|
Each weekday morning around 6 a.m., a group of intense investors files into an office suite in University City's Governor Park. The individuals take their seats at flashing computer screens and wait for the stock markets to open.
"Tension is in the air," says Barry Parish, owner of the San Diego office of All-Tech Investment Group. When the markets open, the dozen or so day traders are off and running, taking positions that they may hold only for minutes and certainly will close out of before the day is over. In addition to this crowd, a group of more experienced day traders is attached to All-Tech by computer modem and is buying, selling or short-selling stocks from home.
None of these people work for Parish. All are independent operators doing something that many avid investors only dream about — trading stocks for a living. The direct opposite of a Warren Buffett or Benjamin Graham-style value investor, these people are looking for trends in share prices that they can take advantage of in a heartbeat. For example, if IBM has been steadily rising, but suddenly bounces down fractions of a point, the trader may buy up to 1,000 shares. When IBM subsequently rises even by a few sixteenths of a point, they quickly sell. Selling, not holding, is the strategy.
"We absolutely discourage people from holding positions over night," says Parish. "People who do it get badly punished. One who did lost $100,000 in six months. You should either be long-term and properly diversified or short-term and in cash. If you want to be long-term, don’t come here."
All-Tech, which started in New Jersey in the late 1980s and now has facilities in about 20 cities, offers individual investors direct access to markets through an all-electronic automatic execution system. Traders are charged $25 per buy and $25 per sell order, or $50 round trip, regardless of the number of shares or the dollar value of the transaction.
In order to trade at All-Tech, an investor must first take a week-long, $3,000 training course. After that, Parish is on hand with guidance and to help with problems that arise. All-Tech provides software for traders who work from home and the service is free, as long as the trader executes 220 trades per month. Otherwise there is a $500 monthly fee.
It is little wonder that brokers, investment advisers and other professionals frown on this type of day trading. The risk is high. Investors must open a $50,000 minimum risk capital account with All-Tech, which when margin is activated, gives the trader a $100,000 trading capacity. If the value of the account falls to $30,000, the account is automatically closed out.
On the other hand, Parish says that many traders earn a good living at the game. One particularly successful husband and wife team tallied more than $1 million last year and made about $70,000 in January. Only about half of the students who take All-Tech's training continue trading for any length of time. It takes a certain type of personality to do well.
"Speed is the whole idea," Parish explains. If a trader takes his or her losses at the close of the markets, there is an instant measure of success or failure. At the end of the day, there should be nothing to tie the trader to the market financially, at least. The need for another adrenaline rush is a whole different matter.
"Success is psychological," Parish says. "Losers lose between the ears before they do on the screen."
***
Recommended reading: For those who have difficulty deciphering annuities and measuring their value, check out Gordon K. Williamson's "All About Annuities" (John Wiley & Sons). The book first came out in 1993 and is now available in paperback. Williamson, author of nine other investment books, has been a financial planner in La Jolla for more than a decade.
***
The buzz at the glitzy Las Vegas Consumer Electronics Show last month was over making it easier for people to access the Internet, especially to use the most popular computer feature of all time, electronic mail.
Microsoft, Sun Microsystems, Oracle and other computer software giants were pushing TV set-top box computers, a limited capability computer that hooks up to your television set and makes it an interactive link to the Web. The basic boxes sell for several hundred dollars, but keyboards and printers are extra. Set-top boxes are expected to be especially popular in emerging economies around the world, where computer prices are still prohibitive. But people do have television sets, and in Japan, where homes are so small there isn’t much room to set up a computer.
Web TV had serious competition in other parts of the CES exhibit hall. That competition is a compact e-mail telephone that costs about $200 and allows users to send e-mail and surf the Web effortlessly. About the size of a fax machine, it has a keyboard and pop-up screen about the size of a lap-top computer.
Casio, Philips and other manufacturers are marketing e-mail phones. One of the most attractive little machines is made by Uniden, a Japanese company with research and development facilities here in San Diego.
Janet Lowe is author of several investment books, including "Value Investing Made Easy" (McGraw Hill) and "Warren Buffett Speaks" (John Wiley & Sons).
|
