I am not sure after hearing all the explanation about Thursday's stock market plunge. No one has come forward and admitted to the bad trade of 16 Billion instead of 16 Million theory. I don't think we needed one bad trade to do this. It seams that the NYSE circuit breakers slow down a fast selling market. However the computer system jumps to the Nasdaq to fill the trades. The Nasdaq being a secondary market in these stocks had very little liquidity and no circuit breakers. The market was trading very heavy in a strong declining wave, which was being blamed on Greece's financial crisis. I think this was another wake up call for all the computer sophistication that has not been fully worked out.
What does this mean? It means other then the fact that the exchanges must resolve their reciprocity, the markets themselves are turning down. Excuses or blame won't change the market direction.
With the Real Estate markets doing better lets hope that it doesn't get interfered with.
Have a market question? I would be glad to help!
Richard
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You make a good point about many parts of the market possibly being overdependent upon a not-so-perfect computerized system.
However, I think that there were a lot of people who were really sensitive about a lot of things. I don't think it would have taken much to create a similar effect to what we had on Thursday. That computer gliche was blamed, but I think that if that didn't occur, something else would have triggered something similar.
I've been following the stock market for about two (2) years now, and I notice that many people tend to overreact to news tidbits. This is great news for investors, as it provides the best buying opportunities. (Of course, you need to have cash on the sidelines to take advantage of these golden nuggets.)
It's really dangerous for those who don't have the right temperment. People tend to panic when they see things that they don't understand. The herd mentality has its place, but the market is not one of them.
I think you touched upon something important, Richard, but I think that it was more of a convenient scapegoat for what happened than the actual root cause of it.
Not a huge stock market junkie here but I think you and Chris defnitely have some valid points.