ABSTRACT
Over the last decade or so, individual investing has become a mass phenomenon due to the virtualization of the stock market and the computerization of buying and selling (Zwick, 2005; Zwick and Dholakia, 2006a). Online investing has been hailed as the democratization of Wall Street and as a major factor in the spreading of the “ownership society.” Impressively, the wide-spread adoption of online trading and the concurrent increase in the number of active stock market participants and owners of equities happened even as the individual investors have been faced with signifi cant setbacks. Many of them became stock market enthusiasts and active investors during the market run-up of the late 1990s, a time of (irrational) market exuberance (Shiller, 2000) fueled by seemingly ever increasing stock prices. In those days, advertising time during a wide variety of television shows, ranging from the Superbowl to Seinfeld, were fi lled with commercials for any of the dozens of newly opened discount online brokerage services, illustrating the changing position of the stock market in the popular imagination of Americans. When the stock market crashed in the spring of 2000, the investment boom years of the late 1990s came to a grinding halt. Investors lost a lot of money in a very short period of time, and many online brokerages went out of business within a few months. However, the few years before the crash were enough to eff ect a profound transformation of how many Americans viewed self-directed and active stock trading. Certainly, many day traders fl ed the market, but they were replaced with even larger numbers of more long-term oriented investors. Hence, in 2005, only fi ve years after the so-called dot com meltdown, more than twelve million Americans were trading stocks online, up six-fold from just a little more than two million in 1998 and up two-fold from the six million online investors in 2002 (Lee and Yongwoon, 2005).
