It was a crazy day in the world of international finance, as one typo at a large brokerage triggered a massive selloff from already nervous investors. Now investigators will attempt to determine whether it was an honest mistake or whether it was part of a greater fraud. Investors are already nervous at the possible implosion of the European Union, and let's face it Barack Obama hasn't exactly been inspiring much confidence as of late. The proper climate existed for this type of freak accident to cause massive rapid damage. Of course once many realized it dropped too far, the market quickly corrected itself and all was returned to relative normalcy.
Today the market fell by almost 1000 points before regaining most of that value. That means that those who were on their toes would have been able to buy a whole bunch of stocks at artificially deflated prices before a steep rebound. Some people made a lot of money today, whether by good fortune or by planned opportunism. If they took abnormal profits, they took them from those people who panicked and unloaded their positions when it was not warranted in reality. Sometimes it doesn’t pay to sell in a panic.
It's frightening to see gold as the only safe bet again.I heard that 3 decades ago from a guy that had been already investing in gold for 3 decades. Everyone at the time thought he was nuts.
ReplyDeleteToday, I was glued to this story, whoa!
I read somewhere that there might have been a data entry problem on Proctor and Gamble that contributed to the meltdown. I agree with you, for most of us, holding through is best, if you have done homework on asset allocation and the particular asset. People who invest in equities should have a multi-year horizon and not need the funds for years. That is why no one should listen too closely to any advisors, and rarely buy traditional mutual funds.
ReplyDeleteThis incident is typical of the herd mentality that infects society like AIDS. No one, including the so-called investment gurus, seems capable of making decisions based on their own reasoning; it's simply a follow the lead- lemming philosophy. Once upon a time a swing in the value of the dollar of a tenth of a cent was a big deal. Now, mainly due to electronic trading and gross stupidity, the buck can swing one or two cents in an hour. keep your money under the mattress.
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