Andy Lindloff with his daughter, Juliana, as he trades stocks from home. He says he earns six-figure returns, which would put him in the rarefied category of profitable day trader.
Encinitas, Calif.
Steve Gomez, a partner in Today Trader, a two-year-old Internet venture, trades from his home in San Diego.
REMEMBER the day traders?
They were hard to miss during the tech-stock mania a decade ago, when the Nasdaq seemed like a casino built by morons and a chimp with darts could pick winners. You would hear about these guys — nearly all of them were guys — and wonder: Could anyone make a living this way? And if the answer was yes, why were the rest of us suckers still holding down regular jobs?
No doubt, it’s been a long time since a question like that troubled your imagination. And perhaps you assumed that the twin calamities of the Internet crash and the Great Recession had doomed the day-trader species in the unruly jungle of American capitalism. But some dreams refuse to die, and few, it seems, are more resilient than the dream of beating the market while wearing nothing but tighty-whities.
Or, if you are Andy Lindloff, a pair of jeans and a black waffle-pattern shirt.
“Banks are seeing a nice little lift,” he says, staring at computer screens one recent Wednesday morning, sipping coffee from a Denver Broncos mug. “The European banks are up, so that may bleed over to ours. Bank of America might be one to watch.”
Mr. Lindloff, 49, is sitting in his living room here in a city known as “surfer’s paradise,” about 25 miles north of San Diego. Surrounded by the playthings of his daughter — a toy oven, a doll house — he appears to be alone. In fact, he has plenty of company. With a hands-free headset, he is speaking to Steve Gomez, his partner in Today Trader, a two-year-old Internet venture that is “about helping traders find success through virtual technology,” as it says on the company’s Web site.
The company charges aspiring traders $199 a month for a live, real-time view of Mr. Lindloff’s computer screen, along with the running banter, commentary and advice that he and Mr. Gomez provide through the morning. (After lunch, it’s just Mr. Lindloff.) The service is billed as a chance to look over the “virtual shoulder” of two veteran stock traders, but you don’t really see anyone’s shoulder. It’s more like staring at the instrument panel of a jet while eavesdropping on the pilots, plus the ceaseless tap-tap of a keyboard.
By the opening bell, 21 subscribers are logged in.
“Citigroup’s at $4.10,” says Mr. Gomez, 43, who is in his home in San Diego. “Probably going to hang around that strike price.”
“AMD is at an interesting stop there, too,” says Mr. Lindloff, hopscotching from one chart to another.
“Keep it tight,” says Mr. Gomez. “Don’t fight the momentum.”
All the while, subscribers send questions and share ideas in a chat room that is part of the service.
“DRYS over 6.”
“MNKD short?”
“Watching this ALD.”
“HBAN?”
It might read like a teenager’s idea of a haiku, but this is the new frontier in do-it-yourself trading. Today Trader and its rivals are tiny operations, and they have modest followings. But they are harnessing all the crowd-sourcing features of the Internet circa 2010: YouTube, Twitter, and companies like GotoMeeting, a Web conferencing service.
They are also harnessing a lot of market-related rage. The gruesome stock plunge of late 2008 and early 2009 was a searing, fool-me-twice moment for many people. The market again seemed hopelessly treacherous, a mug’s game. And if you had an account with the brokerage arm of any number of Wall Street stalwarts — like Lehman Brothers, Citigroup or Merrill Lynch — your losses were doubly galling. Your team helped put a sleeper hold on the economy, the near-collapse of which then ravaged your portfolio.
Even many of those who took the safe route and years ago bought index funds have seen little upside. Look at the performance of the Standard & Poor’s 500, the most popular index out there. If you put $1,000 in it in 1999, you now have slightly less money in your account (about 0.3 percent less, actually).
If the motto of the original day-trade boom was, “If the pros can do it, so can we,” the motto today is, “We can’t do much worse than the pros.”
“There’s this idea out there that retail investors are dumb,” says Howard Lindzon, the co-founder of StockTwits, which curates a gusher of stock tips and financial news alerts tweeted by 20,000 regular contributors. “Well, it turns out that the institutional investors are pretty dumb. They nearly blew us all up with leverage.”
Of course, anyone hoping to join the day-trade caravan had better wear a seat belt, as Mr. Lindloff’s experience on this Wednesday morning demonstrates. Before lunch, he will buy and sell about 44,000 shares, in 17 trades. He starts off poorly, losing about $500. But a timely bet on a company called Rackspace Hosting (“I don’t know what they do,” he says), as well as quick investments in Applied Materials, Eagle Bulk Shipping and a few others, have turned things around.
“Up $210,” he says, removing his headset. Factoring in commissions, he’s made $60.
IT is hard to say how many day traders are currently plying their craft, if that is the right word, in this country. Brokerage firms track the activity and demographics of their customers, but they have been reluctant to share that data. About the most we know is that the day traders skew male, and the number of trades per $100,000 in client dollars is a little less than half what it was back in 2000, according to the Charles Schwab brokerage firm.
Even that figure seems high. As a job, “day trader” registers in roughly the same way as “disco ball manufacturer” or “Brooklyn farmer.” You know that someone has to be making disco balls and that maybe there are still a few plots of arable land in Brooklyn.
Still, it can seem strange to see TV ads for an Atlanta company called Long Term Short Term, which offers two-day investment seminars, as well as DVDs, CDs and online tutoring, in cities across the country. Price: $3,995 a person. Part of the pitch taps into the simmering anger at professional investors.
“People put their trust in stock brokerages that are now out of business, and have seen their 401(k) drop by 40 percent or more,” says Michael Hutchison, an executive vice president of Long Term Short Term, which does business as Better Trades. “Meanwhile, mutual fund companies are making $85 billion a year, and look at their performance. There are people who see all this and think, ‘Why don’t I educate myself?’”
Mr. Hutchinson hastens to add that his company doesn’t encourage anyone to quit a job and trade full time. But more than a few attendees may be looking for a change in career. Many of the new day traders are people who recently lost jobs and can’t find work.
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