Thursday, August 22, 2013

The Nasdaq Flap

The Nasdaq halted trading today and was down for a couple of hours.  Listening to the financial media (CNBC, Larry Kudlow, etc.), you would have thought a great crime had occurred.  99 percent of the investing public had no idea and could care less, me included.

What serious investor could possibly be harmed by a two hour shutdown of the Nasdaq?  Are these pundits serious?  If there was ever an 'inside baseball' issue, this is it.  Only manic traders and hedge funds could possibly care one way or another about the Nasdaq shutdown.

No portfolio of any serious investor could possibly be damaged by a temporary shutdown of a stock exchange.  This is a ridiculous tempest in a teapot.

1 comment:

Otto said...

We live in an era where data is “big” and technology is purported to be mind-blowingly wondrous. How is it possible that a fundamentally “core” system function like a very simple “price dissemination” mechanism fails? Our financial market looks like an old broken down jalopy designed with the same integrity and quality of the 1987 Yugo. Markets and their components – individual companies exist not just in the US, but everywhere in the world. A structure is required that allows effective and efficient financing (in all time zones). To limit market functionality to the hours of 9:30 to 4:00 Eastern Standard Time is archaic. Now, we suggest that we should accept the fact that that stock trading may not work properly between those limited hours. In the future, markets will be open 24/7 and will “work” all the time. Right now, markets like the NASDAQ look like a piece of obsolete junk, incapable of scaling, expanding and keeping up with rudimentary risks that are a part of today’s world. One of our last bastions of expertise will surely migrate to a place where they can built stuff that works.