Mr. Sensitive

August 10, 2011

But Did I Expect This?

Filed under: Uncategorized — lbej @ 09:49

And now we’re down 300 at the open.  Of course we are.  And of course we could have been up 300.  Cramer’s on CNBC this morning talking about how it’s the computers driving the large-caps down in lockstep, by which I assume he means that sell orders are being generated on the basis of proprietary trading algorithms and not on the basis of wild hunches.  The implication is that when the market is up big it’s not the computers, it’s prudent bargain-hunters hunting for bargains.  Nonsense.  Who programs the computers?  Who authorizes the generation and execution of trades?  Are Arnold Schwarzenegger and Robert Patrick sitting in a room above the floor of the NYSE shorting DIS and GE, downing shots of motor oil and laughing it up?  Computers don’t panic, but they can be programmed to simulate the behavior of panicked people.  And they can be turned off, if the traders using them don’t think they’ll make money.  The Flash Crash last year might have been a computer glitch–somehow we still don’t know for certain–but this up-and-down stuff is just human beings being human.  Don’t shoot the message, shoot the messenger.

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