Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: carranza2 who wrote (73362)	5/7/2010 10:32:38 PM
From: Maurice Winn	1 Recommendation of 74559

C2, I have noticed a profit-making opportunity. The idea of canceling trades is a ridiculous breach of contract. A willing seller sold to a willing buyer and trades are arbitrarily canceled. That's going to cost some people a fortune and make some people a fortune. businessweek.com <By Michael Tsang and Lynn Thomasson May 6 (Bloomberg) -- Nasdaq OMX Group Inc. said it will cancel trades of 286 securities that fell or rose more than 60 percent from their prices at 2:40 p.m. New York time, just before U.S. equities plummeted. The Dow Jones Industrial Average plunged almost 1,000 points before trimming its drop and ended down 347.80 points, or 3.2 percent, at 10,520.32. About $700 billion of U.S. stock- market value was wiped out in less than 10 minutes, according to data compiled by Bloomberg. > The mathematicians now have to build into their models the assumption that their successful trades will be canceled if the Nasdaq people arbitrarily and subsequently decide that their friends sold [or bought] at the wrong price. That's a "heads I win, tails you lose" way of handling markets. It will lead to lawsuits. If I buy JPM at a low and some while later it turns out that their friend the seller could have got a better price and they cancel the trade, I won't be at all happy. It's nothing less than swindling. The mathematicians will even now be polishing their models after evaluating the outcome of that skirmish, and including the "Gamblers Ruin" 60% rule that seems likely to be arbitrarily applied [if that turns out to be legal]. I expect another such market challenge to be mounted, with the individual stock bottom at about 55% decline [in case Nasdaq moves the 60% target arbitrarily]. When a crash comes, don't wait for 70% down. Get while the getting is good. Next week I shall put my buy orders in at about 50% below current prices. No doubt the man in the street will whine about computers buying and selling shares. Mqurice

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