He is the New York Stock Exchange’s most photographed trader, also known as the “Einstein of Wall Street” on Instagram. Speaking to Investment Officer, veteran floor trader Peter Tuchman talks about the game changer in his profession: the new generation of investors.
“These guys are almost impossible to tame,” Tuchman (photo) says on the trading floor of the NYSE. The 65-year-old Wall-Street veteran has seen tremendous change during his four-decade career. “But the biggest change,” said Tuchman, “is the arrival of a new generation of investors during the pandemic.”
‘Loss porn’
The network of paper order pipelines hanging over the heads of the 500 remaining traders is a silent witness to what was once the busiest trading floor in the world. Until the advent of electronic trading systems, as many as 5,000 brokers operated the NYSE’s open outcry trading floor daily. Those days are over. Long gone.
Computers made trading easy for professionals. Apps make trading easy for everyone, says Tuchman. In 2020, tens of millions of new investors entered the market through so-called “Free Trading Apps”.
“Joe Schmo with his phone can now easily trade in financial products and take gigantic risks,” said Tuchman. “And that’s exactly what they do. There is even such a thing as ‘loss porn’: the glorification of huge losses on social media platforms like Reddit. Some retail investors laughingly tell me they lost ten-thousands of dollars,” he said while pacing up and down the trading floor, peering at his ipad with bid and ask prices.
The new, riskier investor has previously been characterised by Deloitte as “a different breed”, as his behaviour puts him “at the opposite end of the spectrum from traditional advice-seeking clients”. Tuchman, a native New Yorker, speaks of “crazy gangsters”.
Walking to his own desk, equipped with a number of computer screens and about five “mascots”- miniature versions of Tuchman himself - he continues.
Institutional investors’ future clients
“25-year-old investors today trade completely differently than they used to,” said Tuchman. “Look at trading stocks like Gamestop or AMC. I was live on Instagram during the peak of the AMC craze. Young, disconnected traders bought the stock for $3. Not much later, the stock was trading at almost $60. I begged people to sell the stock, but I was called an old fool. The rest is history.” AMC’s share price has been hovering around $5 for months.
“These are going to be the future clients of institutional investors. They all think they can do it themselves now, and are full of ‘piss and vinegar’,” said Tuchman, referring to John Steinbeck’s novel In Dubious Battle, a story about a group of impetuous men. “But soon they won’t be able to,” he said.
Of those millions of new investors “who now do like some market aggression”, Tuchman said many will transfer a significant amount of their money to professional investors.
“It’s no fun losing money, especially if you have a family. Risk means something completely different at 25 than at 40, but what is certain is that today’s young people are willing to take far greater risks than earlier generations.”
The closing bell rings. Wall-Street closes slightly positive after having been trading in the red for a long time. “There is no such thing as a ‘bad’ market.
I personally have nothing against development as such,” said Tuchman. He even thinks “democratising stock trading” is a good move, but they have to “understand how the game works”.
Tuchman, tireless even after the market closes, spends much of his free time imparting technical analysis and other investment wisdom to young traders. On social media, he calls himself “The Einstein of Wall-Street”. His Instagram has 160,000 followers.
“Suddenly there are all these people in the middle of the dance floor who were never invited to the party before. Those need to have the house rules explained,” said Tuchman. “You don’t want a new guest to drink 12 tequila, only to feel bad and complain about the atmosphere and the invitation.”
‘Don’t listen to uncle Henry’
Asked about the biggest mistake young investors make, Tuchman replied that few people understand that there is no such thing as a ‘bad’ market.
“You can make money from rising as well as falling markets,” he said.
“Those who understand how trading works can make good business now. People who do not trade based on hope, “Fear Of Missing Out” and what “uncle Henry of the internet recommends” can now make tons of money, Tuchman said. “Volatility is a gift.”
By now it is quarter past four and all market makers have left the trading floor. An Italian journalist does one last TV report on the calm stock market day. Heckler Tuchman played even. Whether he will ever quit? “Forget about it! This is the coolest place in the world.”
This article originally was published on InvestmentOfficer.nl.