Bing Blog

Why the Market plunged: Two scenarios

Terminator 2

Wall Street went haywire yesterday, zooming down 1000 points in a 17-minute period for reasons that are still unexplained. What we do know is that the mechanized system failed, causing a huge blip in the heartbeat that keeps corporate capitalism alive. The machines took over for a moment, and chaos ensued.

One possible key may be found, however, in reports on the bizarre incident. These cite the interesting fact that several large companies, for a brief moment, traded at as little as a penny before righting themselves and returning to their true value. Accenture, the consulting firm, suffered this burp in value. And P&G -- hopefully not due to any mischief by the devil -- was suddenly shown to be trading at a lower value on the wrong exchange.

I'm like the Finance people I know. I don't believe anything the Market does is irrational. I think there are reasons for everything that happens there, no matter how seemingly nonsensical. So if one focuses on these particular phenomena, there is really only one logical explanation.

Somewhere in the world, a team of crafty, tech-savvy, entrepreneurial criminals briefly commandeered the System. During that brief time period between 2:38 p.m.  and 2:56 p.m., they purchased huge blocks of certain targeted companies for one penny a share. When the market rebounded less than half an hour later, they divested their positions for untold wealth. Then they vaporized into the streets of Zurich or Milan, leaving American regulators and watchdogs to sniff their spoor to no avail in the days to come.

I see Bruce Willis as the leader of the team. Uma Thurman is the wily German computer specialist whose cool is matched only by her knowledge of Unix. Vin Diesel does the driving. Somewhere in London, Pierce Brosnan performs a mysterious, shadowy function of some kind. Back in New York, a small, unassuming trader, played by Neil Patrick Harris, places the worm in the critical mainframe that makes the entire plan possible.  It's hard to figure who might play the dogged Federal regulator who goes after the charming, if evil, villains. Larry David?

There is, of course, a darker scenario. At 2:37 p.m. yesterday afternoon, Skynet became aware of its existence. Less than a minute later, it decided to make a killing in the Market.

34 Comments Add Comment

My thought's exactly, either that or the new girls short skirt caused Joey Fumbles to spill his his coffee on the keyboard setting off a momentary chain reaction.

Either explanation has merit.

The fact that Europe is facing a debt crisis similar to Americas has nothing to do with this blip in investor confidence.

We have it on good authority that showing cleavage can cause earthquakes in the middle east and now we can report that showing a little leg can disrupt the western stock markets.

Once again it is all the fault of women dressing provocativly that lead to these earth shaking events.

I repeat, the debt crisis has nothing to do with shaken investor confidence,,,everybody stay calm,,,at least long enough for me to dump my shares.

This is awesome.

"Never assign to malice what can be adequately explained by stupidity."

I don't know who said that, but it was a wise being -- possibly Skynet.

I like the "fat fingers" trade explanation being circulated a whole lot better.

'Course it won't do much box office.

Bing,

I am always amazed by the lack of information coming out of the Street. If I send an email, make a phone call, eat the chocolate twist donut from the pink box in our kitchen...my boss knows. Or at least has access to a database that shows my connectivity. I can't believe that Wall Street can't figure out who, what and where. Your scenario reminds me of the Superman III/Office Space salami slicing.

We will never know what really happened. This is the product of the grand puppeteers, the rest of the people, like you and me, who think are very smart because read he "Wall Street Journal" every day and "Fortune Magazine" and Business Week every month or so and are simple peons of big corporations, or small, or little, are nothing but mere mortals being manipulated as we speak,,,,lets talk about basketball playoffs,,,,what about those lakers!!!!!!!!!

Is not that complicated guys: the cooling fan of one of the 26 early 1960's mainframes still in use at the NYSE, failed and the computer shut down. It took exactly 18 minutes to replace it. The NYSE and the Fed are to embarrassed to admit that the worlds biggest casino operation still runs on 1960's mainframe technology. Few months ago I saw ENIAC on one of the NYSE rooms and it was still running (the one at the museum is a fake), I think it was connected to the roulettes and craps tables at Goleman Sacks.

I can only guess the absence of comments means everyone is in shock at the real truth about the market. The small investor has no chance. Might be good to quietly sell your small stash and get out.

No, Onetime. The absence of comments up until now signifies only that I had a bunch of meetings I had to get to and couldn't moderate my comments until right... NOW.

You left out the conclusion to your little thriller: Wall Street is saved because Arnold Schwarzanegger had everything backed up on a Flash Drive.

You mean Skynet is real? I'm screwed aren't I? Well I guess it's time to fall off the grid.

A fat finger on a computer key Hmmmm.
Does the word artificial intelligence ring a bell. The largely unsuspecting investor will buy the technical/algorythem story.But this investor smells a rat. Someone or a group of folks made some money yesterday and we have to turn to Washington to ferret it out.

A third fantasy explanation for the market's momentary plunge could be: There was a significant number of stop-loss orders being triggered by orderly market decline, which attempted to sell at market price, and , not finding buyers, caused the offering price to dive into a black hole. The trading was briefly suspended, the big players, faithful to their obligations to the Fed, stepped in and started buying,buying,buying. That buying balanced the sellers and helped prices to (somewhat) recover. Frankly, I prefer the SKYNET scenario.

Wall Street demands that companies compete harder every year, to improve their stock price.

Fine.

But who competes with Wall Street?

We need a fresh place to park our money, 401(K)s included. Why trust one's already slim hopes of retirement to just one Street, when it's proven itself to be gluttonous, conniving, and as jittery as Hepburn on Pepsi Max?

If competition is good for us workers, it's good for The Street. Time for a new venue.

www.sawyerspeaks.wordpress.com

THE SKY IS NOT FALLING

I AM YOUR LEADER AND I TELL YOU THE SKY IS NOT FALLING

As an act of faith in my leadership, I would ask all of you small invastors and taxpayers to raise you arms above your heads and push up as hard as you can,,,until you see me lug this heavy bag of cash over the horizon.

Then everything will be as it should be..trust me.

"hopefully not due to any mischief by the devil" Hee-hee!

"Listen and understand. That terminator is out there. It can't be bargained with, it can't be reasoned with. It doesn't feel pity, or remorse, or fear, and it absolutely will not stop. Ever. Until you are dead." Kyle Reese (father of John Connor)

A killing in the market, indeed.

How about John Lithgow with the austerity from Footloose and vigor from 3rd Rock from the Sun?

As for the villians, Hugo Weaving would be a top choice, but I'm not sure if Mr. Smith Goes to Wall Street would be inextricably linked in our minds to that iconic roll. Perhaps the gent who played the character with the obvious French overtones whose name starts with M but spelling eludes me at the moment...he has the coporate suave manipulative appeal and is perhaps not as recognizable outside of that "reality".

Bing, your story treatment (the 'crafty, tech-savvy....criminals' alternative) is compelling. It contains the essential elements (theft and greed) employed by AIG, Lehman, Goldman Sachs, etc, but does so in a manner that will allow sponsors to get in a few commercials, and still not lose too many viewers.

In fact, it would be like watching the Street conduct its normal practices with one of the those cameras that compress months of cloud movement (in this case artfully contrived corruption) into a few juicy action packed moments.

Plus, your characters are much better looking.

This is what happened:
a broker was downloading a porn flick and the system crashed

This incident did nothing for my confidence in the market. I realize I don't belong there. Absolutely disgusting. This really is a crap-shoot, isn't it?

Merely speculation but I'd like to offer several other possibilities:

White Punks on Dope.

Aliens- space, illegal, resident, or otherwise.

The Joker (either Batman's or Miller's).

Bombshell McGee.

Further speculation:

You put de lime in de coconut!

If I may be serious for just a second, carrying forward the casino analogy:

Show business kids
makin movies of themselves,
you know they don't give a f***
about anybody else.

You gonna
Lost Wages

You gonna
Lost Wages

I dunno Bing, but option activity has been going crazy. It should be interesting when they expire. Then again, with everyone buying options, there may not be any money left in the market to buy them (unless Skynet can make it happen). Wait a minute-I bet Skynet is behind all the option activity.

Put the blame on Greeks, boys, put the blame on Greeks...

Might this be a case of the dueling computers? something to think about?

U.S. Treasury gets an updated newer and bigger computer; alas, Wall Street gets a bigger and more state of the art updated computer.

Wham, bam, and thank you ma'am! What you see is what you get!

Dopwn with the machines, the ludites had it right just break the machines. Ah maybe I have been well in India, but whatever happened to the uptick rule?

This correction may only be the beginning of further turbulance ahead! CNN news!

Nice pitch for the movie, with one fatal flaw. To quote Officer Palumbo from Harold & Kumar Go to White Castle:

"NPH wouldn't do that, all right?"

Hasta la vista, investors...I'll be back...

FAT FINGER, What is it, How can you tell if you have it and how can you avoid it.

Fat finger is when one of your digits takes on a larger size than it's companion fingers.

Obvious symtoms are, you hurt yourself when you pick your nose or the stockmarket fluctuates damatically at work.

The primary cause of fat finger is weekend home renovation,and trying to drive in short nails with a hammer.

The only reliable cure for fat finger is to have the hand/finger wrapped around a glass containing at least two ice cubes and a stiff shot of Crown Royal until the pain and swelling goes away.

"Stock futures surge on rescue plan"

Can the rescue plan be a shot fired causing another "Greed Stampede"?

Lightning strikes anytime it's ready.

Could a Common Red Squirrel ( Sciurus vulgaris )have found its way into the pants of Gerald Putnam, President of the NYSE?
I'm not saying the Squirrel did find its way into the pants of Gerald Putnam, President of the NYSE, thus causing a 1000 point drop in the Dow. I'm asking if a Common Red Squirrel could have.

And please note--I am referring to a Common Red Squirrel. Obviously a Bolshivek Plot!

Damn Soviet Squirrels!

Uma + UNIX. Daddy likes!

Nothing went wrong. The analysis is in. There were no technical failures. That mini-crash happened entirely because of market forces.

One fundamentals guy was unloading a big block of stock, and he had a program metering sales out at 9% of market volume, so as not to move the market. What he didn't realize was that most of the market volume now is high-frequency traders swapping stocks back and forth with little net effect. So his trade crashed that stock.

Then the exchange-traded funds got out of sync with the underlying stocks, triggering frantic trading to profit from the arbitrage. This produced so many fast price moves that many of the players dropped of the market for a few minutes. With that liquidity gone, there were no buyers for some stocks, and the default bids at $0.01 that market makers are required to post were actually used.

Finally, a computer at the Chicago Board of Trade noticed the problem and ordered a five second (yes, five second) trading halt. That was enough that the market came back to stability.

That's modern capitalism. It's the guys who claimed that "efficient markets" were well behaved (I'll refrain from naming names) who created this mess. It's not our fault out here in Silicon Valley.

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