Any securities litigators out there looking for a cause of action?
And another thing! I'm not sure about the sub-head to this story. Is Greece experiencing deflation?
Theory says we should be seeing signs of deflation in Greece, are we?
The collapse is blamed on computers, but that misses the point. Debt deflation is unabated by the ECB.
YOU KNOW IT'S A BEAR MARKET when the Dow Jones Industrials end down 348 points and traders breathe a sigh of relief.
At its low Thursday, the Dow was gripped with a thousand points of fright as the result of an apparent "fat finger" trade that, according to numerous stories circulating around the market, entered a sell order for billions when it was supposed to be for millions.
The stock in question supposedly was Procter & Gamble (PG), which was trading steadily around 62 until it collapsed to as low as 39.37 in a flash before rebounding almost immediately and closed at 60.75, down 1.41 or 2.27%, which is bad enough. But consider Accenture (ACN), which went from over $40 to a mere penny in the same flash before recovering to 41.09, for a loss on the session of 1.08 or 2.56%.
Some of these errant trades will be cancelled. Trades that were more than 60% above or below levels at 2:40 PM EDT will be cancelled, Nasdaq said late Thursday. Yet that doesn't compensate all that was lost in this fiasco.
I'm not talking about the $1 trillion of market value that evaporated in the past three sessions. That's based on the Wilshire 5000, the broadest measure of the U.S. stock market, which reflects closing prices.
But ordinary stock investors were directly affected by the mindless selling of stocks by electronic, high-frequency trading algorithms that reacted to the sudden plunge in the market.
Limit orders to buy stocks at below-market prices were executed, which got bargains for buyers. Conversely, sellers got correspondingly lower prices.
For instance, an investor who might have placed a stop-limit order (which gets triggered if a stock drops to a certain price to limit losses) would have had that order executed unexpectedly. But it wouldn't be because of a fundamental market drop but a computer gone wild. (I know, because it happened to me.)
Thursday's thousand-Dow point fiasco is just another black eye for Wall Street at a time it is already under attack....MORE