Yeah, we know some crazy shit went down today on major exchanges in New York. Some rogue computer application made A LOT of trades, creating mass confusion among *day traders* for about an hour. The culprit, Knight Capital, said they had some technology issues that will be thoroughly investigated. You, NYT, have turned this into an opportunity to say “…spreading turmoil across Wall Street and drawing renewed attention to the fragility and instability of the nation’s stock markets.” Only half of this statement is really true – day traders did suspect turmoil in the early hours. However, fragility and instability of the nation’s stock markets? Please. This is exactly why we have the SEC and federal regulations, which in time will do its job to clear this mess. The only real loser in the ordeal will be the idiots who tried to move on the excess volume, and of course Knight Capital who will surely face heavy lawsuits from its greedy clients. Cut the sensationalist shit, report the story AS IS, and be done with it.
It’s unlucky that I read the New York Times article first, because afterwards I didn’t think it could get worse. I was wrong. The title alone, “When Will Retail Investors Call it Quits?”, is deserved of a five-across-the-face. Are you kidding me? You say that small investors, like “Grandpa”, don’t stand a chance when things like this happen. Why is that exactly? Is Grandpa buying and selling the same stocks everyday? Well, he might be, but if he is he deserves to lose his money. For proper, long-term investors, this makes no difference whatsoever, so stop acting like it does. Stocks, particularly equities, in the long run will be evaluated exactly where they should be by the overall market. I can’t even believe you found people stupid enough to say stuff like:
With events like the flash crash and this week’s stumble, Mr. Glasser adds, “you could buy and hold a company for 15 years and then have everything you’ve built up disappear in five minutes. No one can take that kind of risk anymore. There’s no such thing as a widows-and-orphans stock anymore.”
If your portfolio is designed in a matter where you can lose 15 years worth of investments on a day like today, you really deserve to be broke, because I’m guessing your portfolio only consists of Knight Capital. Other than Knight, all other stocks affected today will still be the same companies tomorrow, and their value will find their way back to where they should be.
This mess affects only day traders, plain and simple. And anyone who thinks they can make money day trading may as well play the slots, because there is no short-term rationality to the stock market. Never has been, never will be. And stop comparing this to the Flash Crash of 2010, a day where the Dow dropped more than 900 points. This incident lasted an hour, and the market closed almost exactly where it would have regardless of the morning’s snafu.