Panic on the flour…Posted: May 6, 2010
Earlier today, the market was shaken by one of the (if not the) biggest plunge in the history of all the indicators : Dow Jones, S&P 500, Nasdaq… Was it the consequence of the European debt crisis ? Or another black Monday – but on a Thursday – like in 2008 ?
No, it apparently all started with… a typo. One of the trader entered a amount in billions instead of millions on a stock considered as a reference, this quasi-instantly drove the Dow Jones down. Responding to this, the automatic and electronic trading algorithm sprang in action driving the Dow down and the panic up.
As for the humans, their first thought was “Greece”… but this time now, nothing to do with Greece.
This episode tells us several things : first, as we already know, the market can react quickly in a very emotional way. Then, not every financial low moment is related to Greece…