Monday, May 6, 2013

How I learned to stop worrying and love Flash Crashes





From NBCNews: "Rather than being simply a one-off event that Wall Street could write off as an aberration, the first Flash Crash now looks like it was just the opening warning shot of what was to come.  In 20 breathtaking minutes that happened three years ago Monday, the stock market saw the Dow Jones Industrial Average lose nearly 1,000 points, only to rebound just as quickly.

"Academics and market experts have pondered the cause and effect of the event since, and market circuit breakers have been used to good effect at least to stanch any similar events before they have gotten out of control.  But indeed there have been numerous subsequent flash crashes, none as dramatic as the initial one but each a reminder that a certain dynamic has been changed in the stock market, likely on a permanent basis…"

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