Headlines lately could well read "Stop me before I trade again!" as the financial press gets around to chronicling the wild world of Internet share trading.
As a class of citizens, online traders do not get much respect. It is said they do not know the difference between a stock split and a stock option - or, more to the point, between a gambling casino and a stock market.
Critics say online bulletin boards foster a gang-trading, rumour-infested environment in which traders become addicted to the investing buzz. All of this worries professional investors, who fear Internet stocks are being inflated into a huge bubble ready to burst on Wall Street and the US economy.
Fear is also widespread among traders themselves, including one profiled by Reuters recently who lost $20,000 on a badly timed purchase of Amazon.com stock and was worried that he was a compulsive trader.
But in interviews with traders and experts, and in emails sent by online traders, a more complex picture emerges. Online trading has indeed lured unsophisticated investors and compulsive traders and created extreme trading in volatile stocks. But many online investors are careful stock pickers, independent and self-directed. They are more active in trading stocks than traditional investors, but also more active in researching online and carefully monitoring their investments.
"Why are the professionals so bent out of shape with individual investors' new interest in stock market trading?" wrote one trader named Vicki. "I think it's outright propaganda. The full-service broker is obsolete. I've been trading online for two years and I am a careful investor."
Cutting ties to brokers, and commissions, appears to be one of the key threads running through bulletin boards.
Dominick Casone, a Connecticut truck driver, says he is considering opening an online account because brokers keep telling him not to make trades that could have made him money. Meanwhile, he is using his new computer to study the market.
"People are consuming news and using it in their trading strategies," said George Mason University finance professor Gerald Hanweck, whose courses cover online investments. "A lot of these people are million-plus wealthy and have the money to risk."
These investors use bulletin boards, company websites, Securities and Exchange Commission filings and newsletters to gather information, Hanweck said. They are hoping to catch a wave and buy the next Intel or Microsoft.
A number of Internet traders suggested that big brokers felt threatened by online investors' new-found market clout and access to information. "The big boys do not like the idea that the little guy can step into the market with a wealth of information at their hands and make a few bucks," one online trader said. "We are trading for ourselves with the same information that was once only available to them."
The evidence that many others feel the same way is the fact that seven million new accounts have gone online in the past two years. Charles Schwab and Ameritrade Holdings, two of the biggest companies in the area, have launched crash programmes to deal with a crush of unexpected new trading.
James Lee, president of Momentum Securities, figures that fully 40 per cent of all trading on the Nasdaq market comes from so-called "self-directed" electronic accounts that do not go through a stock broker. Nearly 25 per cent are Internet traders and the rest are day traders who use more expensive technology and usually sit in an office with direct links to the market.
"It's phenomenal what's happened here," Lee said. "In just a few short years it's gone from almost nothing to 40 percent of the volume on Nasdaq being electronically routed, without the solicitation of orders (via brokers)."
The Internet trading frenzy reached all the way up to Congress this month when Federal Reserve Chairman Alan Greenspan was asked to comment, and the usually hyper-cautious central banker gave a surprisingly even-handed response. "Is there some hype in this? Of course, there's some hype. There is hype in lots of things," Greenspan said.
He likened the Internet stock frenzy to "a lottery principle" where people bet on million-to-one shots, adding that that process was part of the securities' market role in finding better opportunities and putting capital into them "prior to earnings actually materialising".
"That's good for our system. And that's - with all of this hype and craziness - something that, at the end of the day, is probably more plus than minus," he said.
Not all government attention has been positive. The SEC has been deluged with complaints about online trading system failures, attorneys general in a few states are launching probes of day-trading operations and the National Association of Securities Dealers has warned about online trading dangers.
"People should be paying attention to these warnings," said Lee of Momentum Securities, which did a study recently showing that most day traders lose money. "There is tremendous opportunity in all this volatility but also tremendous risk. It has everyone nervous all up and down the chain."
"Cyberdoctor" Kimberly Young, a University of Pittsburgh researcher, has an online service (www.netaddiction.com) offering consultations for people suffering Internet addiction. She said the key was to strike a balance.
"Gambling or excessive trading - look, a little of this is fine. I don't think there's anything wrong with it," she said. "But when you find it really takes over your life it's a problem. But if you are improving your knowledge about money and getting more involved with finances, you might be better off in the long run for having done it. You just have to find a balance."