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The August 2015 Flash Crash Through The Eyes Of Retail Investors
With professionals proclaiming yesterday's meltdown "historic," and generously telling investors "don't try to overthink what you're seeing," it is clear that the real impact of the carnage wrought by a combination of Fed-indiced crowded trades and HFT illiquidity-providers is yet to be fully appreciated. As one retail investor exclaimed, yesterday's open "was a life-changing 20 minutes."
When OPM (Other People's Money) is at stake (or even better, 'virtual' money), it is easy to be glib and trot out old Wall Street adages to comfort those with real money at risk such as "stay the course," of "what this is not is a repeat of 2008."
Of course, as The Wall Street Journal reports, while institutional and individual investors alike tried to navigate the wild movements in stock prices, Financial advisers, almost unanimously, have cautioned clients not to panic...
Richard Madigan, chief investment officer of J.P. Morgan Chase & Co.'s private bank, called an emergency investment committee meeting following the morning drop in U.S. stocks. The executives spent more than an hour discussing what they were seeing and what had changed. "Some of this is knowing what you don’t know," Mr. Madigan said. "And not trying to overthink what we’re seeing but just try to understand what is real, fundamental and deserved... what may create opportunities."
“What this is not is a repeat of 2008,“ Chicago financial adviser Steven Dudash wrote to clients Monday morning. The president of IHT Wealth Management, which has about $650 million of assets under management, Mr. Dudash said he spent most of the day talking to clients and trying to calm their nerves.
Mr. McNabb said Vanguard was planning to publish several investor communications on its website, including a piece that the firm has largely recycled from the market volatility just ahead of the 2008 financial crisis. The article, he said, would make several points, including urging investors not to panic, not to abandon stocks and bonds and not to make abrupt changes in their portfolio construction. “I still believe that these are the right points now,” Mr. McNabb said.
Still, the risk is that the market turmoil could spill over into the U.S. economy if the selloff persists, and there was real pain felt in the real world...among professionals...
“Meltdown was the only word that can be used to describe price action in equities,” said ANZ Bank Senior Economist Mark Smith.
“The latest developments are driven by sentiment and positioning in financial markets without much relation to underlying economic fundamentals at this stage,” said Liam Spillane, head of emerging-market debt at Aviva Investors, which oversees more than $385 billion in assets. “But those are not mutually exclusive. They can feed on one another.”
“Markets are on their own now; the Fed has already deployed its arsenal,” said Ashwin Alankar, who helps manage about $1 billion as global head of asset allocation at asset manager Janus Capital Group Inc. “All the central banks can do today is not withdraw liquidity.”
and mom-and-pop...
The selloff overwhelmed some online brokerage firms as investors tried to access trading accounts amid a plunge in the markets. Clients at TD Ameritrade Holding Corp. and Scottrade Inc. reported problems logging on to their accounts and executing trades. Scottrade experienced a 230% spike in trading volume on Monday morning, a spokeswoman said.
Jan Rothbauer and her husband, Bill, of Poland, Ohio, decided Friday—when the market was down about 300 points—to tell their financial adviser to sell most of their stock. The couple cut their stockholdings from about 50% to less than 5%, fearing they would suffer steeper losses as they prepared to retire.
“I felt this was on a roll now and not going to stop for a while, so it’s just time to move,” Ms. Rothbauer said.
To Christina Elizabeth, it was “a life-changing 20 minutes.”
The painter from Phoenix was one of millions of Americans who watched in horror as the U.S. stock market sank like a boulder Monday morning, a plunge that topped more than 1,000 points before many investors had finished their breakfast cereal.
Ms. Elizabeth, 31 years old, tried in vain to sell at least some of the shares in her TD Ameritrade Holding Corp. account, but was unable to log in amid a crush of others rushing to do the same. By the time she was able to access the site, she was down $6,000.
“It might not be a lot of money to some people,” said Ms. Elizabeth, “but as a young artist trying to get somewhere, this hurt a lot.”
And finally perhaps some genuine reflection...
Bill Stone, chief investment strategist at PNC Financial Services Group Inc.’s asset-management group, says the Monday morning call he generally holds with financial advisers had more than 300 participants, or 50% more than usual. He said more clients have been contacting advisers, concerned about how the latest market losses could be a repeat of 2008.
“The swiftness of the decline brings back bad memories of the financial crisis,” he said. “I think we’re going to be haunted by those memories for quite a while in the sense that people automatically ask: ‘Is this the start of that again?’”
Isn't it amazing how simple and confidently stated thge BTFD mentality is until that dip disproves itself with Dip (with a capital 'D')... Perhaps it is worth paying attention to the financial advisors that spend less time on TV and more time protecting wealth in their clients' portfolios... or for mom-and-pop, ignoring the rah-rah cheerleaders ever-present in mainstream media business press...
Maybe - after today's record reversal, those purveyors of OPM will be a little more careful with their advice!!
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All downhill from here, PBoC went all in and all in was not enough...
Depending on the face and demeanor and political affiliation, I might be able to provider her a shoulder to cry on.
First China blames the US for its tanking stock market, and I am sure the US will blame China for the tankage these past few days. I guess there will be a lot of finger pointing while BOTH markets keep tanking because I dont think anything except QE4 can stop this from crashing, albeit it stop it temporarily since we know QE is just a bandaid for a bullet wound.
I'm showing +5 STDDEV and climbing. Will we match a Lehman moment or just create a few modern day Lehman's?
I guess we find out when Douche Bank and a few others go down like falling dominos.
The excuses will be entertaining.
this market drop really isn't a big deal...Americans just need to do what the Chinese want to do. ALL investors, I mean every single retail investor, should sell and stay on the sidelines until the storm blows over. That's all.
....and please don't make me use that sarc thing.
....but, in fact, that is the point....the fact that a wide scale sideline activity would destroy the market is the entire point...in the past, at some point, a company would go into debt to buy it's own stock if it were low enough.....but they've already burried themselves in debt jacking their prices UP! There's no backstop left....
QE4? And what exactly do you think has been trying to prop up markets for the last 3 trading days? Retail investors?
Bodies of muppets, stacked up like cordwood.
I smell opportunity, time to open a title loan/payday loan joint next to every Scottrade office.
^ all of the above...hilarious +100
rip their faces off
Definitely not a repeat of 2008. We only had to bail out corporations back then. This time it will be countries. All of them.
1000 point selloff from a 17,000 base? BFD... I sat in my recliner with a bottle of Jim Beam in my hand and watched the Dow melt 500+ points from a 2300 base in the October 87 crash... now THAT sucked dogballs.
I can see why. You should have gone with Jack.
I was doing Mad Dog 20/20 by the end of the day.
Better than snortin' lines out of Yellen's asscrack.
Chivas
I'm currently long rolling tobacco, rolling papers, ganj, Bushmills and tinned food. No guns in this country unfortunately.
Actually some of the best sex i've had has been with the opposite poltical affiliation. (angry sex)
Yeah, you like that? how's that for some change you can believe in, little more? huh? Forward this baby!!
Yes we can!!
LOL!! That visual. Too funny.
1) Nothing only moves in a straight line.
2) It's not a crisis until the men start meeting face-to-face
That said-
While "Don't Panic" is always sound advice, and actually was sound advice yesterday. It is also criminal negligence in many cases, since the average 'Murican stockholder is "of a certain age" and probably over allocated to equities. In which case an advisor has a fiduciary responsibility to their customer to warn them that they are over allocated to equities. (The fact that the traditional allocation means MOAR .GOV debt which is in an even longer term and maor overbought bubble is a slightly more complex issue...)
Brokers sent all of those "don't worry" letters in 2008, didn't stop the crash. Just a cut-and-paste job now, same text. Already got one.
Lindsay Graham on Trump: ‘I’ll beat his brains out’
http://tinyurl.com/os55ug5
The title: The August flash crash through the eyes of retail investors
The article: Lies fund managers are telling retail investors
you aint seen nuffin yet
I'm staying bullish.
This is a buying opportunity.
http://www.denk-bubbles.com/bullish/
It's only a flesh wound! Come back you coward!
It won't be a buying opportunity until all limbs are cut off including both heads. Even then you might want to check that the counterparty is still solvent.
Whoa, wait, what, there are still retail investors?
Those are like bigfoots, or unicorns, or chupacabras, or something.
Bunyips
What small investor is in the "market" these days? Take that money and start a small business. Cheat hard and cheat often (the goobermint that is). No other way to survive.
Bullshit!! If anyone is dumb enough to still be in this Ponzi then they're too fochin dumb to leave until they've had every fochin' penny taken from them by these Ponzi Pumpin' Pricks
Some retail investors that are part of the ZH crowd make good coin knowing the truth and trading. I think dumb would be anyone in debt with maxed out credit cards, car loans, and a house they cant afford along with student debt for a degree every other stupid mother fucker has obtained. That is stupidity. That person bought into the hype rather than thinking for themselves.
I love to hear the excuses/explanations of these "professionals." Almost as bad as the realtors.
Trading TZA over the past few days has been great!!!
I have waited twenty plus years to watch and RELISH the CNBC pundits, traders, experts get punked...it happened today... green shoots in your face you fucking clowns...
Yup my boss is still in denial. Thinking to dump his 401k in a week or 2. I told him back when the top was in but no, he had faith. Poor sucker.
Apparently theses small investors weren't around late 2008/ early 2009. Everyday was a winding road...
Go to any website having to do with investing yesterday and you see the same robot responses across the web
-"I'm indexing i don't care if it goes down."
-"I'm a value investor it just means some companies will get cheaper for me"
-"Stay for the long haul and you will reap the rewards with stocks."
-"Mr.Market is having a sale today so better load up."
-"Stay the course and things will go back up."
-"These are only paper losses."
But what I hate the most, the FUCKING MOST is the cult of Buffett. Spewing out witticisms like they have a clue. You all have no fucking idea what the fuck you're talking about! Buffett the idol who fucked over everyone by lobbying for a bailout in 2007-2008 when shit should have hit the fan. Here's a fucking quote from buffet "never lose money" You hear that you fucking robots? How's that working for you?
So many investors who have only seen bull markets for the last 25 years think they are experienced and wise. None that have any experience of the sideway fucking post 1929 where stocks stagnated for decades until a 2nd world war was the only thing that saved america from eating itself alive. I hope you choke on your fiat shit you diaper wearing fucks.
And Buffet who poured money into health insurers when Obamcare was being rolled out. Great profits screwing the middle class.
Heaven forbid stocks should ever go down! You doomsayers are such a pile of crap. You think this is "the big one?" The one where stocks go to zero? You're wrong. You're the reason Joe Lunchbox never makes money in the market. Stocks go down and you pee your panties. Man up. Real investing doesn't go in a straight line. Bitchez.
1987, 1994, 2000, 2008, get the message ass hat?
Like I said, stocks go down and you pee your little panties.
Do you see a pattern with those dates? Each succeeding one was higher than the previous, dummy.
Stock markets are not efficient because pederasses like you are such wimps. Fine with me. I'll laugh all the way to the bank as I'm driving past your stinky ass bunker with all your rotten sea rations. If I'm fucked, then so are you. Nothing will save you if the TSHTF in our lifetime, so you might as well play the game. Or stay poor. It's up to you.
You doomsdayers are so far from intellectually honest it's hilarious. I love this site b/c of you idiots. Thank you!
Heaven forbid stocks should ever go down! You doomsayers are such a pile of crap. You think this is "the big one?" The one where stocks go to zero? You're wrong. You're the reason Joe Lunchbox never makes money in the market. Stocks go down and you pee your panties. Man up. Real investing doesn't go in a straight line. Bitchez.
They all talk like the slide is over at the end of every day.
It may have just begun, folks.
Not one week of wild volatility, but months of it. Closing in the red every day.
It is the market trying to revert to the mean.
could be. the market always has it's way and reverts to the mean. however with the fed printing to infinity and directly buying the market, the market is going to have to bring an incoming asteroid 6 miles wide and obliterate the fed. this just might be the start of that process.
when the market gets done with the fed it's going to look like that hole in the Arizona desert. Meteor Crater.
And it rarely stops at the mean. It usually overshoots.
Those poor fuckers sitting at their Dell PC monitors trying to access their brokerage accounts believed the bullshit spewed out on the financial MSM that HFTs provide liquidity.
Kudos to ZH for all the HFT /algo/ nanex posts warning about exactly this. Cured me of stawks for good.
I agree.
So many people think they can use their free Scottrade software to "play the market" and then get their ass handed to them on a platter.
Bullshit. My record best year 2009 on a pos Scottrade platform. I would mention how many percent I made that year but you , nor anyone on this board would never believe the number,( it was four digits). OVer 13 bags in a single year sport. Done trading never no more than 3 stocks at any one time, Diversification is for dumbasses wanting a mediocre index return. I cashed out the next year 2010 when the market was Fully Valued at Dow 10800. I only made one trade since, a quick 22% single stock trade held for 3 days and out last year. Again on the lowly Scottturd.
since then its been the 45 degree no vol rampathon where a extreme value type bottomfishing swingtrader/knifecatcher never has a chance to get in and out much less play. Its been the momo monkeys day but Im starting to smell a faint whiff of some dead things on the breeze again. NOT quite ripe enough just yet. Im just hearing a few little piggies squeal. I need to hear a SCREAM. AHH its been a while. another 3 weeks, month or maybe two at most and I show you boys how its done.
Have not seen nothing to swing at for certain yet this year other than flipping a few short options,. I wait till I see the whites of their eyes.
" never no more than 3 stocks at any one time"
specifics.
So long bitches....
"some mother fuckers are always tryin to ice skate up hill...
- Blade -
This is more like August 2007 than September/October 2008, so given the magnitude of this little overture, next year's carnage should be spectacular. But first the rebound rally, to convince everybody that 'its ok, nothing to worry about'.
Jeff Nielson at Bullionbullscanada agrees with you . He says it has to coordinate with the political cycle so as to blame the outgoing party and usher in the new "savior" again for the umpteenth time. The sheep have a short memory.
My all time great hero was my main man P.T. Barnum - ever hear of him? He absolutely loved people!
Preferably boiled.
its their Casino...will mother fuckers ever learn?
no....probably not til its all G O N E.
"Is this the start of all that again?"
No...'all that' never stopped and you are only coming to realize that fact at this present moment.
You can knock on a deaf man's door forever.......
unless he decides to leave the house
:
“Meltdown was the only word that can be used to describe price action in equities,”
How about 'Bloodbath'?
OK
Take a breath.
This website won't let me type.....So fuck this~
stocks are worthless, manipulated pieces of paper that have only perceptual value and as such they can make you money when they are manipulated up.
let's see...S&P 666 March 9, 2009. Geitner and Berananke in terminal testicle vice allow that buying up the mbs to stop the cds carnage that was and still is the problem.
stocks NEVER deserved to get this high. Of course they will fall.....and rise.....and viva volatiltiy!!!! There is where you make a fortune!
Just think about all the financial and investment professionals that were in grammar school when TSHTF in 2008.
They've never experienced what these situations can do, and are in charge of managing billions and billions of $usd in investments.
All they have known for almost 8 years is that the fed. had their backs and to BTFD. These are the same people that are being instructed to tell their clients not to worry.
That mixed with a hiring selection and reward process that guarantees that the only ones that get hired and promoted/rewarded are sociopaths, could lead to some real problems......
Naahhh, Just BTFD
Think also about all the algos written without a clue as to how to handle a bear market. Markets only go up and they were all written to BTFD over the past six years. 95% of them have to be blowing a fuse at this point with owners trying to reach for the emergency stop button.
I have heard this from an insider, the HFT robots reply upon fast accurate qotes. If they don't get them they are programmed to or manually shutdown. Once this happens all liquidity in the market suddenly dries up.
During the flash of 2009?? I had a limit order in and it filled at 30% less than the limit. I set this up time and time again, without further success. I think I am going to try again now that Monday happened.
she can still have a second life as sugar babe
every ten years you get a new crop of people who come of age who think they know "something" which they do...... until they dont - then they get fucked by the system and the "new" product
stocks go up, stocks go down, but the broker / manager always gets his commission and fees
anyone that sells into a 1000 pt. down open, after a 1000 point decline prior 3 days, desverves to get ass raped
maybe they just like a good ass rapin. they are following the example set by the white house.
consensual, they used to call it?
"I don't think the heavy stuff is coming down for quite some time now"
http://m.imdb.com/title/tt0080487/quotes?qt=qt1877406
Good ol' human idiocy. It's seen clearly with the comment by that Christina Elizabeth woman and her looking to sell and take a loss. So if the idea of losing (paper unitl she decided to cash out) money on your portfolio is bad then WHY THE FUCK WERE YOU EVEN IN STOCKS.
Mind blowing how no matter what happens, humans keep doing the same shit over and over and in cases like this will do thier best to make things worse for themselves and everybody else.
People can go and blame the "financial talking heads" for this and while I think they are idiots to be cheerleaders, the fact is human beings need to take some damn responsibility for their own actions and if investors cashed out yesterday and took a nice loss doing it then that is their own damn fault.
The biggest reason to not really invest in the markets is not because of the rigged nature of it all but rather you have to rely on humans to not be complete idiots and they keep showing that they are and forever will be complete idiots.
Human stupidity is depressingly predictable. The prudent application of this realization, however, can make you very wealthy indeed.
Totally agree. Before you get in you have to have an exit strategy. Maybe it's a stop loss, maybe it's a price target, maybe it's "At this point I'm screwed anyway so I might as well hang on."
Also, an entrance strategy: until you can define EBIDTA and understand what it means (among other terms) you shouldn't be in any stocks. You can't hire someone to use common sense for you, because if you don't have it you have no idea if they do, either.
smokin opportunity
Don't worry. This is just a normal market correction. This has been an extraordinarily strong bull run and its only normal to have a correction of 10-20%. The fundamentals of the economy are sound and we are well into a recovery. There is an enormous amount of liquidity in the global system due to central bank easing. Emerging markets are crashing, and that money will be put into the US markets. This is a buying opportunity. There is plenty of upside left in the stock market for retail investors. This is a different investing paradigm.
i'm not at all worried. i know that when you die you often shit yourself. So eventually you are going to get your head out of your ass.
FOS....
I'm too old to be an active trader. I like bonds which I hold to maturity and CD-like stuff that is paying decent interest at the moment (in Mexico). We own a small position in a mutual fund like investment which is 25% stocks (Mexican - but seem pegged to the DOW) and 75% bonds. The trouble with mutual funds is that it is so much harder to get out. If I could have gotten out early this morning I would have but the mutual fund is valued at the end of the day. I wonder if all those working people with 401Ks realize that when they sell at 10AM they sell at 4PM price.
Everyone should sue. Individually.
Had they sold on the open, the pain would have been worse. They should be grateful for the ineptitude.
So when does DB have to start the 75 trillion dollar liquidation that nobody is talking about? That should be a bloody f - ing mess to watch!
So when does DB have to start the 75 trillion dollar liquidation that nobody is talking about? That should be a bloody f - ing mess to watch!
So when does DB have to start the 75 trillion dollar liquidation that nobody is talking about? That should be a bloody f - ing mess to watch!
So when does DB have to start the 75 trillion dollar liquidation that nobody is talking about? That should be a bloody f - ing mess to watch!
SHARK! SHARK! EVERYBODY OUT OF THE WATER THERE'S A SHARK!
“What this is not is a repeat of 2008,“ Chicago financial adviser Steven Dudash wrote to clients Monday morning.
No, it will end up being much worse Steve. What an asshole!!!
As one retail investor exclaimed, yesterday's open "was a life-changing 20 minutes."
And assuming you didn't sell into the panic, today's openning might have been the last good opportunity to exit.
This ^^^, I think this is the number one thing most investors can't deal with. Its not what you do when you are right-thats easy. Its how do you handle being wrong that will ruin you. I think that when they somehow get trapped down 10 percent and rather than admit a mistake/defeat and try to get on another bus leaving the station, they try waiting it out riding a losing hand further down. to the point of major portfolio damage. At times it might be OK to ride 10% down but you need a really good reason (which I dont think they have now). Many is the day I admitted it to myself that I sucked and did something different while you still could.
Darn, I was soo hoping you were going to tell us they fired their financial adviser for letting them be 50% in stocks as they prepared to retire. Most likely, the right amount in their case was somewhere between 0-20%, exactly where they ended up making decisions on their own.
Christina Elizabeth, it was “a life-changing 20 minutes.”
If you think that was bad, you should have seen what went on in the first 20 milliseconds.
The retail suckers are just starting to get the butt pounding they have had coming for being in this rigged market...fools thinking they were going to make profit in their 401k sucker plans.
JU GOT OWNED!
Can the average person get ahold of the NYSE Closing Balance Report which apparently is published at 3PM daily ?
Depends on your broker, or you could just go to the source... http://www.nyxdata.com/Data-Products/NYSE-Imbalance-Datafeed
(But it's not just a single report that comes out once at 3pm)
Retail invester = Someone not paying one damn bit of attention. Every fucking thing on planet earth must take them by surprise.
WTF did they think, come on! When this shit goes south like it did briefly, anyone still in the water will get eaten by sharks.
There are no markets only Zuul.
Bank of America has told their advisors to tell their clients that they are on the toilet. Will return calls after shitting and then snorting.
The markets rolled over. No bid...in spite of their overnight efforts ramping the futures to get a bid under the markets. This is more ominous than the 204 point decline in the Dow indicates. It tells me this selloff has legs. A ways to go before bids start coming in. If someone is advising you to sit it out, consider yourself their bag holder. Markets don't need sellers to decline, just a lack of buyers. Think about that!
This was no crash
Just a Hiccup
So drink coffee , & forget it
If you're still a retail stock investor, shame on ...Huh? https://www.youtube.com/watch?v=eKgPY1adc0A
I have three accounts because of incentives offered by different brokerage companies.
On monday morning, I tried to trade in them, vanguard kept getting server error. fidelity, just too slow to do anything, merrill, was so slow that I could not tell if I actually did a button press or not. I checked the orders screen and it was blank, but half an hour later I was notified that my order executed. I bought a small amount of stock for a really good price.
I guess if you think you can panic sell in a market that is paniced and you are a retail investor, it's not going to happen.
Maybe next time I will put in a low ball limit order before the market is open.
I am trying to help the community, if any one reads my posts or cares, up vote me or reply. otherwise I feel I am wasting my time.