There are times one just can’t help oneself from contemplating just how ignorant (or down right stupid) people are. You might think I’m speaking about the “mis” or uninformed. Or, the “under” as well as uneducated in matters of business, finance, politics, and more. Oh contraire!
I’m speaking of the people whom fill some of the highest positions within those very industries. Once again I have been left with my jaw planted firmly on the floor by some of the revelations or “explanations” from the so-called “smart crowd.” To paraphrase an old adage: “It’s better to keep ones mouth shut and be thought a fool rather than open it as to remove all doubt.”
First a little politics. (please save the emails I blame both sides and ALL players equally.)
In the midst of terrorism once again rearing its ugly head. Showing us just how brutally savage, and spontaneous it can be. We have politicians arguing, pointing fingers and more at their fellow law makers, as well as other government agencies. Each laying blame on one and other as to why, when, or what they knew, didn’t know, and – still don’t know.
All the while seemingly forgetting we have spent hundreds upon hundreds of BILLIONS of dollars. Created new agencies such as Home Land Security and more. All for the very reason so that agencies from the FBI, Border Patrol, ATF, TSA, State and local authorities could gather and seamlessly share data with one and other because of the lessons we supposedly learned from September 11, 2001.
As more and more news comes out regarding what and how the time prior to the Boston tragedy unfolded. We’re beginning to realize not only have we seemingly wasted those BILLIONS – we didn’t even get the proverbial T-shirt. (aka: Billions spent and all I got was this lousy T-shirt)
The details of what was or wasn’t known before the incident leaves one more than stupefied. A great many are beginning to get down right pissed. (as we all should) What’s even more troubling is the call for even more BILLIONS to fix the mistakes that were supposedly fixed the first time as to not let this disorganization of resources ever happen again. You can’t make this stuff up.
The reason and rationale I’ve seen across the media reminds me of the clarity in an explanation of insanity expressed by Einstein: (paraphrasing) “To do the same thing over and over again as to expect a different result is the mark of insanity.”
Let’s move on to the markets.
A little more than a week or so has passed since I mused over what I believed was not only being brushed off by many involved in trading the markets. But rather, was being blatantly disregarded by many more that might have only been managing (or trading) their own 401K’s over the last 4 or 5 years.
I expressed points one needed to not only ponder as to think about “what if?” Rather, what one would do if these scenarios were ever to happen. Because – when they do, you had better be ready. The markets can be unforgiving.
As usual I had a lot of people go on to tell me how I was mistaken. I was given all the “it’s different this time” requiems from the choir and more. Then a funny thing happened. What I was told wouldn’t happen – happened.
Out of the so-called blue the futures market tanked. Not only tanked they spiked down in a fury of HFT (high frequency trading) headline reading, algorithmic sell programs. All firing at once relieving almost nearly if not all so-called “liquidity” from the market. (For those not familiar with the term “no liquidity.” In its purest form it means… Nobody’s there to buy what you are selling and vice versa.)
What set this frenzy off was a hacked AP Twitter account which sent the social media world ablaze, which in turn the HFT machines read and reacted to in nano seconds. Dropping the S&P futures market some 20 points in mere moments. If you weren’t a veteran trader actually watching one’s screens – you might not have even noticed. However, many veterans themselves were left shaking their heads. It hit out of nowhere. No charts, no patterns, no nothing could predict what happened. It was just one of those “things.”
What happened next was almost as bewildering as the actual incident itself. I watched in absolute amazement when I came upon what I deem one of the most dangerous people to the lay persons 401K. The buzzer banging “investor extraordinaire” known as Cramer.
As I’m typing this I’m still shaking my head as to what I heard him express on CNBC® on one of their programs.
First: (I’m paraphrasing. You can go here to view his exact words via a ZeroHedge™ article here.)
The use of Stop Loss orders are foolish. (For those not familiar with jargon it basically means how much money you’ll accept as a loss before your preset order is activated as to get you out of your position.)
OK, that’s fine. Only one problem. That’s only relevant if the market comes back. If it doesn’t. Oh well…You lose till you can’t lose no more. Meaning – wiped out entirely.
Maybe stops aren’t for professionals that don’t leave their screens till they’ve closed any and all positions – even for a bathroom break. However, for the casual investor or trader? Stupid is as stupid does is all I’ll say on that note.
Second: (Again I’m paraphrasing. Hear and see above the exact wording for yourself. It starts in at about the 13 minute mark.)
I near fell out of my chair as this was said. “I want everyone to play that game at home by recognizing that fraud is part of the equation and the government cannot stop it.” We have to accept that basically the markets are rigged, broken, manipulated, or some other term he used. And… (wait for it) We’re going to have to accept that this type of manipulation is now “the market” and trade and deal with it. Huh?
Are you kidding me? You just basically told viewers the markets are rigged, it is a Casino, the Casino is rigged…So invest your hard earned money and sleep well tonight because – now you know. No wonder they’re losing viewers. I mean really…are you kidding me? I bet the remaining viewers are glad they tuned in for that. No wonder it seems there’s more drug commercials on there than anything else. You need something after listening to these “financial wizards.”
Do they not know he just espoused what many of us have said for years? That it’s all been no more than a crap shoot of late. Because, if what he just said is true. (which many of us have known for years) then by ipso facto everything he’s ever said or advised one to do has been by luck of the draw. Nothing more. He better hope his viewers in prime time don’t see that clip. “Booya!”
As for closing, stopping, or the myriad of other things one needs to plan on when partaking in the markets. I caught a little flack from some people that expressed my calls about what happens when your connection goes down or can’t get your broker on the phone. That I was a being a little hyperbolic in my thesis. Fair enough. So I’ll end here with 2 messages that address just that which transpired this same week.
Alerts regarding all options traded on the CBOE (Chicago Board Option Exchange) The worlds largest option exchange: “The CBOE is experiencing technical issues. Due to this issue products listed on the CBOE only are not open at this time.” (emphasis mine) This outage was approximately over 30 minutes. Good thing it didn’t happen during the sell off earlier I guess.
And finally from The Wall Street Journal®
4/23/2013 Brett Philbin (link to original article here.)
Customers of Charles Schwab Corp. (SCHW) were unable to access the discount brokerage’s website or log on to their accounts through mobile devices late Tuesday.
The San Francisco company told customers in a Twitter message, “we are experiencing technical issues with our site and mobile app and are working on resolution. We apologize for inconvenience.”
Charles Schwab had roughly 8.9 million active brokerage accounts, 888,000 banking accounts and $2.1 trillion in total client assets as of March 31.
Representatives for Charles Schwab didn’t immediately respond to requests for comment.
I’ll bet some customers had a few comments. Ya think?
© 2013 Mark St.Cyr www.MarkStCyr.com