Day Trading INTRO: The last several years have brought dramatic changes in the way business is conducted in the U.S. stock markets. Millions of new investors have entered the marketplace and advances in technology and telecommunications have created a much more rapid flow of information. Day trading, a strategy previously employed only by a very few, has attracted some of these new investors. Bruce Hagan, certified financial planner with RAI Investments and Corporate Securities Group is here to tell us why that may not be such a good idea. Q1: Bruce, we’ve heard the term but exactly what is day trading? A1: As the name implies it generally means purchasing and selling a security within the same day (or at least within a very short time frame). Some people feel they can take advantage of the daily price fluctuations in stocks or options and by taking numerous small gains and offsetting them against small losses, come out ahead. Q2: Has this practice come about primarily because of the proliferation of personal computers and online trading companies giving people the access and ability to do it now? A2: Certainly the opportunity to do this has been greatly enhanced by that. Before, there were a few people clients who might hang out all day at their broker’s office or call continuously on the phone and do some fairly active trading, but mechanically it was more difficult. Q3: What percentage of the investing public is involved in day trading? A3: Well, no one knows for sure, exact statistics aren’t kept on that. But it is a relatively small portion. There is lots of anecdotal information suggesting that most of these people possess a gambler’s personality, a desire to make a quick buck without a lot of effort. And for some people the lure is quite addictive. There are folks out there who have become so convinced that they can do this successfully that they’ve quit their job to pursue it full time. Q4: That sounds a little dangerous. Are there people who are so good at trading that they can consistently make good money doing it? A4: The key word you used is consistently. That’s tough to do. This technology and communications revolution we’ve seen has occurred during a very strong bull market. That’s probably not a coincidence. These advances have helped create tremendous efficiencies within companies and helped drive profits. But this bull market has fostered what I believe is a false belief that making money in the stock market is easy. There’s an old saying that a rising tide lifts all ships and some of the day traders who haven’t lost most of their money yet probably will when this market cools down. There are lots who have already been wiped out and a few will actually be lucky enough to do well, but the majority of people looking for a free lunch will find it doesn’t exist. Q5: Why do you feel the odds are so stacked against the day trader and if they are why does anyone continue to do it? A5: If you asked me to pick an investment that will go up over a 10-year period I would feel pretty confident about being able to do that. If you narrow that time frame to one year, I’m not as sure. If say over one week or one day, it becomes a pure guessing game. But some people feel they have a system, a way of interpreting charts or something unique that gives them an edge. The same false hope that someone in a Casino has. The discussion offered above and in the movie should not be considered an endorsement by Florida State University. They are offered in the educational sense of providing thought-provoking information for our Web audience. Copyright shared with Florida News Channel (FNC), all rights reserved. Broadcast 9/10/99