Financial topics

[thomasglee]

Bernanke Warns Against Move to Audit Fed

[jwfid]

Zerohedge must be down too. I tried to login to Charles Schwab also with no luck.

Joe

[freddyv]

Zerohedge must be down too. I tried to login to Charles Schwab also with no luck.

Joe

An hour later I am able to login to Schwab. I had to start from their main page and login again.

Something to think about: we just had a real, honest to goodness stock market crash...in May. That's not a good sign.

Fred
http://www.acclaiminvesting.com/

[freddyv]

A wonderful, humorous headline from CNN at http://www.cnbc.com/id/36999483


"Stock Selloff May Have Started on Trader Error"

AHAHAHAHA!!! How stupid do these people think we are?

Here is a quote:

Sources tell CNBC the firm in question that handled the erroneous trade is Citigroup [C 4.04 -0.14 (-3.35%) ]. The bank said it has no evidence of a bad trade but is investigating the situation

President Obama later called CEO Pandit and suggested he "investigate a little harder."

As the church lady used to say, "How convenient!"

--Fred
http://www.acclaiminvesting.com/

[thomasglee]

A wonderful, humorous headline from CNN at http://www.cnbc.com/id/36999483


"Stock Selloff May Have Started on Trader Error"

AHAHAHAHA!!! How stupid do these people think we are?

Here is a quote:

Sources tell CNBC the firm in question that handled the erroneous trade is Citigroup [C 4.04 -0.14 (-3.35%) ]. The bank said it has no evidence of a bad trade but is investigating the situation

President Obama later called CEO Pandit and suggested he "investigate a little harder."

As the church lady used to say, "How convenient!"

--Fred
http://www.acclaiminvesting.com/

Obama needs a favor from his fat-cat (his words) donors on WS and I'm sure he'll try and make them take the blame for this in a public statement even though it ain't true. I wonder if they'll cave (probably because they're worried about panic too) or tell him that the fat-cats ain't gonna play.

[MarshAviator]

You really have to wonder. For a couple of minutes I thought it was over. (Game Over).
The big question now is first even if it were true some clerical error "caused" this why was the system so fragile that it almost came down.

On a couple of other sites today mention was made about the Robo Algos running amok. When their good, their very good, when the bad who knows.

It is making me think about John's comment that if prices are arbitrary, then any will do, this is apparent as prior support levels were smashed.
Now if there is a rally on Friday, then the PPT may kick the can down the road, if not look out below.

Another point is most retail sites were unreachable, this makes you wonder if as John has pointed out when it really "Happens" then a lot of folks are going to be locked out and will only watch helpless to the carnage.

Maybe again, it was happening and someone cheated, hate to think like a tin foil hat, but stranger things are true.

Note a lot of web sites like Zerohedge were down as well as retail stock houses, seems slightly hard this was a coincidence.

[Higgenbotham]

Some comments on topics being discussed.

I run two trading platforms simultaneously to cross check the quotes. [The reason for doing this is because brokerages may know your trading habits and give you quotes that are slighly "off" in order to skim off of you. I can't say for a fact that this goes on, but if Goldman, etc., are skimming with high frequency trading, this would be a logical extension of that. So I watch quotes on the first platform and execute trades on the second platform.] Both platforms ran normally during the crash. One jammed up a bit as it couldn't handle the huge amount of data. This normally happens after Fed announcements too. The other platform generated a popup stating that order routing through the exchanges had slowed.

The market had been showing weakness since last evening. I e-mailed my broker before the crash, warning him the S&P could drop 30 points in a short period of time if 1150 gave way. While it's possible some incorrect order entries triggered or exacerbated the crash, that's probably not the whole explanation. It seems possible that others could also see the market was weak and triggered or exacerbated this crash on purpose. Also, since most of the shorts have been chased out of the market, there are air pockets under the market because normal short covering is probably not taking place. In summary, in my opinion it is very difficult to know why this occurred and we will probably never really know.

[Marshall Kane]

This morning: bottom falling out, my market-dabbling co-workers scramble to log into their accounts. As soon as I walked over they shook their heads and said me: "Oh man ... looks like you were right..."

This afternoon: everyone is yucking it up over the "fat finger" that triggered the crash. Whew! It wasn't a real crash! Naaaaaah, somebody just made a goofy mistake. Hahaha! But hey, look at all these bargins!!! Damn! I should have bought X stock an hour ago!!! Whoa, I'm gonna get that money I cashed out a few months ago and put it back in! I mean, I'd be crazy to pass up these once in a lifetime deals!!!

All is back to normal. When I walk by and say "Remember, guys: Maximum Ruin...watch your backs." its once again taken as good natured workplace joshing.

Oh well.

[Higgenbotham]

This morning: bottom falling out, my market-dabbling co-workers scramble to log into their accounts. As soon as I walked over they shook their heads and said me: "Oh man ... looks like you were right..."

This afternoon: everyone is yucking it up over the "fat finger" that triggered the crash. Whew! It wasn't a real crash! Naaaaaah, somebody just made a goofy mistake. Hahaha! But hey, look at all these bargins!!! Damn! I should have bought X stock an hour ago!!! Whoa, I'm gonna get that money I cashed out a few months ago and put it back in! I mean, I'd be crazy to pass up these once in a lifetime deals!!!

All is back to normal. When I walk by and say "Remember, guys: Maximum Ruin...watch your backs." its once again taken as good natured workplace joshing.

Oh well.

If this is representative, it probably means there is much more carnage to come and it will be quite severe. I'm biased, though, because I believe in Maximum Ruin too.

Speaking of Maximum Ruin, as of tonight, I have still lost about 8% of my net worth shorting the market. I say "about" because the futures are bouncing around a lot tonight. I'm working very hard to reduce the loss, and it's been quite a challenge. The loss was about 8% when the S&P was 1068, so I've made progress.

[abs]

The latest report on Bloomberg referencing comments by Larry Leibowitz, the COO of the NYSE, has a quote stating that the automated trading platforms amplified the downside pressure after the initial decline in the morning and that there was a lack of liquidity in the market(s) when it happened.

I think that, once again, John deserves credit for stating in advance, and repeatedly, that the automated trading programs would likely be involved in the next major market crash. I have seen many comments from John referencing this point over the last 1+ years and it should be obvious to all that this is just the proverbial "shot over the bow". There is no chance that the "quants" are going to all of a sudden change their code and rewrite their trading programs. Not to mention, these programs are extremely complex and would likely take a long time and great expense to unwind the inner workings of any of these models and make the needed changes to the code base.

My take away is that, as worldwide financial instability continues to climb, and volatility continues to rise back to extremes, that these automated trading bots will undoubtedly continue to amplify extremes on both sides, up and down, in turn creating a massive and uncontrollable feedback loop. The irony is that this is actually very consistent with George Soros' writings the one major point of differentiation (again credit to John) is that the bots have human nature coded into them, are completely inflexible and do not grow weary, they just keep trading. In effect this is Soros' concept of reflexivity hard coded and highly scaled. Absolutely frightening to consider the full ramifications.

I am still short the market and I am not impatient. I realize that it may take some time for the markets to really begin moving down again in earnest.

I think today may have made some investors a little skittish. My sense is that many felt the markets had moved up too fast and too far and were expecting a correction. The question remaining is if these big investors will believe this was the correction they were waiting for and will "go all in" or if they will now become a little more conservative and take some money off the table.

Many retirees that I speak to feel trapped. They need income to live on and feel they have to stay invested in something that yields enough cash flow to stay afloat without eating their principal. It is truly a horrendous situation for anyone in that situation where they know it's a terrible market but don't have much choice but to stay in it!

Andrew