Brian Williams on Wall Street's Free Fall | Hacker News Reader

Brian Williams on Wall Street's Free Fall

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21 pointsdavid92718 comments

After the subprime debacle I can't look at any financial institutions or markets as being anything other than a facade for what's really going on behind the scenes. Was the whole event just rigged to make some rich and powerful person even richer? Maybe some trader was approached with this mistake scenario. Billions in wealth is created and destroyed by one person pressing a b or an m on a keyboard. I'm not really comfortable with our entire society being dependent on the actions of elite traders and back room deals.

Am I the only one who finds the coverage of this completely overblown?

Yes there are significant problems in Greece, Portugal, Europe, and the US.

But why do we continue to place more and more importance on the intra-day movements of the Dow Index, when in the long run, the day-to-day is irrelevant?

You don't make or lose money in the market based on the daily start and finish prices in the market, you make or lose money when you execute your trade, which happens intra-day. The market might have "only" been down 347 points at the end of the session, but many investors bought or sold investments when the market was down 990 points.

Coverage of this is not overblown, yesterdays events were extremely rare and quite damaging for many investors who were forced to sell at the low intra-day points in the market (via stop-losses and margin calls)

Even so, Brian Williams compared it to 9/11 -- that's pretty over the top.

He compared the feeling of it--no one knowing what's happening, fear/chaos, etc. Not the after-effects.

And how many investors were caught in margin calls? Surely a small minority participate in margin investing.

If it was damaging for some people then it must have been equally profitable to those who held short positions and managed to close them out during the nosedive.

My point isn't about making or losing money in a single afternoon, my point is that we as a society are placing way too much importance on the daily or intradaily movements of a single index, rather than taking the longterm view.

Do we really think that the stock market is rational in the very short term? I think the events of the past 5 years have pretty thoroughly disproved that.

Yes it was a rare event, and I suppose that is newsworthy in itself, but is it an important event?

Edit: your point about how one loses money based on the intra-day ignores investors who have held positions for longer than the start of the day's trading session. If I'm up 200% over the past two years and I desire to continue to hold my positions, does a drop of 900 pts matter to me if the price rebounds at the end of the day or the end of the week? No.

You are exactly correct, there are two sides to every trade. The remarkable, important, newsworthy event was the extreme transfer of wealth that occurred yesterday.

And you are also correct, buy and hold investors were not necessarily impacted.

But the comment "a small minority participate in margin investing" is very incorrect - what do you think hedge funds do for a living?

The individual investor makes up a very very very small percentage of volume on the exchanges. Institutional investors who borrow large amounts of money to amplify returns (read: hedge funds) make up a majority of the volume during periods of high volatility.

So I guess what I am asking is how important is it if a bunch of hedge funds have a very bad afternoon? Does it matter in the long-run?

I suppose the answer is that "only time can tell". I just feel as if the media pays way too much attention to the daily movements of an index with just 30 stocks in it, and that they have trained our society to do the same. I fear that paying such a disproportionate amount of attention and importance to such a relatively-not-important thing such as the daily movement of the Dow index is ultimately bad for all of us, because it leads to poor decision-making.

The market might have "only" been down 347 points at the end of the session, but many investors bought or sold investments when the market was down 990 points.

Only the foolish ones. If you are long term investing, you can afford to wait a couple of days to see what happens as a result of that spike.

Easy fix - put in more effective circuit breakers. Right now they are limited to the indices and certain hours of the day. http://www.nasdaqtrader.com/trader.aspx?id=CircuitBreaker

Make it so circuit breakers apply to individual stocks, and for all hours of the trading day.

For example, commodities have a 'limit up': http://www.investopedia.com/terms/l/limitup.asp

easy, and perhaps a bit naive. it is possible you may cause more market turmoil by halting only certain stocks which would push volume into ETFs, futures, options, and other stocks in the same sectors.

The markets are very interconnected and very fast moving. 'simple' solutions rarely work.

With all this disinformation about a 'b' instead of an 'm', I think Brian did a great service last night. This is about entire countries on the verge of defaulting. That's huge. The drop yesterday was huge and it only portends what's still to come.

This information has to get out. Anyone in the market because "it always goes up over time," needs to get out, now.

Buy good companies when everyone's running away

"Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying that "The time to buy is when there's blood in the streets.""

http://www.investopedia.com/articles/financial-theory/08/con...

Shouldn't a network news anchor be more calm?

i agree, that's absolutely irresponsible. way to personally inject a significant amount of fear into the market where there was none necessarily called for.

It sounds like he's saying that the crash was caused by a video from Greece. That's rather hard to believe.

I believe his point was that the effect of looking at videos from Greece while imagining the consequences for the economies in the rest of Europe and those consequences spreading to the US while suddenly watching the Dow fall 1000 points was harrowing, to say the least. Not that one was caused by the other, but that it a lot to take in in one go.

I'm sure watching the Dow fall like that while watching videos from Greece was scary, especially to people that are already too aware of the fragile state of the world economy.

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