Are You a Trading Junkie?

Doc Steenberger addresses a problem we rarely hear discussed: when trading becomes an addictive activity.

I can personally validate the truth of this discussion:  I started out in this business as a trader, and the high you get from the combination of adrenaline and endorphins — and making a great trade — is every bit as much a buzz as any drug you choose to name.

The hardest part about moving to "Research" was pulling the needle out of my arm, and the loss of that sweet, sweet junk every day . . .  (hmmmm, oh yeah, thats the ticket . . . ummm, nice).

Huh? Where was I? Oh, yes.

Anyway, the Doc notes that what is often described as "losses of discipline" can in actuality be revealing of addictive patterns of behavior:

"An addiction occurs when an activity provides a strong source of stimulation that, over time, leads to psychological and sometimes physical dependence. We generally label a behavior as an addiction when people seek out the activity even in the face of demonstrable negative consequences. It is the inability to stop the activity when those consequences interfere with life that marks any addiction.

Let’s look at the facts:

* According to research cited by the National Council on Problem Gambling, 2 million adults (1% of the population) meet the diagnostic criteria for pathological gambling. Another 4-8 million adults (2-4% of the population) can be considered problem gamblers who are experiencing direct problems as a consequence of gambling.

* Research in psychology and psychiatry reported in the Oxford Textbook of Psychopathology finds that between 14 and 16 million Americans meet diagnostic criteria for alcohol abuse or dependence. Between 4-6 million Americans are dependent upon illegal drugs.

* Rates of substance abuse among men ages 18-44 are double those of the general population.

* A family history of addictive problems is one of the best predictors of risk for addiction. Peer influence is another significant risk factor.

* According to a research review in the Oxford Textbook, rates of depression are significantly higher among people with addictions than in the general population, with indications that people are using the addictive activities to medicate themselves for the pain of depression.

* Addictions are also most common among individuals with attention deficits and hyperactivity problems and appear to be related to sensation-seeking among those needing stimulation.

Fascinating stuff, and an important and often overlooked issue.

Thanks, Doc.

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Source:
Addictive Trading
Brett Steenbarger
TradingMarkets, Friday November 3, 9:27 am ET
http://biz.yahoo.com/tm/061103/14986.html

Category: Apprenticed Investor, Psychology, Trading

Analyzing why “It’s a great time to buy or sell a home!”

Yesterday, we discussed the $40M NAR ad campaign, “It’s a great time to buy or sell a home!” On the way home, I actually saw the full page ad in the Personal section of the WSJ; (Unfortunately for the NAR, the section’s front page article was “The New Word in Home Sales: ‘Canceled’) I read…Read More

Category: Data Analysis, Economy, Psychology, Real Estate

Stock Traders Almanac 40th Anniversary Dedication

Category: Media

“Incredible Talent Pool, Zero Competition”

Category: Media, Retail

It’s a great time to buy or sell a home!

In fact, its such a good time, that the National Association of Realtors decided they need to drop $40 million telling you so: > > Buy the way, imagine if a Fund manager or analyst ever said: XYZ? Oh, yeah, its a great time to BUY OR SELL that. (They would cart them away). Here’s…Read More

Category: Economy, Real Estate

NFP: Retiring the Over/Under Bet

Category: Data Analysis, Employment

Blog Spotlight: Abnormal Returns

Another edition of our new series:  Blog Spotlight.

We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
around 7pm.

Up next in our Blogger SpotlightAbnormal Returns. AR is a year old blog written by a private investor with
nearly two decades of experience in the markets.  His experience
includes a stint in a variety of roles with a mainstream investment
management organization, extensive publications in the practitioner
literature, and a hedge fund start-up.  The Abnormal Returns blog is
focused on investor education and unearthing items of interest for the
investment blogosphere.

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Abnormal_returns

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Today’s focus commentary looks at Stock Replacement Strategies in the Spotlight

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Stock
Replacement Strategies in the Spotlight

Seldom a day goes by
without the financial press reporting on some new financial product innovation. 
We have been attuned to the fact that with this increase in choice also comes a
need for education and proper context. 
While
ETFs are clearly the most visible
innovation, the list does
not end there.  Option volumes have
also
surged
showing an increasing
interest on the part of investors to more closely match their viewpoint with the
most appropriate financial instrument.

We
here at
Abnormal
Returns
do not claim to be
options experts, but the time is right to explore an interesting options-related
opportunity.  The stock market, measured by the S&P 500, has run up from a
June low of some 1220 to a recent high of nearly 1390, for a gain of some 14%. 
With some
valuation
and
technical
measures becoming a bit overextended it should not come as surprise that some
investors are looking to reduce their overall market exposure.

Read More

Category: Blog Spotlight

Retail Sales: So much for the “Gasoline Effect”

Category: Retail

Retail Preview & Update

Category: Economy, Psychology, Retail

Blogger’s Take: Hard or Soft Landing ?

Category: Blog Spotlight