Impact On The Market
Thursday, April 29, 1999
Mike Mitchell, a Salinas broker with Southern California-based Brookstreet Securities Corp., notes the impact of day trading on the overall market, and attributes a lot of the recent volatility in the market to day traders.
"A great percentage, up to 80 percent, is fueled by online trading. Statistics I've heard indicate that on an average day, the average size of a trade in Yahoo or Amazon is 350 shares. That's incredible."
Mitchell believes day trading is fueled more by speculation than long-term investing strategies and goals, and that the technology itself is fueling more and more day traders.
"Day trading has got to be speculative because you're trading every day," says Mitchell. "Technology is enabling and spawning a lot of this, and it's become fashionable and stylish to set up boutiques for day trading. People are taking classes, that's fostering more and more growth."
The impact on traditional brokerage firms and brokers themselves has yet to be determined, says Mitchell.
"It's hard to tell, I've been in business 25 years and been with Merrill Lynch and PaineWebber. I have friends in all those companies and people are still making a living. Brokerage stocks are doing well and everyone is making money. There is more business to be had, but I don't know how day traders are cutting the pie. I have 50 clients I talk to and advise. Some day trade, some invest. No one is going broke.
"I don't think traditional brokerage houses will become obsolete. Someone who wants help can come to someone like me. There are a lot more options and different rates in the street."