By true day trading standards, this person was numerically a small player, controlling perhaps $300,000 in financial assets at his peak in mid-1996 and trading perhaps a few times a week. Many of his later trades in options were hard to follow (for me) so it's hard to tell the exact situation. However, despite the fact that he may be "small time", his story is told with heart and he really helps you get into his shoes (with holes in them, at that).
It's worth wondering if the author "Mr. Katzman" had used an even deeper discount broker ($8 per trade instead of $30), or had been in a more bubble-friendly environment such as 1997-2000 instead of 1994-1997, if he might still be with us, and a millionaire. Particularly in the later stages of his mania he seems to have been bent on destruction, and perhaps his wipeout would have been even more spectacular. One has to admire his dedication to pay off his massive debts following his financial collapse. However, he shows you his ugly traits in this novella as well as his positive qualities, giving the whole tale a good ring of truth.
This book is most helpful to someone new to the financial markets, who might have just read "One Up on Wall Street", thinking, "Hey, I can trade stocks like Peter Lynch too!" I doubt if true day traders, manic-depressive and otherwise, will get much out of this book except the pungent atmosphere.
What did Mr. Katzman do wrong? Without going through the whole book I think there were three key mistakes that he made regularly:
Leverage - Mr. Katzman financed his stock purchases with $50,000+ in credit card debt, and margin debt on top of that. Were he not maximally leveraged with the credit card debt, he might have been able to hold on better when the market went against him. In addition, the added anxiety arising from his leveraged position tended to cloud his thinking.
Lack of Diversification - He normally concentrated his portfolio in fewer than five stocks (it seemed like three) - although with options this is more difficult to measure.
Half-Baked Thinking - Some of the ideas he had for his portfolio would be along the lines of the following: A Business Week article says that global warming is going to increase risk of skin cancer in Americans, so he goes out and buys a company that has a skin cancer treatment. Well, if Business Week has thought of it the market probably discounted it last year, let alone last week. You need to take things to the next level when you think of investing ideas (I am prone to this weakness as well).
If you think you can't make the mistakes Mr. Katzman did, please try to read this book with a little humility. Would that every investor in the market could learn this man's lessons.