but it also doesn’t take long to forget it once again. The compulsion to revisit that alternative universe, whether it’s the casino floor or the trading site on-line, often obscures whatever lessons were learned during the last visit. That explains why, according to the North American Securities Administrators Association, seven out of 10 day traders lose money.
At night, there will be fewer people trading and fewer shares traded. In a less liquid market, it is harder for buyers and sellers to find a fair price; prices swing all over the place. Basically, when trading is thin, people tend to get hurt. Inexperienced traders unfamiliar with the wild ways of after-hours trading, what James J. Cramer, the hedge fund trader and columnist, likes to call “the Badlands,” will be easy prey for the professionals who know the terrain.
“If I had any family member or any friend asking me whether they should get involved in this after-hours trading, I would do everything I could to have them avoid it,” said David Bardin, 30, a proprietary trader at a boutique investment firm (who said he got a flood of calls from friends thinking he was Mark Barton, the day trader who went on a shooting rampage recently in Atlanta). “They’re gonna get eaten alive. They think they know what’s going on because they read the papers, watch CNBC. They don’t, trust me. You’re gonna see people lose their 401(k)’s and their I.R.A. money. This is not a game, and you can’t just walk in here.”
“We will destroy them,” said Matthew Rich, a managing director in his own hedge fund, Kauser Capital. “The individual investor is going to get slaughtered. How can I put this without sounding like a jerk? I know much more than they do. They are going to do things that are stupid.”
“Trading is a fairly bloody business–minus the violence–in that it needs a constant influx of new losers,” said Dr. Elder. “Extending trading hours will allow more losers to enter the game, which is great.”
So maybe the early wave of trading hobbyists will get wiped out. But Wall Street abhors a vacuum. If there’s money in trading all night, well, then, people will trade all night, even if it makes them miserable. “Money drives things, and people who have endless opportunities to make endless amounts of money will also be vulnerable to endless errors and personal and societal consequences,” said Neil Kavey, director of the Sleep Disorders Center at Columbia University. “We’re talking about potential errors at the workplace, irritability at the workplace, lack of pleasure at the workplace, all of which takes a toll on society. Then it spreads out to the social environment, and then to families. And then kids who are getting yelled at, kids whose parents aren’t enjoying parenting, become unhappy children, and then their kids …”
Who said anything about kids?
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