Yeah, Day Traders!

By James J. Cramer

So you want a piece of me? Think you're such a hotshot e-trader that you should quit your day job to pit your wits against me and my fellow professionals, who swing around millions of dollars in stock a day without blinking? At one time, I would have laughed if you had even contemplated such a thing. You couldn't match my access to conference calls, information or quick brokers. You couldn't afford the $1,500 a month you'd need for a Reuters, Dow Jones or Bloomberg wire.

But these days there is so much great information available via the Internet that I no longer have much of an edge. And on-line trading execution, while suffering from occasional outages, equals anything I can muster with all my direct wires and trading turrets.

The truth is there has never been a better time to attempt to trade for a living. The opportunities for short-term profits in the stock market, given the new wild swings we have seen, can't be dismissed as unworthy or foolish. That hasn't been true for most of this 17-year bull market, when only wacky, thin, corrupt or heavily shorted stocks jumped enough to make a short-term triumph possible. And for most of that period, commissions were so high that they ate into those gains for all but the biggest traders, who got discounts from their brokerage firms.

Neither is true now, though. In the past few weeks, deft traders have been able to make 15 points on IBM in one day or make 6 on 3M or Alcoa, Eastman Kodak or Hewlett-Packard. These are marquee Dow names, not heavily manipulated penny stocks or hyped Net offerings. You could "scalp" a huge gain simply by buying these stocks at the opening and selling them at the bell.

Sure, the tax code favors those who hold 'em. And America has made a hero of Warren Buffett, in part because he had a predilection to own, not trade, during a phenomenal period to be long stocks. But where is it written that holding for eons makes you a sage and owning for a few minutes makes you a fool?

So why not do it? Why not try to be like that guy in the ad--you know, Al, who owns his own country but drives a tow truck because he likes helping people?

O.K., I'll give you a reason. Because it's hard--really hard--to get the direction right, even with all that great info and terrific execution. We have enjoyed the bull market of a lifetime, one that has seen the Dow go up more than 8,000 points, and yet every day thousands of issues go down or disappear or blow up. And while you hear periodically of the day trader who earns enough to retire, you don't hear about them any more than you do about lottery winners.

To me, there is a happy medium here. You can use the more level playing field to great advantage. You see a product you like, a store you enjoy, a way-cool website--now you can do more work on it in your spare time than ever before. You can get e-mail alerts about it. You can chat about it with others. You can get comfortable with the fundamentals as never before. And if it goes down, you can buy more rather than kick it out in a panic. If your tax situation permits, you can take a quick gain without having it eaten up by commissions.

In short, you can make a profitable hobby out of it, and probably, given the poor returns of the billion-dollar behemoth mutual funds versus the Dow, outperform the pros as never before. Just don't quit your day job. I already have all the competition I need. James J. Cramer runs a hedge fund and writes for thestreet.com This column should not be construed as advice to buy or sell stocks