On May 6th we had “The Flash Crash” as it has come to be known. In a blip the market lost 10% and then quickly regained most of its loss.
It was of course a coincidence that the Senate was debating very sensitive parts of the financial reform bill that day, that hour. Maybe it was a coincidence.
But we still have no explanation for what happened that day, and trust me I have watched for it.
It ain’t coming.
Either we haven’t a clue as to what happened, or we do and the powers that be can’t say.
Regardless the crash is a huge warning to individual investors.
70% of trades done these days are done by quant robots buying and selling back and forth in milliseconds. The market was once a place to invest in companies. It is no longer, at least for those of us who don’t work for Goldman or JP.
If your money is in the market right now, the question is; why? I know, I know, long term etc. etc. I used to be a broker I know the whole bit.
You could get lucky, don’t get me wrong, and being lucky is a good thing to be. However, if you prefer poker to craps you might want to think long and hard about remaining in the current high frequency trading driven market.
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