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DIY: Not Just a Financial Craze

Do-it-yourselfers and daytraders aren't in the same game.
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Of all of the articles that have stood out about the hazards of daytrading, the one that sticks in my mind -- and craw -- is a piece by

Gretchen Morgenson


The New York Times

, lamenting the do-it-yourself stock craze.

It is infuriating to me that the press fails to see the distinction between those who quit their job to daytrade -- a very tough job indeed -- and those who would take charge of their own finances.

I am not in favor of resigning from a steady job to go to an office to daytrade. Daytrading is thrilling and exciting and, if the tape and your luck are good, profitable. But if your luck and the tape are bad, it can be extremely tough. My wife daytraded for a living for years and made a go of it, but she had in her arsenal every conceivable relationship and commission dollar that could be leveraged. And she still had a tough time.

But doing it yourself? That's no craze. That's no fad. That's the healthiest possible alternative. When institutions possessed all the real-time information, it made sense to trade with them. When mutual funds didn't inflict tons of taxes and routinely outperformed, they made a ton of sense too. And when brokers could spend a great deal of quality time with you they made sense too.

I talk to and email many thousands of investors. Very few of them can recall quality time with brokers. Very few of them felt the profession did a great job for them. They are convinced that, given the tools the professionals have, they can do just as good a job, or better, if they have the time and energy to devote to investing. I call it the financial

Home Depot


wave of the '90s, in that people didn't think they could do repairs around the house themselves until Home Depot made it possible. (In fact, many people get great satisfaction and save a lot of money repairing routine problems themselves.)

Sure, just like your house, there are some problems that need the help of the pros. Just as you may not want to perform electrical work on your house, you may not want to pick all your stocks yourself. You may be unsure about how to do things or be time-constrained.

But to call self-directed investing a "craze" is a needlessly noblesse way of looking at the issue. It says that the people can't do arithmetic and can't figure out what is best for them. That smacks of paternalism of the worst kind.

Those who don't see the difference between doing it yourself and quitting your job to try to take guys like me on simply haven't done homework. The rise of the do-it-yourselfer may be the greatest financial trend I can recall. It gets much too negative a rap from the media. And it deserves our support, not our condemnation.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at