Posted on 05/07/2010 11:39:25 PM PDT by NoLibZone
The day after $1,000bn was briefly wiped off the market value of US equities, traders were still trying to work out what caused share prices to plunge and then rebound so dramatically in a matter of minutes.
The conventional wisdom held that an incorrectly typed sell order – one that confused “billions” for “millions”, for example – was the likely culprit.
“The trigger for the sell-off was most likely some kind of errant order, a fat-finger typo, which set off a chain reaction of selling,” said Sang Lee, managing principal at Aite Group. “I would be shocked if that was not the case as the fall in stocks was so sudden and extreme.”
(Excerpt) Read more at ft.com ...
The more this goes on, the more I think this was real. The market really is this sensitive right now and the crash could come any day.
Des Moines, Iowa is already a huge insurance and financial services center, believe it or not. I nominate them.
“Mass psychogenic illness - when groups of people feel sick at the same time..” Uh, how about “Mass psychogenic trading”. Everyone pulled their trigger-fingers because of the Greece situation.
It seems to me that in the very process of declaring it a mystery, they explain it ... with the “stub bids” for example. The sell orders simply overwhelmed the buy orders. Surely this was automated panic selling, where a determination was made, algorithmically, to sell to the bitter end, that is $.01, where they met up with the stub bids. To me, it all makes sense.
I believe the Financial “reform” bill moves a large portion of NYSE to... guess where.. Yep.. Chicago.
Most of the volume on the exchange is done by computer buying and selling. The new software actually does several thousand trades per minute allowing the big guys to make/lose thousands per trade. IMHO it could have been a software glitch that is triggered by unforseen events during the market trades, much like the software problem that plagued the Toyota accelerators. In the lab and during testing nothing will happen, but in the field the conditions that cause the problem manifests itself if certain chain of events or conditions happen. Problem is once it happens can the users catch and record the conditions that trigger it??? Since the trades occur very rapidly, a post mortem is near impossible to do.
A ridiculous assertion. It's not like it was a quark-gluon plasma fireball, or something.
This is going to end up being the SEC’s versions of the 2001 Anthrax Investigations.
Everyone knows what happened and who did it, but no one in authority will dare say it out loud...
Just imagine what will happen when the first Iranian nuclear weapon is tested successfully. DC will probably run out of plunger for a lot longer then 20 minutes.
There has to be a record for every single transaction. Once the market starts dropping, all the automated stop losses could feed the fire so to speak. It’s all on record. My guess is more automated selling kicked in as the prices dropped, causing prices to drop faster, kicking in more selling, etc. If the sell orders were set to take market price and the sellers far, far outnumbered buyers for that period, why wouldn’t the bottom literally fall out for those stocks?
I know I’m a crazed traditionalist when it comes to stocks, but I buy good companies with the intent to hold. It doesn’t really matter to me (at this point) if my stocks halve in value, because I have no intention of selling. If anything, I consider a lower market an excellent chance to increase my shares.
People like to say it’s a different market. They are right that it acts different in some ways (certainly more volatile), but I still believe it’s wise to invest regular amounts over a long time. You tend to ride out the ups and downs, and even when I start selling, I don’t plan on dumping everything at once.
Folks who are in it to make a quick buck tend to lose or gain large amounts, with the losers typically outnumbering the winners. That’s too much like gambling to me, and I consider gambling foolish.
Just like the oil rig “leak” happened as off-shore drilling was being considered.
See my tagline.
I agree. The underlying cause for this was the televising of the Greek riots. The minute that they were broadcast, the markets began unwinding. The TV commentary added to the fear, not just the words that they were saying but the helpless look of shock. This was a classic panic in a sports stadium, with an exclamation point added by rapid sell programs that couldn’t find enough corresponding buy programs for a few moments. Forget all that talk of fat fingers.
Agreed. Just like the H1N1 virus ‘scare’ came when they wanted to pass 0bamaCare.
Follow the money and the source will be found.
There will be a move from NY Stock Exchange to Chicago Mercantile.
That was the plan from the start.
The “problem” is that our “markets” (of one can still even call them that) are like the SOuth Platte in Nebraska, a mile wide and an inch deep. They are so tortured by the “plunge protection team” that the least thing sends them reeling in agony. At this point a “butterfly fart” in Cambodia can end up sending the whole mess crashing down. Now if our markets were truly “free” that would be a different matter.
When you have a criminal enterprise running the government, and their interest is in destroying free markets in favor of socialism/communism, it stands to reason that there’s something going on behind-the-scenes that is designed to sway public opinion in favor of a government takeover.
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