Over the next year Bruggemann would turn that $10,000 into more than $300,000, principally trading penny stocks, a practice rife with risk, fraud, and wild swings of fortune. He took off school that day, but for most of the time when Bruggemann was trading, he was also a 16-year-old high school junior in Wyckoff, New Jersey. With his iPhone in hand, Bruggemann would buy and sell six figures of stock from his lunch table, the bathroom, and, occasionally, on the sly while sitting at his desk.
What Bruggemann did with penny stocks isn’t new, but technology has changed what’s possible. Twenty years ago even the best home internet wouldn’t have supported this kind of real-time trading. A decade ago you might have done it from a home office. Today, with the supercomputers we carry in our pockets, a kid can put his life savings on the line while sitting in Spanish class.
Bruggemann has always been interested in making money. In kindergarten his parents dressed him up as a concession boy for Halloween, complete with a tray carrying popcorn and candy. "He came home with money, but no candy," remembers his mother, Lynn. Later he tried his luck with a lemonade stand in front of the house. "We’re on a cul-de-sac, so almost no cars come down here. He didn’t care. He waited for five hours to make that dollar happen."
He got a job as a busboy at a local restaurant at 14 and worked weekends. He put his money into a savings account, but was unhappy with the paltry interest he earned. His grandfather encouraged him to try the stock market and his father, a former Wall Street trader, eventually agreed to act as the custodian for an Etrade account. "I always talk about the glory days, so maybe it rubbed off a little," said his father John, a former vice president at JP Morgan who worked on the floor of the New York Stock Exchange. But John never played the penny stocks. "Never. Not my game. You could make money or lose money very, very quickly."
Bruggemann, on the other hand, embraced the chaos. He was a fantasy football fanatic with a head for numbers and an attention to detail. He had dabbled in sports betting and online poker, getting into trouble with his parents when they discovered it. For Bruggemann, as for many others, penny stocks were another outlet for that risky reward seeking. "There is a lot of fraud and manipulation, a lot of them are not legitimate companies," he says. "It could be someone like you or I sitting here saying we have a $5 million deal with Panasonic, when in reality that’s not true." According to the SEC, penny stock scams have surged over the last two years.