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House Calls For Hearing On Stock Market "Glitch"
Lucas123 writes "The House Financial Services securities subcommittee plans to hold a hearing next Tuesday to examine what caused the US stock market to plunge almost 1,000 points in a half hour Thursday, and it called on the SEC to investigate possible problems with computer algorithms that may have exacerbated a human order-entry error and led to the precipitous drop. 'Reports have surfaced that much of this movement was potentially as a result of a computer glitch,' Committee Chairman Kanjorski said. 'We cannot allow a technological error to spook the markets and cause panic. This is unacceptable. In this day and age and with the use of such complex technology, we should be able to make sure that our financial markets are effectively monitored and investors are protected.'"
It doesn't take a subcommittee hearing to figure out that people are finicky and the system is remarkably fragile.
Cancel or Allow?
After today investors will have little if any faith left in the US stocks, assuming they had any to begin with.
During the GM bankruptcy, I saw their common stock was still being traded on the pink sheets. That's when I realized that many traders have shit for brains.
When a company goes bankrupt, their equity gets wiped out. In other words, the traders were trading worthless pieces of paper. My father in law almost bought some thinking it was a great deal. I clued him into the idiocy.
RIP America
July 4, 1776 - September 11, 2001
Who decides that? And what happens to a smart invester that buys stock at $0.01 that usually trades at $40, to quickly later sell it at $30? Will the $0.01 buys be cancelled, but the $30 sells not be cancelled? But that would leave you with a short position, having to buy them back at $40. May be very expensive.
Follow the money. SOMEONE made money, it sure as hell wasn't me.....
Agreed. A friend of mine who is a lawyer for a well-known investment management firm was amazed when their traders were doing business with Lehman the day after it filed for bankruptcy.
When he asked them what the hell they were doing trading with a bankrupt, they told him "but the prices on the screen are amazing!"
He had to explain to them that the prices were amazing because they were unlikely to see the transaction completed by their counterparty. "Have you not been reading the papers?" he asked, exasperated. But all they could do was stare at the trading screen.
They just didn't get it. That's the thing about these so-called Masters of the Universe - they're not the best and the brightest despite what they think.
My friend then had to spend the next 36 hours working non-stop to close the positions his traders had taken as best he could. The really astonishing thing was that his boss reprimanded him for not explicitly telling the traders earlier not to trade with Lehman.
--- "We've always been at war with Eastasia."