Weekend Links: Safe Traders Caused Dow to Drop 900 Points

Thursday May 6, 2010 was a fun day for the stock market and all investors – pardon my enthusiasm. As I had my Scottrade streaming quotes on my screen and the Dow went skydiving, I was able navigate my account in such a flawless manner to transfer some cash over in order to not miss the largest sale of the year on the stock market.

It became a saddening sight to watch the Dow pull back up from its 900-point drop as I was about to punch in my buy order. Nonetheless, I shopped and I bought.

Clearly, it was an odd day to the jittery souls at the New York Stock Exchange and at home with their daytrading stations. The weirdest part is the speculative theories on what caused such a financial anomaly.

Do you really think a guy who had mistyped a “B” for an “M” could wreak such a havoc? Even if this person had input “billion” instead of “million”, the collective automated sale of stock is the true cause of the steep market dip. Add on the fears of Greece’s debt and other economic noise and we’ve got a recipe for pandemonium.

Don’t point the finger at the fat-fingered individual and blame those who scheduled stop-loss orders. Maybe automation wasn’t such a good idea….

Personally, I don’t agree with the actions that stock exchanges are taking – canceling orders on stocks that experienced sharp volatility. There was no computer error. Automated electronic trades are legitimate orders, correct? Can you cancel my order when I buy a stock that goes from $100 to $70 then to $120 and back to $50 in 20 minutes?

In fact, I hope this happens again – so I could continue to build my portfolio on a tight budget. Praise the Oracle of Omaha, “Be fearful when others are greedy and greedy when others are fearful”.

Don’t mind my opinion, there’s more to life – like these great posts:

• Money, Stress, and Your Health at Get Rich Slowly. Money affects everything we do. Money can ruin relationships and break up marriages. Whether we have it or not, money is a reason for concern, worry, and stress – which then trickles down to your health.
• Six Psychological Reasons Consumer Culture is Unsatisfying at PsyBlog. Shopping makes you happy? I wonder why… The things you never think about when you go out an buy stuff. Studying consumer behavior can curb your spending – not to mention how cool it is.
• 44 Ways to Ruin Your Financial Life By Age 30 at Frugral Dad. I think I’m doomed…

Carnivals that Realm of Prosperity participated in recently:

• Carnival of Personal Finance #253 (Demotivational Version) at Punch Debt In The Face

(Photo credit: artemuestra)

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