Stocks and Trading Thread - Channeling your inner Mono

[Admiral Yi]

Wee!

V-shaped dip or false recovery?

[MadImmortalMan]

I've been getting lots of text messages from people I usually don't talk to asking me what the hell to do. 

[Tamas]

I've been getting lots of text messages from people I usually don't talk to asking me what the hell to do. 

That must be annoying!

So, what did you tell them?

[Habbaku]

I've been getting lots of text messages from people I usually don't talk to asking me what the hell to do. 

I offered to help someone set up their retirement/investment accounts some months ago when they said they were clueless about this stuff. Unbidden, he contacted me yesterday wanting to set up something. I shouldn't be surprised, and yet...

[Admiral Yi]

Market not too appreciative of 50 basis point cut.

[Admiral Yi]

Robin Hood crashed last two days.  Oops.

[Habbaku]

Commentary from a blogger I read (Matt Levine):

I wrote yesterday that "one of the best services a retail broker can provide is not answering the phones during a crash": When the market is going down, retail investors often panic and sell at the worst time. Just turning off the phones—or, these days, the computers—can save your investors a lot of money. On the other hand online brokerage Robinhood's platform crashed this Monday, when the market was up 4.6% and lots of Robinhood customers were hoping to buy. That seems bad!

But it depends on what the counterfactual is. One reader emailed me the tongue-in-cheek headline "Market Rallies as Robinhood Outage Ends Panic Selling." Robinhood's platform was down basically all day Monday, and Monday was the first green day for stocks in over a week. Robinhood traders who were looking to buy, and couldn't, complained loudly; Robinhood traders who were looking to sell first thing Monday morning, and couldn't, were presumably quietly relieved. But what if there were a lot of the latter? What if they had all watched the market drop and made plans to sell on Monday, and the market would have gone even lower, but Robinhood's outage prevented them from doing so and led to the rally? Robinhood's problems were more or less fixed by yesterday, and the market dropped again. Hmm.

I'm kidding, I'm kidding, I don't really believe that the global stock market moves around with the whims of mobile-phone-based retail traders. But I did read that WallStreetBets story. Maybe the retail traders are more powerful than we think?

Anyway here is Robinhood's apology for the outage. It makes no mention of the theory (popular on Twitter and Reddit, but without any apparent evidence) that the problems were due to a Leap Day coding error. Instead it blames the problems on, just, too much going on:

We now understand the cause of the outage was stress on our infrastructure—which struggled with unprecedented load. That in turn led to a "thundering herd" effect—triggering a failure of our DNS system.

Multiple factors contributed to the unprecedented load that ultimately led to the outages. The factors included, among others, highly volatile and historic market conditions; record volume; and record account sign-ups.

I have to say, if I ran an upstart brokerage firm that had to apologize for not having the infrastructure to support a lot of trades in a volatile market, I might stay away from the phrase "thundering herd." I get that it is a standard phrase in computer science, but it has a different meaning in the financial industry. There it usually refers to Merrill Lynch's giant army of retail brokers. Often these days, in a world of indexing and robo-advisers and online zero-commission trading, the "thundering herd" sounds a little quaint, but if you run an online zero-commission brokerage that breaks, you don't really want to remind your customers that your competitor has thousands of live brokers standing by to take their calls.

Elsewhere:

Customers of Vanguard Group and Fidelity Investments had trouble accessing online accounts on Friday morning, angering investors who couldn't trade as stock
markets fell.

The S&P 500 closed on Friday at its lowest level since October; it has since rebounded. Vanguard and Fidelity did it right!

[Admiral Yi]

Come to think of it, Etrade was slightly gimpy one day last week.

[Admiral Yi]

I've been tracking the main Asian indices the last couple days to get like a leading indicator of the US market, but there does seem to be a disconnect.  Asian markets have all steadied in the green while US has been seesawing.

[FunkMonk]

I'll never get tired of Larry Kudlow advising people to buy at the dip.

[Admiral Yi]

Asian markets all down.  S&P 500 futures fell 5% and a circuit breaker kicked in.  Could be a rough week or twelve.

[Razgovory]

It's like 2008 all over again.

[Tamas]

You guys let me know when I should start buying stuff.


Worst of all with the timing is that probably I will be forced to close my little stock account at the end of the year due to it being in the Netherlands and I am being a subject of Boris Johnson.

[Richard Hakluyt]

You are still Hungarian too and a EU citizen; not a bad position to be in O pessimistic Magyar one 

[Tamas]

You are still Hungarian too and a EU citizen; not a bad position to be in O pessimistic Magyar one 

Could be worse, I know.

But I have residence in Britain so the Dutch might not be able to keep managing my account. Or rather, to offer guarantees good enough to have me keep it with them.

Although I guess if prices won't recover until then, I can might as well just leave it with them and see what happens. 

But I will need a cheap British brokerage to start buying next summer.