Crazy Glue*

Michelle B submits:
Daytraders are often criticized by investors. Apparently, daytraders dabble in the risky business of speculation, while investors do not, despite the generally accepted perspective is that anyone buying or selling a stock is speculating.

Daytraders are often described by the investor bunch as being forever glued to their screens, watching every tick. The hours these investing blokes spend poring over fundamental documents like balance sheets, income statements, debt credit ratings, etc., either in paper form or via the dreaded computer screen to which one can become hopelessly glued, evidently does not constitute being stuck on their work. Some of them go on to say that this research is continuing and time consuming, and not everybody, especially the majority of their potential clientele who have nine-to-five jobs, either have the ability or the time to do what is required, so that is why they are there--to provide an invaluable service at a price.

Meanwhile, the 'glue addicts' are using shorthand with which to identify and follow the actions of investors that have done the fundamental research. How do they do that, you may ask? By following squiggly lines, of course. Besides 'sniffing glue' constantly, daytraders venerate the almighty squiggle. Japanese candlesticks, trendlines, and patterns like cup-and-handle reversal and head-and-shoulders topping formation are among many of the icons which daytraders adulate. In addition, these pathetic, clueless 'glue addicts' are filling up their country's governmental coffers because of the higher tax rates in which their profligate behavior results.

So, we got these desperate folks, with no grasp on fundamentals of a stock, oddly glued to their screens, worshipping the almighty squiggle, and paying unnecessary taxes out of the gazoo to their governments. I say, gather them all up and pack them off to the crazy farm!

What these critics are not able to grasp is that daytrading is conducted as a business. The trades involve buying merchandise and selling it at a higher price. Daytraders focus on turnover, and in the process, provide often needed liquidity to others--yes, even to those glue-fearing investors! If one emphasizes the high-failure rates of daytraders, then it is only fair to note that a large number of first-time businesses also fail.

When a daytrader explains the method behind his madness, he does not seem looney, even to die-hard investors if they are willing to listen to his reasoning of why he does what he does. Then, such an investor will often reply, ok, but it is not for me. I don't want to speculate or run a business in that manner. Fine. Then don't. However, calling traders stupid because they do not speculate the way you do or choose a business to your liking, is, well, stupid. In addition, to try to convince others that any other method is not worth doing because you either do not want to do, or do not have the ability to do, or is too difficult for the majority at which to succeed, is more than stupid. It is noxiously close minded. The majority of speculators, whether they are investors or daytraders, are not consistently profitable. The number that is consistently profitable is so because they have chosen a method and style that fits and works for them.

*[Ed.: Krazy glue is a trademarked, commercial brand of glue]