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Not everyone is losing out in the most volatile markets in a generation.
Nick Craft, a professional chef in his early 30s, has made £15,000 ($25,000, Dh96,300) since the collapse of Lehman Brothers a month ago by trading on the equity markets in his spare time.
"The past three weeks in the banking sector were very good for me. I bought Lloyds over the past month and made over 20 per cent," he says from his Sussex home, south of London.
"I think the banking sector is the way forward and there are going to be some very nice highs in the coming months, and it is just a case of waiting for the market to calm down."
Craft represents a growing band of retail investors, often operating from their own living rooms, attracted by the ability to make large sums as the markets swing wildly amid the worst financial crisis since 1929.
Since Lehman imploded on September 15, volumes on some broking websites have jumped by as much as 400 per cent, with buyers outnumbering sellers by as much as three to one, with investors betting the markets have hit their lows.
In the past week, these record volumes have forced many websites to crash, while people trying to trade over the telephone have often been left on the line for hours as they try to buy or sell.
The biggest number of trades has been among bank stocks, which have experienced extreme levels of volatility, with some undergoing daily falls of 30 per cent. A 10 per cent fall was the standard for many financial stocks last week.
Angus Rigby, chief executive of TD Waterhouse, which runs a website and telephone service for investors across the globe, says: "The bank stocks have been driving volumes. The banks are among the top five buys and sells because of the volatility."
Stephen Barber, head of research at Selftrade, a London-based broker that offers investment services online and over the telephone, adds: "In the past two weeks, overall volumes have been huge. We have never seen higher, even during the dotcom crash or September 11.
"We are seeing the markets fall by more than 300 points, or eight per cent, then coming back a little, only to fall sharply again. This encourages people to buy or sell, some quickly, trying to make money fast, while others buy and hold."
The US has the biggest number of individual retail investors that actively trade - some daily, while others buy and hold for up to a month - with estimates varying between 20 million and 60 million. In Europe, there are about five million investors. These investors are typically male and in their 40s, according to Barber, with some making bets during their lunchbreak from their day job while others gamble full time. The profile of these investors has changed in the past few years. Ten years ago, the active retail investor was likely to be a retired man, often managing his pension. Now many women play the markets.
Trend
Spread betting, which involves predicting how steeply a market will rise or fall, has also taken off in the past year. A trader bets a market will fall by, say, 500 points, making a pound or dollar for every point fall. Conversely, if the market rises above a certain threshold, they have to pay out.
David Jones, chief markets strategist at leading spread-betting company IG Index, says: "We opened 2,700 accounts in September, which compares with just over 1,000 a year or so ago. We are also seeing a record number of trades, with the biggest ever on one day on Wednesday, the day of the co-ordinated rate cuts."
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