Archive

Stock Market 2010 "Flash Crash"

  • LJ
    http://online.wsj.com/article/SB10001424052748704370704575227754131412596.html?mod=WSJ_hpp_LEADNewsCollection
    At its afternoon low the Dow Jones Industrial Average was down almost 1,000 points, hurt by sharp drops in Procter & Gamble, 3M and other companies that traders said were subject to heavy selling by so-called black boxes, or automated trading systems.
    Shares of Procter & Gamble plunged to $39.37 from around $60. The New York Stock Exchange said each stock has its own circuit breaker level. When these stocks fall below their levels, then they can be traded on any other exchange or platform at any price. When P&G fell below its circuit breaker, a bid came in for the stock at $39.37 from the Nasdaq, the NYSE said.
    Interactive Graphic

    "You don't see a blue-chip stock like this go down 20 points with no news," said Frank Ingarra, co-portfolio manager at Hennessy Funds, a quantitative firm that deals with program traders. "All of the algorithms kicked in from this errant thing."
    So someone made an errant trade, the rumor being putting in a sell order for 1,000,000,000 shares rather than 1,000,000, then having the automated trading computers kick in and start liquidating shares of other stocks. Something seriously fucked up happened on wall street today. When are there going to be regulations on the automated trading? We have seen them manipulate the market before. Now, I am all for hedge funds and everything, but that is because there is an actual art to it when it is run by actual portfolio managers doing their due diligence and making plays that carry human emotion. When you get these computers that can make plays faster than a human can, you get things like this.

    More proof that something fucked up went on
    http://blogs.wsj.com/marketbeat/2010/05/06/accenture-went-to-a-penny-at-248-pm/?mod=e2tw
    You think the action in Procter & Gamble was weird, check out the nosedive on Accenture, which plummeted from above $40 at 2:47 p.m. to $0.01 at 2:48 p.m. Had demand for consulting services declined so sharply in that one minute?
  • LJ
    Sorry, the fund meant to sell "$16 million" worth and typed "$16 billion" worth instead.

    Regardless, pundits are now out saying "but the market STILL crashed". I'm sorry, but while 350 points is bad, it's not quite the fear mandate that 1,000+ is.
  • I Wear Pants
    Computers should not be allowed to make investment decisions.
  • ptown_trojans_1
    I'm no expert on the stock market, but the fact that little error like this caused so much confusion and panic is a little unsettling to me.
  • LJ
    I Wear Pants wrote: Computers should not be allowed to make investment decisions.
    I agree to a point. I mean, a lot of the selling would be automatic stops put into place and margin calls, which I feel SHOULD and CAN be computerized, but when they are merely running algorithms, that's pretty messed up.
  • derek bomar
    would have liked to have gotten accenture at $0.01
  • LJ
    derek bomar wrote: would have liked to have gotten accenture at $0.01
    How many people are getting home to see that their TD account stopped them out of a bunch of stocks that were caught in this "flash dance"
  • derek bomar
    LJ wrote:
    derek bomar wrote: would have liked to have gotten accenture at $0.01
    How many people are getting home to see that their TD account stopped them out of a bunch of stocks that were caught in this "flash dance"
    I'd Hulk Smash my comp if I saw that
  • majorspark
    It was funny watching the commentators on CNBC confused over this.
  • I Wear Pants
    LJ wrote:
    I Wear Pants wrote: Computers should not be allowed to make investment decisions.
    I agree to a point. I mean, a lot of the selling would be automatic stops put into place and margin calls, which I feel SHOULD and CAN be computerized, but when they are merely running algorithms, that's pretty messed up.
    Well yeah but the stops and margin calls originated from a person. Like, I say sell it when it gets below 5 bucks. The computer does that. I'm cool with that.

    I'm not okay with algorithm based trading that makes many many trades a day.
  • believer
    ptown_trojans_1 wrote: I'm no expert on the stock market, but the fact that little error like this caused so much confusion and panic is a little unsettling to me.
    Agreed. I just checked my 401K and took a big hit today over this dumb ass mistake. WTF? :-/
  • goosebumps
    I think its fair to say that this would have been much worse were it not for the stimulus bill :)
  • LJ
    believer wrote:
    ptown_trojans_1 wrote: I'm no expert on the stock market, but the fact that little error like this caused so much confusion and panic is a little unsettling to me.
    Agreed. I just checked my 401K and took a big hit today over this dumb ass mistake. WTF? :-/
    Your 401k took a big hit for other, actual, reasons. If you lost some shares because of the flash, then I would agree, but the flash was nothing but a blip intraday.
  • IggyPride00
    This is the free market at work. High frequency trading is not a regulated activity, and is free for all to do. If people lose money because of it they should stay out of the market. :(
  • jmog
    I'm sure somehow this is Bush's fault, we should as Obama and see what he thinks :).
  • LJ
    IggyPride00 wrote: This is the free market at work. High frequency trading is not a regulated activity, and is free for all to do. If people lose money because of it they should stay out of the market. :(
    I don't call being able to manipulate the market being "the free market at work". Most extreme free marketers I know are very against HFT.

    That is unless of course you are just being factious
  • IggyPride00
    LJ wrote:
    IggyPride00 wrote: This is the free market at work. High frequency trading is not a regulated activity, and is free for all to do. If people lose money because of it they should stay out of the market. :(
    I don't call being able to manipulate the market being "the free market at work". Most extreme free marketers I know are very against HFT.

    That is unless of course you are just being factious
    I was being facetious, yes. Many of the HFT guys are also "get the government out of my business and leave me alone" guys as well. You will pry the ability to do that from their cold dead hands.

    An easy way to tremendously cut down on it is a transaction tax, but that would never fly because we would hear from all the usual suspects about how all the trading will leave the U.S, and it will kill investors, and so on and so forth.
  • LJ
    IggyPride00 wrote:
    LJ wrote: factious
    I was being facetious, yes.
    wtf firefox autocorrect, lol.
  • I Wear Pants
    IggyPride00 wrote: This is the free market at work. High frequency trading is not a regulated activity, and is free for all to do. If people lose money because of it they should stay out of the market. :(
    The free market at work...always fucking everyone over.
  • IggyPride00
    Well, the banking sector got its $300 millions worth today from its lobyying efforts as the vote to break up the big banks failed in the Senate 33-61. We deserve every banking crisis we get from now on (and there will be more to come) as we have had a chance to do something about it and took a pass.
  • LJ
    A bunch of trades from today are being canceled.
  • Footwedge
    IggyPride00 wrote: Well, the banking sector got its $300 millions worth today from its lobyying efforts as the vote to break up the big banks failed in the Senate 33-61. We deserve every banking crisis we get from now on (and there will be more to come) as we have had a chance to do something about it and took a pass.
    + a bunch. And those that think that another crises will be magically averted here live in a dream world.

    As I posted above, the financial volatility in Greece is no different than the US's financial walk on egg shells. The IMF has given the US a free pass on the deficit spending craze we've been seeing since September of 08.

    Denninger shares the truth in the bottom third of his piece written today.

    http://market-ticker.denninger.net/
  • LJ
    Footwedge wrote:
    IggyPride00 wrote: Well, the banking sector got its $300 millions worth today from its lobyying efforts as the vote to break up the big banks failed in the Senate 33-61. We deserve every banking crisis we get from now on (and there will be more to come) as we have had a chance to do something about it and took a pass.
    + a bunch. And those that think that another crises will be magically averted here live in a dream world.

    As I posted above, the financial volatility in Greece is no different than the US's financial walk on egg shells. The IMF has given the US a free pass on the deficit spending craze we've been seeing since September of 08.

    Denninger shares the truth in the bottom third of his piece written today.

    http://market-ticker.denninger.net/
    Denninger is usually completely full of crap, but I agree with a good part of his last post today.
  • fish82
    derek bomar wrote: would have liked to have gotten accenture at $0.01
    A buddy of mine stocked up on P&G @ 39. Bastard. :D
  • sleeper
    fish82 wrote:
    derek bomar wrote: would have liked to have gotten accenture at $0.01
    A buddy of mine stocked up on P&G @ 39. Bastard. :D
    From my understanding, any trade made from 2:40p to 3p are being canceled, so he won't get to hold those shares.