The Big Picture

Posted on May 10, 2010 by The Weekly Commentary

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Photo courtesy of Reuters

Something happened Thursday to make the stock market suffer its sharpest drop in its history before rebounding like a rubber ball at the end of the day. And, no one has told us what caused these phenomena. Afterward, the stock market exchanges arbitrarily cancelled only those stock transactions where the stock price dropped more than 60%. Sadly, if you are one of the unfortunate investors who just happened to place a sell trade seconds before the big plunge you could have received only 59% (or less) of what you thought you would receive and you would have to live with it! The Stock Exchanges said there is no appeal of their arbitrary decision.

Why 60%. Why not 50%? Or, 70%? Or, 10%? Or, why not cancel ALL of the trades during the 40 minute interval that caused the problem? The arbitrary decision is just not right. Many innocent investors were hurt. And, there is no recourse.

Full disclosure is needed to explain what happened and exactly what will be done to prevent its re-occurrence. I will keep you posted.

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