October 9th, 2008
08:53 PM GMT
NEW YORK - One year ago today the Dow hit an all time high above 14,000. As I write this now, stocks are getting pummeled for the seventh straight day. The Dow lost nearly 700 points. The selling was like a tidal wave at the very end of trade. Few saw it coming.
Earlier today I was down at the New York Stock Exchange and talked to a veteran trader who said there is just no confidence. Every time someone tries to step in buy, they get their head handed to them.
He thought part of the problem was the increase of electronic trade. It used to be that human beings made markets at the New York Stock Exchange and other places. You could see what was out there. Who was buying and selling. Specialists could bring parties together and in some cases stand behind a trade until a fair price was found. It slowed things down, gave cooler heads a chance to prevail.
Now everything is down by a push of a button. Things can unravel with lightning speed, which is what happened today.
These kind of furious sell-offs are terrible for confidence. They spook retail investors, who are already lost trillions in retirement savings. They scare professionals who can not make educated guesses on risk. The market will eventually find a bottom, but in the meantime the victims are piling up.
How much have you been impacted? Are you pulling out of stock markets for good?
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