I’m not going to spend a lot of time on this Teen Trader story where a high school junior from Queens, New York conned a bunch of journalists into believing he’d made $72 million in profits speculating in the stock market on his lunch hour. Anyone who’s spent even a few years in the market knew on sight that it was bullshit. I was one of the first people to say so yesterday (see CNNMoney) and a full-blown avalanche buried the kid and the publications that had been taken for a ride.
Teneage millionaire whiz kid traders coming out of the woodwork with an overly eager press willing to believe. The bull market is advanced.
— Downtown Josh Brown (@ReformedBroker) December 15, 2014
By the end of the day, the kid and his classmate (who was acting as PR for some reason) had backed out of an appearance on my CNBC show after the vetting process didn’t go so well. The magazines and newspapers either printed retractions or rationalized their original stories and the Teen Trader came clean about the fact that he’d not placed a single real trade – only simulated ones on paper.
I feel bad for him, actually, because he probably got caught up in the story himself and let it get too far away from him. We’re talking about a child here, at the end of the day and the whirlwind is only half his fault. All con artists require one thing to get one over – willing marks who are able to suspend disbelief in the presence of a promise. In most cases, it’s the promise of gains without losses a la Madoff. In this case, it was reporters who had a crazy-clickable story on their hands and wanted it to be real.
In my experience, paper traders will often let their imaginations run wild. After a few successful calls or simulated trades, the lines between reality and fantasy begin to blur and a misplaced sense of grandiosity sets in. So powerful is the delusion that paper traders can even become bellicose in their dealings with actual investors who have real dollars on the line. It’s all very embarrassing for everyone involved. It’s rare to encounter an actual professional behaving in this aggressive of a manner.
One of the key clues that the Teen Trader wasn’t real was the Jordan Belfort worship and all the talk about hedge funding at 18 years old. Only a paper trader would harbor such ridiculous fantasies.