Dow falls 1,000 points on a single typoed keystroke

[bascule]

http://www.cnbc.com/id/36999483

 

Yesterday the Dow took a 1,000 point nosedive. The problem was originally blamed on the fallout in Greece, however it seems it may have been initiated by a single trader at Citigroup who accidentally typed "b" for billion instead of "m" for million, apparently when trading Proctor & Gamble stick which is one of the DJIA stocks.

 

Whoops!

Edited May 7, 2010 by bascule

[jackson33]

Something DID set off 'Institutional Sell programs', but I'll question if any software used by the professionals or day traders could be the cause. First, any trade set up and submitted will be based on what's available (it won't accept a sell of 1B if you don't have 1B). Second, any price too far off what's the current (open sell) is not very common, to the point of the panic, usually, 'price limits' are used. Third, it's not likely to ever be known, but would suspect a series of sells on PG or any DOW stock, set off a chain reaction, leading to the panic from those Institutional sell orders. Forth, all major market fell simultaneously (called "in sympathy") and to near the same averages, meaning there were probably thousands of individuals/brokers, looking for some reason to sell. You could see some of the same (volatility, 200+ points in a short period) this morning and may this afternoon (near a Friday Close). In after hours trading last night, selling did continue, until pre-market activity today brought out bargain hunters. In not suggesting this is advise, but if we have a 100+ point down turn near the close, I'll be in their after hours buying.

 

Having gone through all that, your still looking at a rather short time loss of 6-8% loss, in US Market Values, over a four days and this is being blamed on Greece or the possibility of a chain reaction, throughout Europe. Think about this, the strongest monetary unit this week has by far been the US Dollar, yet we have any number of States in no better shape than Greece itself, especially on domestic obligations and with in that State.

[jryan]

Absolutely true. There is a bigger story at play in the markets this week than the errant "B", but you wouldn't know it watching the news. We have what amounts to the 2008 housing bubble set to possibly burst at any time, but this time it is entire countries that could be going bankrupt.

 

Add to that the distinct possibility of a Chinese market collapse in the next 12 months and we are looking at very bad things.

 

We may look really good economically in comparison, but not if we run out of solvent lenders to feed our deficit.

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Merged post follows:

Consecutive posts merged

By the way, as a matter of perspective: The DOW officially lost all of it's gains this year during this week of trading.

[ewmon]

Hmm..... maybe robo trading could be required to include delays related to how quickly the market plunges:

Normal fluctuations [math]\rightarrow[/math] no delay.

Questionable drop [math]\rightarrow[/math] mild delay.

Worrisome drop [math]\rightarrow[/math] larger delay.

Massive drop [math]\rightarrow[/math] close the market.

[Zolar V]

Or, we could do something logical, and remove the stock market due to its lack of "real" value. The whole idea of the stock market is to trade on the prospected value of a company, which imo, is both dumb and presents the challenge of representing the true value of a company.

if i am remember right, after/during the great depression placing buying/selling on prospected values was signed illegal. yet from this obvious downturn, it is still in practice.

[jackson33]

California, current unfunded obligations are estimated from 380B$ to over 500B$ (half a trillion), with an ever INCREASEING number of retirees and an apparent loss of people (Expected to lose 3 House Seats, next years, representing near 2 million or more people. To meet these obligation, they have no other means to achieve this than raise taxes, or issue bonds (loans with interest) which WILL simply reduce all sources of the tax base.

 

 

Researchers tallied CalPERS' unfunded liabilities at $239.7 billion and CalSTRS' liabilities at $156.7 billion. [/Quote]

 

http://www.writeonnevada.com/2010/04/californias-unfunded-pension-liability.html

 

Unfunded HEALTH CARE COST alone, Nationally are estimated at 1.4T$ and Debt alone from BONDS ALONE is estimated at 1.9T$.

 

 

Estimated Unfunded Health Costs: $1.4 Trillion

Some jurisdictions have made public their estimates of

unfunded retiree health costs, which are projections of

future costs measured on a present value basis. Table 1

summarizes data we found for 16 states and 11 local

governments.7 For each jurisdiction, we calculated the

unfunded health costs per active employee in the related

health plan. The average unfunded health costs for

sampled governments was $135,313 per employee. [/Quote]

 

http://www.cato.org/pubs/tbb/tbb_0925-40.pdf

 

All Greece had done is borrow money based on the Euro, to fund it's current and future obligations to the point, less then enough Taxable Base was able to sustain.

 

To emphasize this 'unfunded thing' , the listed Countries below have CURRENT debts already over their GDP and those unfunded debts, that came due in Greece's recent year, just put them over the top to make interest payment.

 

By the way, that "unfunded debt obligation" not counted as US National Debt, is today 108 TRILLION Dollars, not counting State problems...

 

http://www.infowars.com/u-s-debt-clock-in-real-time/

 

 

 

Today, Greece is only the tip of a very large iceberg, says IBD. Portugal, Spain, Italy and Ireland together owe $3.9 trillion in short- and medium-term debts, an amount larger than their combined gross domestic product (GDP), estimated last year at $3.3 trillion. [/Quote]

 

http://www.ncpa.org/sub/dpd/index.php?Article_ID=19296&utm_source=newsletter&utm_medium=email&utm_campaign=DPD

 

 

 

 

Or, we could do something logical, and remove the stock market due to its lack of "real" value. The whole idea of the stock market is to trade on the prospected value of a company, which imo, is both dumb and presents the challenge of representing the true value of a company.

 

if i am remember right, after/during the great depression placing buying/selling on prospected values was signed illegal. yet from this obvious downturn, it is still in practice.[/Quote]

 

Zolar; I'm not going to go through the history of Public Markets, but even through the 'Great Depression', people in general were allowed to invest in any public company they could or wanted to and individuals in any private company they desired. It's no different in practice, than Joe Six Pack, opening up the local Bar or Pub, using his resources or Sam Walton borrowing from the local bank for his first few stores.

 

Not all Countries suffered what the US did, during that depression, those that invested abroad or Companies that did business abroad, actually made the depression a little less destructive than FDR tried to make it. Bringing those dollars into the US Economy.

 

In fairness, you might mean 'Margin Buying' which was limited then and has been further deluded over the years. This can also be reversed today, since most bank will loan money using stocks as collateral.

 

In the 1920’s more people invested in the stock market than ever before. Between May 1928 and September 1929, the average prices of stocks rose 40 percent. Stock prices rose so quickly that at the end of the decade, some people became rich overnight by buying and selling stocks (Matthews, 3). People could buy stocks for only a 10% down payment. Between 1920 and 1929 the number of shareowners rose from 4 million to 20 million (Temin, 45). With artificially low interest rates and a booming economy, people and companies invested in over-priced stocks. During 1928 and 1929, the prices of many stocks went up faster than the value of the companies the stocks represented. “It was like pouring gasoline onto a fire-the flames rose up, no lasting fuel was added, but the economy sure looked great” (Matthews, 3). [/Quote]

 

http://econc10.bu.edu/Ec341_money/Papers/Carroll_paper.htm

 

 

 

bascule; Sorry if this seems off topic, but the investor is currently shaky and thought this might explain some cause. As for the predicted down turn today, it occurred early enough (2:30 ET) to stabilize (3:30) and after hours was 'steady' to up. I expect a good start Monday, then I have no idea what to expect, I bought nothing however...

[DrDNA]

http://www.associatedcontent.com/article/2978400/updates_on_dow_jones_drop_includes.html?cat=3

 

"""......... all trades which occurred between 2:40 p.m. and 3 p.m. on Thursday were canceled, but only if the trades were significantly more than or less than the price of that security at 2:40 p.m. Information indicates that there were no signs of a technological issue. The stocks affected can be seen here (http://money.cnn.com/news/storysupplement/economy/wall_st_turmoil/ ) and new stocks may still be added.

 

So far, 296 stocks have had trades canceled. What could have been a huge buying opportunity became a complete mess, with those trying to sell- or buy - stocks shut out of the process. Of course, most didn't realize this till later, when the news of the cancellations were announced."""

 

This is a personal matter for me, because URE is on the list.

I traded URE at $40.14 at approx 2:36 pm.

URE then proceeded to go to $20 by 2:48 before coming back up to $41 at ~2:50

 

So, I missed the 'get your trade back' deadline by 4 minutes.

 

I'm curious to know how they came up with 2:40 - 3:00 and how they decided which symbols to put on/keep off the list.

 

Any ideas??

 

I also dumped approx 20 other stocks at about the same time and want these trades back also.

 

I'd like to file a formal complaint.

Who is in charge of the complaint desk here?

[ewmon]

SEC and exchanges consider creating a unified circuit-breaker system for all exchanges.