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December 5, 2008

Doctor My Eyes

By Michael Scotti

The good news was sparse this past year: There was historic volume in equities. That, unfortunately, is about where it ends. The S&P 500 was down about 40 percent in mid-November. And although that, too, is historic, the current financial downturn has been devastating. Fueled by nonperforming mortgage bonds, the current financial mess has wreaked havoc on people's lives-from retirement accounts to their livelihoods.

The effects have been particularly acute on Wall Street, where investment pros held past bonuses in company stock that is now either worthless or valued at a fraction of what it once was. The more fortunate ones still have jobs at those shops or elsewhere. And for everyone in the equity trading community, it is safe to say that stress has been heightened. Anxiety is 2008's main emotion. It's tough enough to see friends and colleagues lose their jobs, and then only to wonder if yours isn't next. That's understandable, and part of human nature.

Last month, I visited a man whose clients include many investment professionals. His name is Dr. Bob Siroka, and as a psychologist, he helps them cope with emotional issues, both personal and job-related. I called on Dr. Bob to get a little color and insight into how people are handling the situation. "They are all questioning themselves," he explained. He pointed to one hedge fund manager who experienced a double whammy: He liked both financial stocks and leverage. This successful stock picker of 30 years suffered from what the good doctor described as "a form of financial trauma." Essentially, his stock-picking value discipline no longer worked, he lost confidence, and his "brain froze." In situations like that, Dr. Bob said, investors have three responses: flight, fright or freeze. "I got him to go home and make one trade. He called me back later and said, 'OK, I feel better.'" Well, that's a start.

Separately, this December issue marks the second consecutive year that Traders Magazine has featured the top trading stories of the year. Some stories made the list for both years: Coverage of dark pools is one example. The evolving New York Stock Exchange is another. Hopefully, 2009 will be a better year than 2008 for everyone-investors, traders and their firms. Happy holidays from everyone at Traders Magazine.

Michael Scotti

Editorial Director

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