Fat Fingers my #&%@?%!

Posted: May 7th, 2010 | Author: admin | Filed under: Uncategorized | Tags: , , , , , , , , , | No Comments »
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A trader with fat fingers caused the 1000 point drop in the DJIA yesterday. Someone made billions in about a half an hour. The timing and extent of the drop were perfect as they occurred in such a way as to avoid trading curbs. Was this an organic event or was the market manipulated? Will we ever know….

Fat fingers. OK, and President Kennedy was killed by a single shooter with a magic bullet. And we are the only intelligent life in the universe. OK, maybe I am subject to some hyperbola every now and again but this is my blog.

Call me a skeptic but I felt compelled to check all my keyboards and on every single one, the letter “N” separates “B” and “M”. So this trader in Chicago must have really really fat fingers or maybe a really really small keyboard. Oh, and the mistake just happened to occur after 2:30 when the circuit-breaker trading curbs on the NYSE end. And the drop just happened to fall short of the 10% mark that would automatically close the market. Perhaps this was just a coincidence. A “perfect storm” so to speak.

Coincidence is totally plausible. Its even more plausible if you happen to believe in “too big to fail”, Goldman-Sachs puts it’s clients and the country by just supplying liquidity and that then President of the Federal Reserve Bank of New York, Timothy Geithner just happened to be out of the room, every time the health of CitiBank, Merrill Lynch, Bear Stearns and their ilk were discussed. As a side bar, Secretary Geithner appeared to be setting himself up for a top job a Goldman, once he left the government. But now with Goldman’s image tarnished, he may have to pursue alternate exit strategy.

The stock market is a zero-sum system. Someone buys and someone else sells. I’d like to know who bought at the bottom yesterday. Someone made billions. Perhaps it was Goldman-Sachs, just acting as a simple market maker at 2:30 PM, absorbing excess inventory of companies like Accenture  or Excelon (which both dropped from the $40’s to pennies only to close back up in the $40’s), and then selling that inventory back into the market at 3:00 (as they testified ad naseum to Congress, they are just market makers and they are really careful about holding onto “aged” inventory).

Will we ever know what actually happened? Was the market manipulated? Were the computer driven systems gamed? Will Goldman be around in a few years? And if so, will Tim Geithner have an office there? Stay tuned……

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