STOCK MARKET WARNING!

[Eddie Haskell]

If you have stocks, a very significant event took place this morning. The world's markets were down substantially last night. That set the stage for some NYSE panic selling at the opening bell. Here's what happened as reported by CNBC this afternoon. .

For the time being, the SEC has no curbs in effect for the first and last 15 minutes of each day’s trading. This morning, two thinly traded utility stocks were overwhelmed with sell orders. One of these stocks went from the mid seventies to the thirties within minutes. These trades were executed and will stand! Now here’s the kicker; because these stocks recovered, the abnormal trades were declared aberrant and the records of the trades were expunged.

Do not place any market orders during these time periods. I suspect we will see this again. Trying to get out of a position in a panic situation could prove very costly.

[elleng]

1. Wouldn't think of doing such.

(But don't place my own orders anyway; leave it to pros.) Market stabilized during the day, ending with Dow down 12 points, I think.

[Eddie Haskell]

2. Maybe you wouldn't, but ...

Imagine a scenario where everyone wants out of the market due to events that happen overnight. Under panic circumstances, putting in a limit order may not get you out. Imagine the market opens down 1000 and continues to crash. You continue to chase the market, dropping your limit orders, but you can't catch the market. The market is now down 2000 points. Your stock's value has been cut by 20%.

What does one do?

Many people will decide to sell at whatever price the market will support and change their limit order to a market order. Yesterday, some people lost 40% in minutes. These were utility stocks not some speculative bio-tech. These were the kind of stocks people hold for retirement income. Again, these people lost 40% in minutes.

[elleng]

3. Those foolish enough to act in panic

Last edited Fri May 24, 2013, 10:40 AM - Edit history (1)

due to 'overnight' events deserve what they get, imo. (Obviously I HOLD, hoping my original decisions to buy what I did were based on sound fundamentals.)
Dow down 80 now. EDIT: Dow down 64 at 10:35 a.m., fwiw.

[rdking647]

5. no they didnt

the trades were cancelled. they never happened. no one lost 40% in minutes. thats misleading

[rdking647]

4. FYI

the lowball trades in teh 2 stocks were cancelled which usually happens during one of these glitches
the 2 stocks were AEP and NEE the NYSE is putting limits during the first 15 minutes starting in augist

rather than telling people not to trade during the first 15 minutes its better to tell people to never use market orders. always use limit orders

[Eddie Haskell]

7. FYI

CNBC reported that the trades would stand, but the records were cancelled. That may have changed since, but I was not aware of any change when I posted. Perhaps CNBC had it wrong, maybe the bad publicity caused the exchange to have a change of heart; but I know what I heard.

Also if you read my post, you'll see I did not tell people not to trade. I told them not to use market orders just as you suggested.

On Edit: Here's a link confirming my original post.

http://www.reuters.com/article/2013/05/23/us-markets-usa-stocks-aep-nextera-idUSBRE94M0WD20130523

[Common Sense Party]

6. Speculators may care about these daily fluctuations, I suppose.

I'm not a speculator/gambler.

I am a diversified, long-term, buy-and-hold investor. An 80-point drop in the Dow? I couldn't care less.

Out of curiosity, what were these two "thinly traded utility stocks"?

[Eddie Haskell]

8. Anyone seeking a ROI is speculating ...

We're all betting on the averages. We're all betting on past market performance. But that performance was based upon wide open spaces and unrestrained growth. What goes up doesn't necessarilly keep going up. There are no guarantees.

[Common Sense Party]

9. There are no guarantees. But there is a big difference between long-term investing and day trading.

[Eddie Haskell]

10. I agree.

[David Zephyr]

11. Smart investor.

Speculating is gambling. Investing is investing. Both draw different personalities to them.

I am an investor much like yourself. Since the 80's.

[Common Sense Party]

12. It's much more boring, but I kinda like boring.

At least in this case.