Economics

Dow Plunge Open Thread

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Going down.

Thar she blows. Is it a long-overdue return to common sense? Those pesky laws of gravity again? Is it all Greece's fault? Is it all Jim Cramer's fault? Is it all Elizabeth Warren's fault? Will we end the day below the non-magical 10,000 figure? Dow 3,600?

Your guess is as good as anybody else's so pipe up in the comments.

Update: DJIA rises through the late afternoon, closes at 10520.32.

CNBC is blaming a trading error at Citigroup, in which somebody entered "billion" instead of "million." (Thank God the government kept Citi from going out of business!)

Nasdaq closes down at 2319.

The waves of panic that greeted this temporary drop, in addition to demonstrating how thoroughly the system is rigged against short sellers and the valuable information they provide, brings back an old question: If the government is willing to spend trillions of dollars to prop up house prices, in the belief that this asset is so central to Americans' personal financial situations, why shouldn't it be spending just as much to make sure the Dow never goes down? If the price of your house—which you still get to live in even if it loses value—is sacrosanct, why isn't the price of your 401(k) plan?

NEXT: Reason Writers Around Town: Shikha Dalmia Addresses More Bogus Arguments by Arizona Restrictionists

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  1. Tory’s may be projecting a small majority in the UK general election (hey, that might counter the bad news from the continent).

    http://www.guardian.co.uk/poli…..-live-blog

    1. Yes, if the Tories were worth shit, instead of being Labour lite.

  2. Wow, what a show. I can’t believe I witnessed this, by chance. I just wanted to see how much was in my account and BAMM! WOWEEE!

    I feel like I missed a golden opportunity, but maybe not. The volume is so high, but I wonder if it was even possible to get an order in there, such a small window. Inexplicable???

    1. I tried to buy the S&P (SPY) when the Dow crossed 10,000 and couldn’t get an order in. I finally ended up cancelling when it came 2/3rds of the way back. Grrrrr….

      1. I had the same problem with a couple of buys I tried to make (shakes tiny fist at E-Trade).

  3. Buy, buy, buy!

    1. yep yep yep. time to increase my 401k contributions…

  4. You should refresh the illustration. @1208 PDT, it’s come over halfway back up the loss extent again.

  5. It is called a sucker’s rally.

  6. “Your guess is as good as anybody else’s.”

    The really sad part is that this is so true.

  7. All reporting on the DOW plunge seems to be blaming Greece’s crisis.

    1. I don’t buy it. The Greece thing isn’t a sudden unexpected surprise. This reeks of manipulation or gross error.

    2. I know. It is a good thing that the Feds or any of our largest states are not engaging in the high tax, high public service employment policies that got Greece into trouble.

      1. That was sarcasm – right, John? 😉

        1. Maybe a little.

          1. we need a clear and recognizable sarcasm font.

            1. Sarc Serif?

              Times New Ironic?

              Courier parodic?

    3. According to CNBC this was based on “unverified” information that the credit markets had frozen like what happened here.

      OK, Barack, time to bail them out too, right?

    4. All reporting on the DOW plunge seems to be blaming Greece’s crisis.

      That answers it, then. The U.S. needs to prop up Greece’s 45-year-old retirees.

      1. We are, via IMF.

  8. That is one steep-ass dive. I’d be worried to death if i wasn’t already broke as fuck.

    1. I personally welcome hyperinflation. I’ve got student loans out my ass.

      1. I’ve got a fixed rate mortgage.

        1. Ditto. At least I’ll have a house, even if I can’t have food, electricity, or running water.

  9. Glitch.

  10. Sell treasury bonds short…

    1. Yeah, that trade’s working out REAL well…

  11. I blame Tin Tin’s ridiculously overt racism, and futile efforts against global wage arbitrage *cough* Germany. But mostly Tin Tin’s inyoface racism.

  12. To the moon!

  13. Probably Software…

    P&G lost 25% of its value in 5 minutes?

    …and then got it all back again?

    That one glitch seems to have hit all Dow 30 stocks at the same time–and none of the others. That’s probably a glitch.

    We won’t know for sure until we know for sure, but if one of the servers wasn’t offering prices properly, isn’t this exactly what we’d expect to see?

    1. As pointed out on CNBC, here’s the quote for Accenture…

      http://www.google.com/finance?client=ob&q=NYSE:ACN

      It went down to one cent, for a second, and then came all the way back up…

      That’s a glitch. That has nothing to do with Greece or anything else, directly. It’s just that you’re not going to see a glitch like that happen unless the system is under stress, and between Greece and the oil slick and…

      There was a glitch.

    2. Briefing.com is saying:

      The action was not the result of any particular news item, but rather a breakdown of technical levels and a wave of broad-based selling.

      1. The question is what set off the wave, and it was almost certainly a glitch of some kind initially…

        And then you’ve got margin calls to deal with.

        And then you’ve got program trading to deal with…

        There’s no way a stock like Accenture, with a $30 billion market cap, goes from around $40 to one cent and then back up to around $40 again under normal trading conditions…

        Unless there was a glitch that set the chain reaction off.

        1. “There’s no way a stock like Accenture, with a $30 billion market cap, goes from around $40 to one cent and then back up to around $40 again under normal trading conditions…”

          …in a period of 5 seconds. But that’s what happened. Look at the chart.

  14. I heard 9k was the new ten thou . . .

  15. 2:48 p.m. would have been an awfully sweet time to buy. Too bad I have a job or I could have been monitoring this closely.

  16. The Greeks are behaving like a bunch of 2 year-old brats throwing temper tantrums because they didn’t get a candy bar they wanted.

    In other words, like typical leftists.

  17. “Turn those machines back on!!”

    1. “Where’s Beeks? Where in the hell is Beeks?”

      1. He’s with Biggles.

  18. Damn Speculators!

    1. or what I meant to say is that maybe a drop in the DJIA will be enough to wreck union pension plans. Thus finally putting an end to the SEIU, AFL-CIO and other thuggish organizations.

      1. …out of business.

        1. That would be a silver gold lining in the storm cloud.

          1. Until the federales decide to assume said pension obligations. Obama is a wholly owned subsidiary of public employee unions.

            1. Haha. Welcome to the party comrade. We have already created the Pension Benefit Guaranty Corporation. All your 401ks are belong to us!

              /union goon

            2. No the private sector unions retain a minority stake in Obama.

              That’s why he stole the bondholder’s share of GM and Chrslyer and gave it to the UAW.

              And signed an executive order that all federal construction contracts have to go to companies with union work forces.

              1. I thought he did that because he was inspired by corporatism.

  19. Dropping again…

  20. Yup, Warren’s fault.

    1. Obviously.

      1. Bite me. I tried to warn you.
        DOOOM!

    2. Fer sure.

  21. I have set aside some money with which I plan to buy some stocks — this is money I can afford to lose, though I would of course be spectacularly pissed off if I did — but I have not yet made any stock purchases because I still think the market is inflated. I base this not on any specialized stock knowledge, but on the housing market — there are STILL a lot of ARMs that have yet to reset, and IIRC in 2011 there’s another wave of them scheduled to go bad, and the housing market will then drag down the rest of the economy just as it did when the first wave of ARM resets kicked off the current economic mess.

    1. Put most of your money into a money market account (ie. treasuries, Tips, ect.) and large corporate bonds like P&G, BAC or whatever. Then I’d suggest putting a smaller “speculative” portion into commodities (ie. gold, silver, oil, wheat, copper, ect.)

      Although, safety is what I’d be looking for right now.

      1. Safety is primarily what I am looking for now, too. My main problem — which I suspect is no accident — is how everything is so manipulated these days, it’s damn-near impossible for an ordinary non-stockbroker type to really know what’s going on.

        Here’s an example I’ve given to friends before: if you and I could go back in time a decade or so, and I keep my memories but you lose yours, I could (if I wished) utterly destroy you financially: invest in Enron! Tyco! WorldCom! Obviously, you would not invest on just my say-so — you’d do your homework, check the accounting reports, etc. — but they all lied too, and made those three companies seem like honest, solid investments even though an investor would be better off simply setting his money on fire — at least that might slightly reduce your home heating bills, so you’d get SOME benefit from it.

        And other than “don’t go for a stockbroker who makes money based on the sheer number of trades you make,” I am not entirely certain what to look for regarding good vs. bad.

        The system’s rigged so you can never climb off the damned treadmill, can you? If the value of money were stable — if a dollar forty years from now would buy as much as a dollar now — I wouldn’t need to worry about investing. My savings account contains an impressive number of circa-2010 dollars, but even at “low” rates of inflation, a sum of money that would let me live comfortable for several years right now will barely cover twelve month’s expenses when I’m ready to retire. (Especially when you consider that,in order to Save Social Security for the Baby Boomers, my generation’s retirement age will be around 95 or so.)

        So saving won’t prepare you for your future — you MUST invest, but the system is rigged against small investors.

        1. “Safety is primarily what I am looking for now”

          Electric and gas utility stocks tend to be pretty safe. But you must, must diversify.

          1. And think long-term. People like the Kennedys aren’t adjusting their portfolio everyday. They make sound long-term investments and let them grow quietly. This provides greater returns for much less stress.

            1. Oh, yes, I’m not looking for day trading or quick turnaround, but long-term investments. Still, I think I’d be better off waiting until the ARMs adjust in 2011 before I dive in to the market. The housing bubble has a lot of deflating left to do, no matter how desperately the government tries to keep it inflated.

          2. Would most regulated stocks be safe? 🙂

        2. I would just recommend a Vanguard MM account. That is probably as safe as you’re going to get.

          http://www.vanguard.com/

          But, as always, investors should do thier due diligence.

          1. Money Markets are great, now that the US Government has promised to bail them out if anything bad happens!

            1. So are bonds of some of the big financial institutions such as BAC, C, GS ect. So long as Uncle Sam is going to prop up TBTF, your bonds are safe in those corporations.

      2. Then I’d suggest putting a smaller “speculative” portion into commodities (ie. gold, silver, oil, wheat, copper, ect.)

        Look at RJI (Commodity fund)

    2. Donate it to my 2012 reelection campaign Jennifer. I appreciate your vote in 2008 but I have so much more to do. Go ahead and give a little to the DNC for this cycle, but not too much I fell 2010 is a lost cause for the Party.

    3. Jennifer, you might look at PRRDX, a PIMCO inflation-protected Treasury fund. That’s where I put my chicken money – it gets a decent return for a bond fund, but isn’t terribly volatile, and should be pretty inflation-proof.

      1. Thanks for the advice,but I have another question — where/how DO you buy such things? It’s not like you can just bring your wallet into “Investments R Us” and buy stuff. And again, I know the rule “don’t choose a broker/investment advisor who gets paid based on the number of trades or purchases you make” but other than that I really don’t know what to look for.

        1. Ameritrade or Sharebuilder, I’ve worked with Ameritrade for 5 years and they generally leave me alone to manage my own portfolio. Only called 3 times and weren’t soliciting anything. I don’t even think Sharebuilder has employees to call you.

        2. Jennifer

          You can buy directly from Vanguard.

          They have a wide variety of stock mutual funds and money market funds from the conservative to the aggressive.

          They are also “no-load” funds so your costs are lower.

          1. It is my opinion, for what that it’s worth (not much, I know), that a small investor is better advised to do their investing through funds like Vanguard or AXA.

            Especially if one is working. Unless you have time on your hands to watch the market and actively trade, you are better of letting a professional mange things.

            Not Bernie Madoff, though. 🙂

        3. My brokerage accounts are at Fidelity, where I manage them myself on-line. I would totally go on-line.

          Vanguard built their family of mutual funds for people just like you. I would definitely stick to mutual funds, at least for awhile, and theirs are as good as any, and better than most.

        4. “this is money I can afford to lose… Safety is primarily what I am looking for now”

          Don’t invest it. I’d say buy gold platinum and palladium and bury it, but platinum and palladium are somewhere between spot-on-value or in the middle of a bubble.

          Seriously. Don’t count on anything anymore. We’re hitting bubbleliscious territory.

          “I’m not looking for day trading or quick turnaround, but long-term investments.”

          No such thing, not for a decade or so. Sorry. Bad time to have been born, huh?

          I’m trying to ride the waves. I’ve bought in a series of ETFs on commodities to crest on the asset bubble. The assets that I’m riding should be leading indicators (I hope!) and when they go down 10%, I’ll cash out and buy a ETF that shorts the market and hold on to my dear life.

          But I’m really really okay with losing all the money I’ve invested. Life’s too short.

      2. Jennifer, you might look at PRRDX, a PIMCO inflation-protected Treasury fund

        Or TIP (an ETF)

  22. Bernanke: Banks should make loans to creditworthy borrowers…

    “Our message is a simple one: institutions should strive to meet the needs of creditworthy borrowers, and the supervisory agencies should do all they can to help, not hinder, those efforts,” Bernanke told a conference on banking in Chicago.

    “We are also supporting efforts to work with troubled borrowers to bring them back into good standing,” he added.

    We’re so screwed. Is there any more that needs to be said?

    1. “Our message is a simple one: institutions should strive to meet the needs of creditworthy borrowers,”

      Yeah – just like Fannie Mae and Freddie Mac are doing!

  23. PPT powers activate

  24. Repeat of Oct 2, 2008? Dow falls from 10831 to 10482 that day.

  25. Three words: Dollar cost averaging.

    1. How has that worked out for those holding US equities over last 10 years? Zero return (not taking into account inflation losses). Buy and hold in this market? Not for me.

    2. How’d that work for ya over the past ten years?

  26. GIVE SOROS WHAT HE WANTS!

    1. You know, I really wouldn’t be half surprised if Soros spent his nights wearing practicing Kaballah nude, in front of a picture of Alisair Crowley.

      1. Better than Monica Crowley. Maybe. I dunno, tough call.

  27. Can you say “double dip” boys and girls?

    I knew you could.

    1. Any relation to Jim Rogers?

  28. By far the funniest thing I’ve read about this plunge was the following at WSJ.com-

    “Investors fled everything from stocks and risky bonds and poured money into safe assets such as U.S. Treasurys. “

    BWAHAHAHAHAHAHAHAHAHAHAHA!!!!

    1. Treasuries = the new bubble. Pop coming soon… He’s vacationing with Snap and Crackle in Greece as we speak.

      1. That’s what they have been saying about Japanese govt bond yields for 20 years. However, they keep heading down.

        10 yr treasuries are headed to 2.5%

  29. NASDAQ did it.

    1. Now a it was human error.

      Human’s did it.

  30. We blame this on the Tea Baggers. And Brownie. And FOX News.

  31. I love me some trailing stops. I was entirely out of the market yesterday (except for my gold stocks, that is).

    Gold is up like a rocket, but gold stocks have been caught in the general undertow. I think there is still a window to buy them. If you want to dip your toe in the water, you might try GDX, GDXJ, or FSAGX.

    DO NOT BUY a gold ETF (GLD or one of its clones). Maybe SGOL, if you just have to speculate, as its the only one I know of that probably has actual unencumbered gold to back its shares.

    I debated this morning whether to put some money into one of the short ETFs, and decided not to. Which sucks, but whaddayagonnado?

    1. sounds like RC Dean is a gold conspiracy buff!…I suppose the Jooos are manipulating gold prices huh RC with their fancy ETFs?

      You really think they could keep something that big a secret with the open and honest media in this country? The competitive nature of our media guarantess that that story would be broken in no time if it were true…take your paranoia elsewhere, the ETFs are perfectly safe.

      1. RC Dean, by his own admission, pulls down $200K+ by commenting on H&R all day. Maybe you should listen to him. Or maybe he’s a big fat liar.

      2. sounds like RC Dean is a gold conspiracy buff!…I suppose the Jooos are manipulating gold prices huh RC with their fancy ETFs?

        I do think the gold price is manipulated, but only because central banks have both the motive and the means to do so.

        I don’t trust gold ETFs, because I have read their prospectuses (and can do simple math), and therefor know that
        they cannot possibly hold enough actual bullion to back their shares. SGOL may be the exception.

        I think gold mining stocks have been a good play, so I have around 30-40% of my equity money invested in them. Returns over the last year are in the 30% range. I think they’ve got a hell of an upside, now that the big miners have shed their forward contracts and safe haven investments like gold look more attractive to more people.

        1. Gold ETFs are well meaning vehicles, but the problem is that the way that they are set up it’s easy for big players to game them on arbitrage. You’re better off buying physical (which isn’t really that hard) unless you’re really in for some short-term speculation and don’t mind losing some value off of that arbitrage.

          But gold is really shitty for short-term speculation. It just doesn’t move that much. If you want to play that game with commodities, you’re better off buying the newly-made ETFs for platinum and palladium (PALL, PPLT). For those metals, you’re way better off buying the ETFs for short-term speculation because you might find them plunging long before you get the chance to take some time off of work to go to the coin shop.

    2. Perhaps true, I think GLD loans out it’s shares.

      Maybe SGOL, if you just have to speculate, as its the only one I know of that probably has actual unencumbered gold to back its shares.

      Maybe also CEF?

  32. This is obviously due to the masses of unpaid interns ravaging the economy.

  33. It’s just a few percentage points. Big deal. The media gets all excited over several hundred points, but we can get those back in a day or two.

    Doesn’t look like there’s anything substantial here. Probably just a sell off triggered by people thinking some key stocks have peaked. I tend to agree with that thinking.

    1. “It’s just a few percentage points. Big deal. The media gets all excited over several hundred points”

      That is so true. When the dow was at 1,000 then a 900 point drop was big. But with the dow at 10,000+ it’s less that a 10% drop.

      1. …a 10% drop in ten freaking minutes. That, my friend, is a BIG deal!

        1. No, it isn’t. Didn’t close 10% down, now did we? Only the gamblers freak out, because they don’t understand finance or markets.

          1. Give it a few more weeks, then we will see whether today was a big deal.

            1. Fasten your seatbelts, it’s going to be a bumpy night!

  34. So I should have shorted my position on frozen concentrated orange juice?

    1. Great movie.

  35. Actually, I know what the problem is. The leading indices are dropping the same day we learn that we are freaky Neanderthal/Homo sapiens sapiens hybrids.

  36. The liberals are blaming this on Greeks not paying their taxes. Figures.

    1. So we are all fucked Greek style.

  37. *covers eyes*

  38. I think somebody hit the Magic/More Magic switch at MIT again

  39. Dow Plunge Open Thread

    AKA “H&R-Crash Open Thread.”

    Anyway, CNBC has reported that the “plunge” was due to institutional trading glitches. They also reported that the “plunge” was attributable to “Greek worries.” In another 15 minutes it will be almost conclusively blamed on the Oil Thing (remember that?). As I type, MSNBC is asking: Are We The Next Greece? It’s funny ’cause it’s true.

    1. No. there are a two, maybe three other countries ahead of us in line.

  40. amazing.. This Greece news isn’t new.. What gives?

    And if we think Greece can’t happen here we’re crazy. And no one will be there to bail US out.

  41. Down she goes. Time to shore up the border, the Canadian one that is.

    1. Right, Canadians have no interest in US stock markets at all.

  42. That graph almost looks like a hockey stick.

  43. There is nothing more sound than a diverse portfolio.

  44. THE URKOBOLD BELIEVES THAT THE DOW’S PLUNGE IS RELATED TO THIS PLUNGING IN ENGLISH APPAREL.

    1. Great, now we have the stock market crashing and earthquakes.

    2. Coldest, hardest rock a man ever laid his head on.

  45. The point of the show is to illuminate.

  46. THEY ALSO CAUSE GLOBAL WARMING: MAMMOPOGENIC GLOBAL WARMING.

    1. A little nip in the air prevents a little nip in the air. I can dig it.

    2. It’s getting a little nippy.

  47. Now there are reports that it could be the result of a typo. Someone wanted to sell shares in the millions but accidentally sold billions.

  48. I say computer glitch. Greece has nothing to do with this.

  49. Original post updated. That million/billion excuse sounds totally bogus, but it’s still pretty funny.

    1. Was Dr. Evil shorting the market again?

      1. That’s no way to refer to George Soros, who is like unto a godling of the left.

    2. Tim, it doesn’t sound bogus to me, I’m always getting my millions and billions mixed up.

  50. The plunge was caused by my purchasing a unitard, after I said I wasn’t going to.

  51. CNBC is blaming a trading error at Citigroup, in which somebody entered “billion” instead of “million.” (Thank God the government kept Citi from going out of business!)

    Should I resist the temptation to cash out of my citigroup stock, or sell like crazy?
    Argh!!!!

    1. I was briefly a Citigroup employee. When I was there, one of the executives made some (public) joke about buying Canada.

      1. I think that means “Hold”. Citigroup still ain’t going anywhere.

        1. That’s correct.

          Neither is Canada.

  52. Jump, you fuckers

    Bye, Euro, bye.

    Yen, baby, yen.

    1. Um Yuan. Unless you think Japan’s gonna be the next economic leader.

      1. But, but, the Yen was strong, today. Every other currency, except for the dollar fell.

        Yeah, I know. The Euro is crashing. The long term trend for the Yen is down. It’s a fucking race to the bottom. Everybody knows it. The last thing Bernanke wants is a strong dollar. It’s difficult to inflate away debt with a strong currency. But don’t worry, after the Euro completely crashes, the Dollar won’t be far behind. Gold hit an all time high, I believe.

        1. The Yen seems to be negatively correlated to the US stock market.

      2. the only thing dumber than thinking that Japan is going to be the next economic leader is thinking that China will be. That would be like betting on Germany just prior to the great depression. Producer countries are going to be sooooooo screwed.

      3. Don’t count Japan out, but India is a more likely candidate than China. In fact, I think China has some implosion written on it.

        1. I agree. India.

          1. If circumstances were that I could participate in the medical tourism industry, India I would be going.

        2. I’m partial to India myself.

      4. Um Yuan.

        Thank God there are some people taking that side of the bet. Sorry, it has to be you.

        1. Look into the development of a commercial real estate bubble in China before you invest. There may be still plenty of smart bets there even after you do, but I wouldn’t wont you caught up in the ‘next sure thing.’

          1. Uhm, ‘I wouldn’t want’, the other way with the double negative would be quite malicious of me.

    2. No, I think it’s pretty close to even money now that a bunch of Euro countries are gonna get kicked out of the Euro-zone.

      The ones likely to get kicked out are, of course, Greece, Spain, Portugal and Turkey might as well forget about it, ’cause that ain’t gonna happen…

      With German elections especially… You might see Germany and France keep a common currency for a while, but I imagine that would be about as popular with France as Canada adopting the US Dollar would be.

      Even money that the jokers get kicked out, and then the Euro’s not much of a rival to the Dollar. That should have an inflation resistant effect on American interest rates too–more people will prefer to hold dollar denominated debt–especially in Greece, Spain, Portugal…

      1. “…but I imagine that would be about as popular with France as Canada adopting the US Dollar would be.”

        …as Canada adopting the US Dollar would be in Canada, that is. Why would the French want their monetary policy set by the Bundesbank? Why would Germans want their currency inflated to help the French?

        You get the idea.

        1. The Canadian dollar is a decent inflation hedge since the countries economy is heavily resource dependent. Likewise the Australian dollar, and perhaps even the SA Rand and the Chilean peso.

          1. That’s not exactly what happened with the last big currency crisis…

            Asian Flu? I’m not saying it’ll necessarily play out like it did before, but when the bottom fell out of the commodities indexes, the currencies in those economies (Russia’s too) took a haircut…

            Just ’cause it happened that way last time doesn’t mean it’ll happen this time, but I think there’s reason to think it probably will–especially if the Eurozone shrinks in the near future.

            And I think that’s highly likely.

  53. Hello? I blame Bush.

  54. So, what just happened? I don’t know, but what I do know, is that those GE corporate whores over at CNBC are full of shit. Somebody with fat fingers hit a “b” instead of an “m”? Yeah, right.

    My guess: Blankfein, Bernanke, Geithner and Dimon were in a room with a few “select” Congreecritters, and said,

    “watch what we can do… Got it? Now, say Uncle.”

    “NO!”.

    “Say Uncle, we can make it go lower.”

    “no?”

    “Look, all you have to do is say Uncle, and we’ll make everything all better. Just look at Proctor and Gamble. Without them, you won’t have any Dawn detergent to clean up all those poor little birds. NOW SAY UNCLE, MOTHER FUCKERS!!!”

    “OK, OK, Uncle”.

    “Now you know who is control, right?”

    1. Well, they are two letters apart.

      But I thought all the trading was done by computers anyway.

  55. So, my Efficient Market Hypothesis worshiping friends: can anyone explain how the value of 30 major stocks lost 10% of their value in five minutes, and then regained almost all of it in just a few more, based on rational valuations of the stocks?

    Or can you just admit that a random error was compounded by irrational fear (or that it was some sort of fraud…wouldn’t THAT be fun)?

    1. Better question: how quickly do you think a government bureau could fix that many errors? I have the sneaking suspicion that it would take a hell of a lot fucking longer than five minutes.

    2. The errors conveyed false information to the market, the market then reacted accordingly. It then corrected itself when given the opportunity.

      What exactly is the issue here?

  56. I am not a conspiracy theorist but today potentially showed am ongoing trend that is problematic if not illegal. If I wrote a program that sought specific companies that fit specific criteria of all the stocks in the market that would find situations where shares for my buy or sale were not available, couldn’t I theoretically find the way to create a downturn that exactly mirrored the situation today. If I found a company that could not cover my purchase ? i.e. not enough stock to cover my buy or enough to cover my sales and increased the buy or sales in escalating increments; essentially finding weakness – wouldn’t that account for the program trading that I saw today? I am not an expert, just a home gamer with a programming/consulting background, but this looked liked a well executed programmatic solution looking for weaknesses.

    This is a disturbing situation for retail investor that potentially shows market manipulation. Today it was excessive driving ACN to .01 P&G down 25% and others to fractional values, but from a programming perspective I know I could find these situations. The key is exploiting the “triggers” that other program traders recognize and trade with daily. If I had written these programs, knew what the key decision criteria is based upon, and then traded according I could go counter to the directional theory of the programming and look for situations that I could “trigger” program behavior and manipulate the share prices. It would not work every time, nor if the market was not already facing severely bad news. It would have to be executed quickly ? just long enough for the other programs to react and allow my next transaction. It would not be apparent unless I became excessive, meaning that I could not drive prices downward to noticeable levels, e.g. ACN to .01.

    The transfer of wealth out of the U.S. if done carefully would be hidden in daily transaction volume. The only way that the trend would be noticeable would be if it were driven to extremes, like today. I watched the same situation with Bear, Lehman, and Merrill and the banks and all the others that were short sold into bankruptcy or close to it. The system looks like it was “played” not only potentially by hedge funds but others. I don’t have the clout to launch an investigation but this wealth transfer has been extreme and it looks programmatic, or simply stated that someone knows the game and set itself up to take advantage of the knowledge.

    The stock market is the heart of our economy the suspicions are correct, this has been the crime of the century.

    1. As this unfolded, all I could think was Madoff must be jealous. The market shrank and expanded a full 8% in less than an hour. If only 50% of the purge and surge was deliberate and the balance of the 3.5% that was retracted are HF Managers and Brokers caught off guard–someone made off with a lot of loot. Blaming the flux on Greece as if they controlled a major share of the free market seemed timed and stupid–Greece has been teetering since Obama took office with no safety net–duh?! Even targeting P&G or ANC as if those two positions created a domino effect is simplistic scapegoatism. In the end–the only culprits that took a real hit were Mutual Funds–again. It’s as though the MF Managers always buy and sale at the worst possible times. To allow any one entity to walk away with 2.5% of of your portfolio in less than 1 hour totally unrecoverable is criminally brilliant. I cant’ say I didn’t feel that the take was on from the moment I started watching the rally. Someone made off like a fat cat in a canary shop. The MF Managers simply walked back in after all the carnage and closed the cages.

  57. Oh! this is my first time to know it. Thank you for sharing the video.

  58. We should blame Jim Cramer. Even if it’s not his fault, that guy needs to STFU.

  59. wow, I lost a whole bunch thanks to this quy.

  60. Something that supports a perspective:
    In very broad terms, high-frequency trading refers to the buying and selling of stocks at extremely fast speeds with the help of powerful computers. Using complex algorithms, these computers can scan dozens of public and private marketplaces simultaneously, execute millions of orders a second, and alter strategies in a matter of milliseconds.

    In the U.S., high-frequency trading firms represent 2.0% of the approximately 20,000 firms operating today, but account for 73.0% of all equity trading volume.

    On 24 July 2009, Karl Denninger of The Market Ticker accused high-frequency traders of “intentionally probing the market with tiny orders […] to gain an illegal view into the other side’s willingness to pay. This pattern of offering [sell orders at different levels] was intended to do one and only one thing; manipulate the market by discovering […] a hidden piece of information – the other side’s limit price!” He went on to argue that “the presence of these programs [would] guarantee huge profits to the banks running them” and that “retail buyers would get screwed as the market [moved] much faster to the upside than it otherwise would.”

  61. How gaming happens: 1) The Information Leak (Fishing)- By selling a few small lots, a gamer determines that a passive buyer has placed a standing order in a stock 2) The Exploratory Maneuver – The gamer buys the stock rapidly in the displayed market and succeeds in moving the stock up. 3) The Hit ? After moving the stock, the gamer sends a large sell order to the dark pool and sells at substantially higher prices than the price he started buying at in the displayed market. 4) The Reversion ? In less then two minutes it is all over. Prices revert as the gamer stops supporting the market.
    The Hit
    Reversion
    The Exploratory Maneuver
    The Information
    Leak
    ?
    Gaming by manipulating the midpoint. Most dark pools execute more than 90% of trades at the midpoint, since it is derived from the NBBO. Once there is information leakage from the dark pool, traders can manipulate quotes in their own favor. For example, if a stock’s NBBO quote is 10.10 x 10.20 and you have a buy order of 100,000 shares, a seller can submit a sell order of 100 shares to “fish” for buy orders in that stock. Once a buy order is discovered, the seller can then send a buy order to the open market @ 10.14 to manipulate the midpoint, following it with a sell order that is executed @ 10.17 rather than 10.15, which would have been the execution
    15
    price without the manipulation. The trader will then likely withdraw his buy order from the displayed market, bringing the quote back to 10.10 x 10.20. (See Figure 4)
    Figure 4. Midpoint Gaming
    16
    10.10
    10.20
    10.15 Buy 10 K, Sell 0
    Dark Pool
    Displayed Market
    10.10 10.20 100×100
    Buyer in Dark Pool eligible to execute at 10.15
    10.14
    10.20
    10.17
    Dark Pool
    Trades 10 K @ 10.17
    Displayed Market
    10.14 10.20 200×100
    Sender manipulates the midpoint, buyer executes at 10.17
    Buy 100
    Sell 10 K
    ?
    Gaming by market making inside dark pools. Market makers traditionally tried to capture the spreads by layering the books of ECNs and exchanges electronically. In the displayed market it is more difficult to make markets because displayed orders help competing market makers detect their strategies.
    Dark pools, on the other hand, can be a perfect place for market makers to enter or exit a position. When entering a position, they do not need information on other orders in the pool since they can blindly send passive limit orders to these dark pools,
    17
    knowing that the orders will execute when there are market swings. To exit a position, however, market makers need some information about other orders; they can obtain this information via fishing or other IOI mechanisms established in dark pools, as described above. The effects on dark pool customers are difficult to quantify in terms of profit and loss, but it is generally safe to say that this is not the kind of flow interaction dark pool customers desire. The dark pool is no longer a level playing field and market makers benefit from it more than the traditional dark pool customers.

  62. WE DON?T PAY FOR YOUR CRISIS !!
    Let the greedy bankers and gamblers pay for the mess they have caused !!

    http://www.youtube.com/watch?v…..re=channel

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