Dumb Money

Peter K. peterk at enteract.com
Sun Apr 23 13:11:27 PDT 2000

>Dumb Money is hilariously funny, even if it does describe me as "a
>stick-in-the-mud socialist critic of financial markets."

Say it ain't so! I wonder how they would feel about certain LBO-list members. Am I right to think Cavanaugh is more of a fan? In a weird way, Suck is sort of socialist, or collectivist, with their code names or "handles." I know. It's a stretch.

There's a review in today's New York Times Book Review: April 23, 2000 Don't Quit the Night Job


Day trading, which is stock speculating by mouse click, sits at the intersection of two of today's red-hot obsessions -- the Internet and gambling. Stoking the craze is the stock market bubble and the promise of ''disintermediation.'' This is a fancy way of saying, ''Death to the middleman!'' Brokers, market makers and markets themselves are headed for the ash heap of history. They are being replaced by Leibnizian monads, autarkic individuals wired together into one huge global electronic market open for betting 24 hours a day.

The problem for day traders is that we're not there yet. The dream of frictionless, cost-free speculating keeps bumping up against the reality of brokerage commissions, spreads, capital gains taxes and trades that go unexecuted.

Day trading is a sucker's game, as people learned in the summer of 1999, when Mark O. Barton opened fire in two Atlanta day-trading shops, killing nine people and injuring 12 others. Barton, after flushing his life savings down the high-tech toilet, was more demonstrative than his colleagues, but many of them must have been feeling their own ''trade rage.'' Ninety percent of the players mousing around in electronic bucket shops lose money, and the sport is no less perilous when played at home.

Of all the deadly sins currently tempting us, envy is topping the charts. Who wants to get rich? Everyone! Who wants to work for it? No one! But as the hero of ''Dumb Money'' makes clear, day trading itself is hard work. He rises at 4:50 a.m. to catch the market's opening. He suffers from stress headaches and nosebleeds. He is addicted to Nicorettes and Xanax.

Yet day trading is a growth industry -- and so is writing about it. The flurry of books on the subject follows the same formula, combining investigative reporting on day trading with step-by-step instructions on how to do it. The resulting schizophrenic discourse resembles the confessions of a dope fiend, bundled with cheery advice on how to mainline.

I expected better of Joey Anuff and Gary Wolf's account of Anuff's short life as a day trader. The editor of the Webzine Suck.com, Anuff is a great wit and truly funny man when he is skewering the pretensions of the Silicon Valley moguls he surveys from his overpriced south-of-Market-Street San Francisco loft apartment. Wolf, a contributing editor at Wired, is an ace reporter who knows the digital revolution inside out. Put them together, and they should make quick work fulfilling Suck.com's mandate: ''a fish, a barrel and a smoking gun.''

Indeed, some of their writing rises to this level. Anuff does a brilliant job of lampooning his own stock-picking strategy. ''I stepped up to the trading screen from a childhood of Asteroids and Pac-Man and Doom, where little graphical symbols convincingly represented missile fire and cannibalism and mass murder.'' Day trading ''is the same thing, only more violent.''

Unfortunately, the authors start pulling their punches toward the end of the book. Anuff confesses that day trading is not an ''occupation'' but a ''neurosis.'' He realizes he's a lucky monkey, someone who made an accidental $50,000 guessing that eBay, a Web site designed for buying and selling Pez dispensers, would emerge with a market capitalization comparable to General Motors.

He begins an earnest search for a winning system. He attends seminars given by day-trading gurus. Finally, he consults a ''trading coach'' who specializes in pumping up the psyches of flagging stock jockeys. This is the barrel. Anuff is the fish. But instead of shooting these easy targets, the book returns to its hero -- supposedly recovered from his addiction -- musing, ''Am I a millionaire yet?'' Joey, get your gun! ---------------------------------------------------------------------------- ---- Thomas A. Bass is the author of ''The Predictors,'' a book about using advanced physics to predict the world's financial markets.

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