Sorry, yes it was Livermore. And while I thought that he was wiped-out (and subsequently made it back) both points are irrelevant to my main point: that while events in the markets may (roughly) repeat themselves, the major ones are truly "once in a lifetime" or nearly so.
Sure, we're likely to have another great bull market like this one, but I am unlikely to be around to take advantage of it. If I am, my fingers are unlikely to be able to work the keys fast enough, anyway. :)
As to my apocalyptic prediction - it's one possible scenario. We may get a crash, or the bull may just die with a wimper. What I am sure of, though, is that it WILL end, and that it's NOT "different this time".
The decimalization problem is part of what I feel is the most likely crash scenario. There is ample evidence to suggest that, like 1987, we lack the necessary infrastructure for the market to trade in an orderly manner past a certain threshold.
The crash of 1987 was as much about a failure of technology as it was about a culmination of events. On that day in 1987 the tape was running TWO HOURS LATE. Traders sold out of panic borne out of a lack of information, with those away from the floor putting in market orders without having any idea what price they might get.
Decimalization, IMO, could push us right into another similar scenario. The infrastructure can barely handle current volume with fractional quotes. Decimal quotes are going to push the systems over the edge.
(If you don't understand why decimalization will overload the infrastructure, think for a moment what your L2 display is going to look like...)
Hopefully, though, it won't happen - not just now. NASDAQ is right, and the SEC is wrong on this. It most likely won't happen, because no matter what the SEC mandates, NASDAQ just CAN'T DO IT. What is the SEC going to do - shut down NASDAQ because they can't switch over the decimal quotes? :) |
