The New York Stock Exchange trading room floor is a flurry of activity from the minute the bell rings until the second it closes. People are running everywhere, jammed together, in a single large room.
Dan Geer, who did more work on Wall St than I did (and I did a lot) in the 90s used to say “they will trade.” He was sure that if there was a disaster, the traders would step over the corpses of their peers and carry on. Later, on 9/11, that was pretty much how it was going to happen. The markets were closed for two days afterward.
Closing the market might have been a good idea, considering what the coronavirus panic did to them. But it was a foregone conclusion that many commercial market sectors were going to fall off a cliff, and take everything else with them.
What about the traders? [reuters]
NEW YORK (Reuters) – At least two more New York Stock Exchange floor traders tested positive for the coronavirus on Tuesday despite measures taken to prevent people infected by the virus from entering the exchange while it remained physically open last week, according to a memo seen by Reuters.
“Given the possibility of exposure, and consistent with local, state, and federal government guidance, we recommend that all those who worked on the NYSE Trading Floor over the last 14 days should self-quarantine until a two week symptom-free period has elapsed,” Intercontinental Exchange Inc (ICE.N)-owned NYSE said in a memo to traders.
Having a seat on the exchange costs millions of dollars, and the market-makers who work down there are moving billions of dollars in shares a day. Someone’s getting a slice of that action. The traders I’ve met will not hesitate to go to work even if they are sick. There’s money to be made. The invisible hand of the market’ll sort it all out.
More like the invisible hand of Death.
and we’re back to The Red Death.
In Latvia they would get in trouble with the police for doing something like this.
Right now the law says that everybody who has been abroad, has contacted with somebody infected with the coronavirus, or has been diagnosed with the coronavirus must sit at home. Those who only might have the virus are legally obliged to sit at home for 14 days. Those who have been diagnosed with it must sit at home until repeated tests show that they are no longer spreading it. (For now most of the coronavirus cases are still traceable in Latvia. Whenever somebody gets tested positive, epidemiologists get in touch with everybody who has been in contact with this person, and all those people are ordered to sit at home for 14 days. All people who have recently been abroad, and are thus suspect of a possible infection also sit at home for two weeks.)
Police currently walks around and checks to make sure that everybody who must sit at home is actually sitting at home. Those who disobey get small fines. If they disobey really badly, they can get criminal charges. Here people who are infected or might be infected aren’t legally allowed to go to work. If somebody gets caught lying to epidemiologists, they face criminal charges.
The fall of the British FTSE 100 index led to losses of $ 160 billion pounds. In France and Germany, indices fell by more than 12%.
annarogers@#4:
The fall of the British FTSE 100 index led to losses of $ 160 billion pounds. In France and Germany, indices fell by more than 12%.
Back in the great depression, stock traders were jumping out of windows. It was that bad. I guess nowadays they don’t take it as seriously. Or maybe the buildings are constructed without windows that open.
Andreas Avester@#3:
In Latvia they would get in trouble with the police for doing something like this.
Maaaaaaaybe. I don’t know how it is in Latvia, corruption-wise, but these are very powerful, very rich people.
One of the Wall St types I used to work with (I consulted for her group at SIAC, the Securities Industry Automation Corp) was married to a “penny trader” – that’s a guy who mostly transacts cheap stocks that are swirling around in the bottom of the toilet. He made a couple hundred thousand dollars on a good day. On a bad day, he lost the same kind of amounts. But he was going to get to the exchange come hell or high water – literally. I remember she told me one time that it snowed particularly hard so he went to the Land Rover dealership and bought a Land Rover to get to work in, because he didn’t think the Jaguar could handle the snow. I can’t imagine a broker who wouldn’t go in to trade unless they were running such a high fever there was smoke coming out their ears.
Only on paper. Neither gains nor losses are real as long as you’re still invested. To paraphrase Douglas Adams: money is an illusion, money in the market doubly so.
Ah, markets. I had an interesting conversation today with a bank teller, asking them to stop the monthly purchases for my fortunately tiny portfolio on account of the markets being in freefall and so forth.
They kept saying I ought to reconsider because “now is a good time to buy” and sure enough, everything is cheaper now than it was a month or two ago. But while I’m no financial expert by any stretch, I would think the “good time” is just when the upwards slope starts at the far side of the slump, not while in the middle (or even at the top) of a precipitous decline. You just have to be careful not to miss it.
Still, the worst part is that now I am doubting myself, because essentially I’m ignoring expert advice in favour of my own common sense over something I know very little about. Common sense is at least as dangerous as no sense at all – and I may just have both.
P.S.: A paper market it may be, but it is slowly eating my money. Luckily I don’t have that much, so rather than being stung I’m genuinely curious to see how many months/years/decades it will all take to come back. At heart I have always been an empiricist. Let’s crash the world economy, out of idle curiosity.
“You just have to be careful not to miss it.”
It turns out this is the tricky bit.
Marcus @#6
Recently one of Latvian members of the parliament got diagnosed with the coronavirus. Soon after the police started an investigation about why the hell he wasn’t sitting at home despite earlier having been abroad Latvia.
komarov@#8:
P.S.: A paper market it may be, but it is slowly eating my money.
Yes and no. Losses or gains are only realized when there’s a sale. Unless things go to zero, that is. I doubt that will happen, here, though the kind of market volatility we’re seeing is going to set a new benchmark for “bad”
I wish Trump was right that any president who oversaw such a collapse would be pilloried or hanged or whatever it was he said. But this actually is not what I’d consider his fault. It was inevitable, at a certain point. He’s surrounded with incompetents (yeah, the buck stops here and all that) but I don’t expect even a competent president would have been able to handle this situation.
Trump should commit hara-kiri, anyhow.
Hara-kiri is honourable.
Trump is unfit.
Hara-kiri is a thoroughly idiotic idea, Trump seems to be a great fit!
Racist.
Financial advice is rarely worth as much as you pay for it, and free “advice”* is typically worse than useless. Many of the “experts” are currently saying you should stay invested, or buy right now, but I strongly suspect most of them are selling the rallies and waiting. They just need you to buy so that they can sell. Certainly the sort of market moves we’ve been seeing (and continue to see) can only be the result of big institutional investors running for the lifeboats.
You can pretty much never call the top or the bottom exactly, so don’t worry about it. There will always be something you could have done better if you had perfect foresight.
* Which is never actually advice in the technical sense, because that is regulated.
In the financial world there is “advice” and there is “well worked out theory” and the latter is generally priced very attractively, as it ought to be, and furthermore is generally far more accurate than “advice.” There is a bit of difficulty in working out what’s “advice” and what’s “theory” to be sure.
The “own a diversified and balanced portfolio, and rebalance according to some schedule, it doesn’t much matter what schedule” is well worked out theory, and demonstrably outperforms everything except insider trading and Warren Buffett. It’s free advice, there are any number of books you can pull out of your local library that will unpack it as far as you like, and any number of books that will cite chapter and verse of the supporting studies. I urge everyone interested to do their own homework, rather than simply taking my word for it.