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The market tanks because the stocks that make the index have dropped, a stock drops when someone is selling/buying at a lower price. Therefore someone sold at a

The market tanks because the stocks that make the index have dropped, a stock drops when someone is selling/buying at a lower price. Therefore someone sold at a lower price. Perhaps those that sold at a lower price purchased another stock also at a lower price and there is an assumption the universe will balance it out. But stocks drop at different % some institutions may choose to move to cash or another commodity temporarily. I don’t expect it’s a zero sum That is what I know, am I missing something ?

roenxi 7y ago
A person who buys/sells the stock is responsible for their decision and it is no concern to anybody else if they are making or losing money. Particularly a flash crash. If they didn't want a stupid algorithm making their decisions for them they shouldn't have used a stupid algorithm. I can understand the exchange rolling back half an hour of trading or whatever and calling it a wash. The idea that a trader is somehow liable for something seems absurd. Only thing he is guilty of is annoying powerful people.
- gorgoiler 7y ago
  Since the 80s it has been an integral part of society (at least in the UK and US) for citizens to invest their own money on the stock market — where “owning shares is as common as owning a car”: https://www.margaretthatcher.org/document/106145 https://www.margaretthatcher.org/document/106145 Having protections in place to guard against market manipulation is a facet of this policy where all citizens are now traders (and not just a select group of well educated, well steeled stock market professionals.) I don’t defend this policy, but I see why the former leads to the latter. Another good reason to enforce a level playing field in capital markets comes about from another backbone of the 80s and 90s: placing national infrastructure like power, water, and pensions in the hands of private companies traded on the stock market, who need some form of protection on their share price.
  - roenxi 7y ago
    > ... who need some form of protection on their share price ... I expect it will be quite difficult to defend that position. The value of a company to its owners is more or less its expected earning potential. That is to say, low share prices in and of themselves don't necessarily cause bad outcomes for the shareholders in the long term and have no impact at all on the prospects of a company. There is no reason to protect something that isn't important. If anything, the very high returns vs share price should drive additional investment in the sector, although the link there is a bit tenuous and speculative if market manipulation is involved. Personally I don't see a problem investors are forced to - crazy as it may seem - buy things because they want to own them for the long term.
  - ForHackernews 7y ago
    Was this "market manipulation", or just dumb bots doing what they do? I'm a normal citizen who holds shares. I remember I got an email alert when the flash crash happened, had a minor heart attack, and then reminded myself that I'm investing for the long term and it doesn't matter what the market does on any one particular day. In that case, it wasn't even a whole day before my portfolio had recovered. Markets need to be fair and transparent, but you can't save people who panic-sell in a crash.
    - perl4ever 7y ago
      You can't save anyone who gets their idea of a security's value entirely from the price, rather than the other way around. That's the root problem.
  - perl4ever 7y ago
    All citizens are not traders and virtually none of the ordinary people who trade stocks are doing it with a program that acts in fractions of a second. And those who were, deserve what they get. This is like saying "because chainsaws are available everywhere to use without a license, we must make juggling them safe for all ages". Well, ok, maybe we should forbid market orders to retail investors. Or make it a special privilege that you have to be approved for like margin and options.

roenxi 7y ago

A person who buys/sells the stock is responsible for their decision and it is no concern to anybody else if they are making or losing money. Particularly a flash crash. If they didn't want a stupid algorithm making their decisions for them they shouldn't have used a stupid algorithm. I can understand the exchange rolling back half an hour of trading or whatever and calling it a wash. The idea that a trader is somehow liable for something seems absurd. Only thing he is guilty of is annoying powerful people.

gorgoiler 7y ago
Since the 80s it has been an integral part of society (at least in the UK and US) for citizens to invest their own money on the stock market — where “owning shares is as common as owning a car”: https://www.margaretthatcher.org/document/106145 https://www.margaretthatcher.org/document/106145 Having protections in place to guard against market manipulation is a facet of this policy where all citizens are now traders (and not just a select group of well educated, well steeled stock market professionals.) I don’t defend this policy, but I see why the former leads to the latter. Another good reason to enforce a level playing field in capital markets comes about from another backbone of the 80s and 90s: placing national infrastructure like power, water, and pensions in the hands of private companies traded on the stock market, who need some form of protection on their share price.
- roenxi 7y ago
  > ... who need some form of protection on their share price ... I expect it will be quite difficult to defend that position. The value of a company to its owners is more or less its expected earning potential. That is to say, low share prices in and of themselves don't necessarily cause bad outcomes for the shareholders in the long term and have no impact at all on the prospects of a company. There is no reason to protect something that isn't important. If anything, the very high returns vs share price should drive additional investment in the sector, although the link there is a bit tenuous and speculative if market manipulation is involved. Personally I don't see a problem investors are forced to - crazy as it may seem - buy things because they want to own them for the long term.
- ForHackernews 7y ago
  Was this "market manipulation", or just dumb bots doing what they do? I'm a normal citizen who holds shares. I remember I got an email alert when the flash crash happened, had a minor heart attack, and then reminded myself that I'm investing for the long term and it doesn't matter what the market does on any one particular day. In that case, it wasn't even a whole day before my portfolio had recovered. Markets need to be fair and transparent, but you can't save people who panic-sell in a crash.
  - perl4ever 7y ago
    You can't save anyone who gets their idea of a security's value entirely from the price, rather than the other way around. That's the root problem.
- perl4ever 7y ago
  All citizens are not traders and virtually none of the ordinary people who trade stocks are doing it with a program that acts in fractions of a second. And those who were, deserve what they get. This is like saying "because chainsaws are available everywhere to use without a license, we must make juggling them safe for all ages". Well, ok, maybe we should forbid market orders to retail investors. Or make it a special privilege that you have to be approved for like margin and options.