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Is there any discussion anywhere about what happened?

• tptacek 16y ago
  Worries of Greek sovereign default.
  • abstractbill 16y ago
    Seems like a very sudden amount of worry for something everyone has known about for a long time. Did an actual event trigger this?
    • drawkbox 16y ago
      Most likely it was all algorithms. You'll note it was a slow downtrend then it hit a window that triggered massive selloff cascade. When it hit the bottom from February the other algorithms were set to buy. I am betting few humans got through an individual order during this. It was mostly software. This is what cause the crash in the eighties, we have some fail-safes in place to slow it but most trading is done by tuned algorithms during stuff like this. In fact, the PPT (Plunge Protection Team) might have kicked in...
      • nailer 16y ago
        I wonder whether a large enough entity could actually deliberately hold and then suddenly sell enough of an instrument they believed to be undervalued, just to ensure their competitors stop losses executed, then immediately buy back the entire market for the instrument.
        • eru 16y ago
          You can try. But the strategy is very risky. It's similar to Cornering a market (http://en.wikipedia.org/wiki/Cornering_the_market http://en.wikipedia.org/wiki/Cornering_the_market), but backwards--i.e. short instead of long. If you can pull it off, you have earned your profit.
        • prewett 16y ago
          I think Porsche did something like that in 2008: http://radian.org/notebook/porsche http://radian.org/notebook/porsche
          • eru 16y ago
            Not really. Porsche bought lots of VW stock either outright or as a call option. They also lent their VW stock to short-sellers. This way they `recycled' some of their VW stock, because those short-sellers sold to Porsche again. This allowed Porsche to build up a huge position, with only a few willing market participants as counter-parties. They also managed to short-squeeze the short-sellers. (http://en.wikipedia.org/wiki/Short_squeeze http://en.wikipedia.org/wiki/Short_squeeze) The grandparent post described a long-squeeze. (http://en.wikipedia.org/wiki/Long_squeeze http://en.wikipedia.org/wiki/Long_squeeze)
    • tptacek 16y ago
      Riots because of Eurozone-pushed austerity measures; Greek citizens would (understandably) rather not cut services than comply with a largely foreign monetary policy.
      • abstractbill 16y ago
        There have been riots in Greece for at least several days though - photos of them have been showing up in my Facebook feed from a friend who is in Athens right now. I'm still not sure that explains today's sudden loss.
        • jarek 16y ago
          Excuse my cynicism, but this is southern Europe; to some degree, riots are the norm, rather than the exception.
    • RyanMcGreal 16y ago
      One trader left to go to the toilet and everyone else panicked and raced after him.
  • deleted 16y ago
    [deleted]
  • dasht 16y ago
    Not so sure that's entirely it. See from two days ago: http://www.ritholtz.com/blog/2010/05/market-changes-tone-during-correction/ http://www.ritholtz.com/blog/2010/05/market-changes-tone-dur... and one day ago: http://www.ritholtz.com/blog/2010/05/cash-100/ http://www.ritholtz.com/blog/2010/05/cash-100/ (Some of) the technicians were looking at a lot of money on the sidelines, a rally that looked like it was cresting, a lot of profits to be locked in - and anticipating a big correction. There's a lot of luck to it and maybe even some feedback so its sort of a joke but Ritzholz cashing out (and blabbing about it) by yesterday, and turning to shorting opportunities, just confirms that he's a Sooper Genius.