Last December one couldn’t escape the story of the 17 year old teenager from New York who had allegedly made $72M (!!) trading stocks during lunch breaks at school. Of course, the next day it turned out it was all a hoax.
This time around, there’s a Japanese day trader who has supposedly hit the stock market jackpot:
While Many Panicked, Japanese Day Trader Made $34 Million. Not only has this story become viral, but I’ve seen experienced traders on Twitter quoting from his ‘wisdom’ as in:
For him the basic rule is: “Buy stocks that are being bought, and sell stocks that are being sold.”
Now, that’s $34M worth of trading advice right there . What surprises me is that the major news outlets and experienced traders talking about this on social media show very little skepticism towards this story. Just because the guy said something and Bloomberg Business published an article, then it must be so. Well, if I say that I can walk on water and provide some Photoshopped pictures to prove it, would you take my word for it ? Then why would one believe an equally enormous claim resting on the same kind of shaky evidence ?
It’s not just that the story doesn’t make sense : here we have a guy who wants to remain anonymous for fear of robbery and extortion (in Japan, of all countries !) but is active on social media and keeps going to the press with fantastic claims. Either you spend your +100M dollars in trading profits on the quiet or if you want the world to know how skillful you are, back up your claims.
What really irks me is that this type of stories cast trading in a totally unrealistic light. It’s like hearing that some doctor cures cancer patients just by touching them. The world just doesn’t work that way. And speaking of cancer, do you remember the Australian blogger Belle Gibson who fooled everybody that she was healing herself of brain cancer through natural therapy ?
Back in October 2008 I witnessed first hand how easy it is to deceive the media with unsubstantiated claims of trading success. On a very popular news and entertainment Romanian TV channel the evening news presented a guy who claimed he made big profits by being short US stocks just at the right moments in those crazy volatile times. The message was very similar to the one transmitted by the Bloomberg article linked above: people panicking and losing money left right and center, but Mr X is different. He is making money, and lots of it. This guy was some sort of guru on a Romanian trading forum, and even convinced people to give him money to manage. Well, in the end it turned out that all his trading and supposed profits were demo and he lost the money people entrusted with him.
I’ve no idea how much truth there really is behind the story of this wonder Japanese day trader. All I can say is that we shouldn’t forget our common sense and a healthy dose of skepticism before believing everything we read.