[stoney]

This was wild. Still trying to explain it to the really junior guys on the desk, they didn't quite understand why I was telling people to stop calling and just watch.

If you didn't really see this, it's worth watching to see just how bad it was on the floor. This is the problem with high frequency trading, when the computers are turned off, there aren't any offers... Market built on air.

 

[X3pilot]

Every post you post makes me hate lawyers a little less and stockbrokers a little more.

 

[stoney]

The funny thing is, it's the mathematics and physics PhD's in finance that are causing most of the problems...

 

[dante]

You could've picked up Sam Adams for a penny....... At least until the NYSE voided the sale, but hey, it would've been fun for a day or so.

 

[X3pilot]

You could've picked up Sam Adams for a penny....... At least until the NYSE voided the sale, but hey, it would've been fun for a day or so.

"You could get 50 shares of stock for a case of Sam Adams empties," he quipped. "That's a good deal."

When all stock trade is like this, I'm in the market!!

 

[ridiculous]

I have to say that was one of the most exciting 30 minutes ever. I was no where fancy but I was logged in to my software at the time. My <$10000 account fluctuated between $1000 and $20 M during that half hour. I could make NO trades. Bid/Asks were essentially infinity. So I sat and watched accenture trade to zero and aapl to 200.

Absolutely scary.

Joker, whats your estimate for how much of the trading is done by servers and their respective algorithims on an average day?

 

[stevew]

if i had to listen to that for 8 hours a day....i'd start shooting people.

 

[stoney]

I have to say that was one of the most exciting 30 minutes ever. I was no where fancy but I was logged in to my software at the time. My <$10000 account fluctuated between $1000 and $20 M during that half hour. I could make NO trades. Bid/Asks were essentially infinity. So I sat and watched accenture trade to zero and aapl to 200.

Absolutely scary.

Joker, whats your estimate for how much of the trading is done by servers and their respective algorithims on an average day?

Vast majority. Real trading is drying up.

 

[$tinkle]

Vast majority. Real trading is drying up.

so script kiddies determine my net worth? how awesome is that?

 

[ridiculous]

if i had to listen to that for 8 hours a day....i'd start shooting people.

Cant agree more. I went to the CBOE floor last summer. If I had to sit in a pit with 300 traders butt to nut with CNBC, Stock Ticker and a Baseball Game as my only visuals ide blow my brains out too.

 

[Secret Squirrel]

so script kiddies determine my net worth? how awesome is that?

Live by sword...die by acne...

wait, wat??

 

[rockofullr]

The funny thing is, it's the mathematics and physics PhD's in finance that are causing most of the problems...

What the hell does physics have to do with the stock market?

PS that dude may as well be screaming at me in Japanese.

 

[stoney]

What the hell does physics have to do with the stock market?

PS that dude may as well be screaming at me in Japanese.

Nothing, but the insistance that economics is a true science, and not a social science has those true science types fitting rigid rules to something which can not accept them.
Read:
Black Swan
When Genius Failed

 

[$tinkle]

What the hell does physics have to do with the stock market?

good at physics; good at math & comp sci. these guys can therefore find & define patterns & trends, and (hopefully) make it all accessible to us bourgeois feet washers

 

[rockofullr]

Nothing, but the insistance that economics is a true science, and not a social science has those true science types fitting rigid rules to something which can not accept them.
Read:
Black Swan
When Genius Failed

Stupid nerds and their dumb numbers.

 

[ohio]

See the rebuttal of the Chicago School of Economics and Posner's return to Keynesian Economics.

And the full list of interviews if you want to bore yourself to death: http://freakonomics.blogs.nytimes.com/2010/01/20/chicago-economists-on-the-crisis/

Joker, I have to say I'm surprised... for all of your talk of the perfect efficiency of the markets, and their need for complete freedom, I wouldn't have expected you to now talk of consumer irrationality. You realize that the two ideas are incompatible?

 

[narlus]

Nothing, but the insistance that economics is a true science, and not a social science has those true science types fitting rigid rules to something which can not accept them.
Read:
Black Swan
When Genius Failed

do they make you guys re-watch _&#9573;_ until you've got it memorized?

 

[stoney]

See the rebuttal of the Chicago School of Economics and Posner's return to Keynesian Economics.

And the full list of interviews if you want to bore yourself to death: http://freakonomics.blogs.nytimes.com/2010/01/20/chicago-economists-on-the-crisis/

Joker, I have to say I'm surprised... for all of your talk of the perfect efficiency of the markets, and their need for complete freedom, I wouldn't have expected you to now talk of consumer irrationality. You realize that the two ideas are incompatible?

I am a fan of market freedom, in that if you f* up it's your problem to deal with. Don't expect me to bail you out. If you f* up greater than you can afford to, I now own you; don't go crying to mamma govt because you screwed up.
As for market efficiency, it is far from efficient. Inside information does exist, I see it regularly. I also think that the new algo efficiency trading programs (quants)are far from investing, and because you can get paid by the market for creating liquidity HFT's are taking over.
I personally would rather see a return to fractions (1/16's) and required time delays to 1 second on trades to see people come back into trading instead of computers.

 

[stoney]

do they make you guys re-watch _&#9573;_ until you've got it memorized?

huh?5

 

[narlus]

it's a good flick

Pi (1998)@@AMEPARAM@@http://ia.media-imdb.com/images/M/MV5BMTI4ODUzNzY3MF5BMl5BanBnXkFtZTYwOTU2OTY4._V1._SX100_SY138_.jpg@@AMEPARAM@@BMTI4ODUzNzY3MF5BMl5BanBnXkFtZTYwOTU2OTY4@@AMEPARAM@@SX100@@AMEPARAM@@SY138

 

[stoney]

SOunds like he's looking for Fibonacci...

 

[narlus]

well, it's either him or Mr Goodbar

 

[Rideforfun]

Ok, can someone please explain, in semi-plain English. What is happening in that video? I only ask because I'm a curious teenager. *flame suit on*

 

[narlus]

it's a bunch of chickenhawks looking for an easy score

 

[dante]

Ok, just imagine that you're watching your favorite hockey team play, and suddenly the huge television/scoreboard suspended above the rink falls and crushes everyone. Blood all over the place, people screaming and dying, bones sticking out everywhere, and just goes on and on and on for 1/2 an hour.

It's like that but 100x worse, since it involves real money getting flushed down the drain instead of just a couple dozen people dying.

Does that help?

 

[stoney]

Ok, can someone please explain, in semi-plain English. What is happening in that video? I only ask because I'm a curious teenager. *flame suit on*

Not a problem. It's actually a good question to ask when you are young.
This past Thursday, the S&P 500 dropped ~1000 points in 8min. To put that into context, it's an approximately 10% drop in the market in 8min. The crash in 1929 "Black Tuesday" was 11% over the period of a day.

What you are listening to is a running audio coming from the futures pits. When you see the guys "on the floor" on CNBC and Bloomberg TV, that's an equivalent to the pits.

The S&P started at 1138 and ran down to 1125, which is a big push down. As he is yelling "5 evens" he is saying that bids are coming in at 1105. He is referring to the last two numbers with "99, 98, 85, 84, etc" Bids are offers to sell, so what you are seeing is effectively the entire market hitting the sell button at once.

Handles are the increments between bid and ask, and are also referring to the thousandth's number (ie 1095 to 1093 is two handles). They are usually within 1-2 handles max. We were seeing spread handles of greater than 30, which is monstrous.

It's a pure panic, and you can hear it in his voice. You will probably never seen another trading day like this again.

Well, at least until we have a major country default, or the Euro break up.

 

[stoney]

Ok, just imagine that you're watching your favorite hockey team play, and suddenly the huge television/scoreboard suspended above the rink falls and crushes everyone. Blood all over the place, people screaming and dying, bones sticking out everywhere, and just goes on and on and on for 1/2 an hour.

It's like that but 100x worse, since it involves real money getting flushed down the drain instead of just a couple dozen people dying.

Does that help?

That too.

 

[ohio]

And now for something on which I think Joker and I will agree: in a world of irrational investors and unpredictable volatility, something has to be seriously ****ed up for a trading firm to not record a net loss on ANY SINGLE DAY in the last quarter: http://www.zerohedge.com/article/un****ingbelievable-goldman-has-zero-trading-loss-days-last-quarter

Goldman is doing something that is impossible in a properly functioning market. Unless our reform is getting to the heart of that problem, all the regulation or enforcement in the world is wasted energy.

 

[stoney]

I concur. Not only Goldman, but Citi, JPM, and DB if I remember correctly. That's ****ing unbelievable.

 

[stoney]

Chatter about the breakup of the Euro. France threatened to pull out if Greece was not bailed out, and rumor is that Germany is in internal talks to pull out. Seeing EURUSD tgt prices at LEH lows around 1.23. If we hit those numbers, expect substantial pullback in US mkts as the dollar gets stronger offsetting inflation based gains.

If the Euro breaks, LEH will look like a hiccup.

 

[$tinkle]

If the Euro breaks, LEH will look like a hiccup.

action is action
go get it

 

[valve bouncer]

I'm thinking of buying sterling as it's gone back in to the sh*thouse again against the yen. When I last went to Blighty (Aug 2008) a quid bought about 200 yen, now it'll only buy 135.....haha suck it u Poms.

 

[stoney]

I've got my cards on the table already.
Long gold, short SPX, long volatility.
I am looking to put on a treasury short as well, but as long as the Euro is breaking down treasuries will continue to be "safe money".

 

[dante]

Chatter about the breakup of the Euro. France threatened to pull out if Greece was not bailed out, and rumor is that Germany is in internal talks to pull out. Seeing EURUSD tgt prices at LEH lows around 1.23. If we hit those numbers, expect substantial pullback in US mkts as the dollar gets stronger offsetting inflation based gains.

If the Euro breaks, LEH will look like a hiccup.

USD = #1!!!!

Anybody else remember the good old days when a stronger dollar meant more investment and a stronger economy? Too bad that idea went out of fashion around the same time that "budget surplus" became something to be avoided at all costs...

 

[Inclag]

And now for something on which I think Joker and I will agree: in a world of irrational investors and unpredictable volatility, something has to be seriously ****ed up for a trading firm to not record a net loss on ANY SINGLE DAY in the last quarter: http://www.zerohedge.com/article/un****ingbelievable-goldman-has-zero-trading-loss-days-last-quarter

Goldman is doing something that is impossible in a properly functioning market. Unless our reform is getting to the heart of that problem, all the regulation or enforcement in the world is wasted energy.

Sounds like you're seeing it for what it really is.

A game.

 

[DaveW]

True the stockmarket is not really about investing in a company anymore, most of it's about gambling on prices.

 

[stoney]

True the stockmarket is not really about investing in a company anymore, most of it's about gambling on prices.

Exactly. While you should still do your fundamental analysis, it's so quarter by quarter it's not even funny. I've been focusing on macro level movements and using technicals to time entry and exit points.

 

[stoney]

Good read and interview from El-Erain:
http://www.zerohedge.com/article/mohamed-el-erian-you-have-buy-both-liquidity-and-solvency-solutions