One comment on “Stock Market Liquidity

  1. Seems like this was basically just a coordination problems between the exchanges where prices that weren’t defined became prices of zero. The floor traders have a persuasive-sounding argument, but their finger-pointing to high frequency algo traders is unjustified. First, although algos don’t seem to have stepped up to provide liquidity, that was an effect, not a cause. Second although the presence of floor traders might save you a dollar every now and then (if you use stop market orders), floor traders’ corresponding opacity will tend to cost you a penny two hundred times, so to speak. Usually I don’t want to be short skew, but that is one case where I’ll take my chances.

    Also, although it seems absurd that the stock market would go down 10% in one day, if society as a whole has been repressing the depths of its debt mismanagement and demographic problems, and one day there is an “aha” moment, a 10% drop is less absurd. The real absurdity and source of extreme volatility is the deferral of debt.

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