Skip to comments.Keep the Markets Open
Posted on 03/17/2020 5:03:45 AM PDT by Kaslin
While our nation fights the novel coronavirus for our health and physical well-being many Americans are also waging a daily battle in the financial markets as we see historic and unprecedented volatility. Many investors can only be left in a constantly shifting cycle of awe, confusion, and grief as one day the Dow Jones Industrial Average drops 1,000-2,000 points, jumps up similarly or the same, and so on and so forth. Monday saw perhaps the worst of that as the 10% rally from the Friday prior faded as the day closed the day down almost 3,000 points.
In some ways it seems the stock market is the last community space left open in the United States as of the moment for interaction and exchange as we see municipalities and states increasingly implement quarantines, large gathering bans, restaurant and business closures, curfews, and now even entire full lockdowns. Amid all this there has been increasing talk of adding in the stock market to that list of shuttered shops in the belief that it may be formulating the next crisis after coronavirus - the economic devastation to workers and businesses from the ripple effects of all this economic chaos.
Shutting down the stock market is an easy solution to a complex problem and is less a fix than a new, and perhaps more troublesome, set of problems. There is U.S. historical precedent for a stock market exchange shutdown for extreme market conditions, primarily as a means to restore confidence and cool panic selling, but those were largely in eras before modern financial markets were as technologically supported, finessed, and sophisticated as they are nowadays. Even during the Great Depression and the 2008 financial crisis the exchanges did not close despite the turbulent and violent volatility.
While many of those nearing retirement and retirees who rely on their individual retirement accounts or 401(k) accounts, and the financial securities in those accounts that seem to be experiencing an unexpected and unending wave of battering, to restrict the ability of those most reliant on the stock market to liquidate assets or pick up assets, for those who luckily prepared cash, would cause them more financial strain than if the markets were open but turbulent. Essentially it would be a freezing of assets for those most needing the income and also would leave them in the dark about the exact level of assets they really have and thus put a wrench in financial planning and security.
This lack of market information from shutting down the exchanges would extend to businesses too. The stock market is essentially a real-time, all-inclusive price discovery tool now made increasingly fast by the power of modern communications and algorithmic technology. While there may be some risks, such as accelerated news and panic based buying/selling, from everyone having a smartphone connected to their brokerage account and the proliferation of high-frequency traders nonetheless this still is the market readjusting itself constantly to price assets, companies, and economies.
A shutdown would also seriously disrupt the primary, but often forgotten, actual function of the stock market which is to raise equity capital for companies. Even amid turbulent market conditions that have caused many companies to cancel share buybacks to preserve liquidity and shelve IPOs due to indiscriminate selloffs when the market finally returns to a sense of calm, and perhaps sooner, companies may well need the ability to raise money through public markets rather than often erratic and uncertain private placements.
The New York Stock Exchange (NYSE), through its President Stacy Cunningham, rightly said on Monday amid another selloff day that “[c]losing the markets would not change the underlying causes of the market decline, would remove transparency into investor sentiment, and reduce investors’ access to their money…[t]his would only further compound the current market anxiety.”
Cunningham is precisely right in that even as unpleasant as the current stock market moves may be for consumers, companies, and investors that it remaining open is still more beneficial than it being closed. The stock market’s volatility is the pricing system of the market in action and now in full bloom and testing it limits as each day new and significant news concerning everything from company revenues to economic growth gets priced in.
the markets will stay open. the only reason they closed down during 9/11 was because of physical damage.
“one day the Dow Jones Industrial Average drops 1,000-2,000 points, jumps up similarly or the same”
More like the bottom drops over the week, with the odd 1 “up” day thrown in once in a while. That’s not “alternating days” balancing one another out, that’s a trend.
Thanks for posting this is a good one also. I don’t exactly agree with the editorial it’s because it is not a Level Playing Field the tactics when you have the oligarchs like Bill Gates Jeff Bezos George Soros and others who want to team up and absolutely obliterate the market with their shorting manipulation schemes fleeces the rest of us out of our shares for those who are foolish enough to sell on the way down. If you think about it right now there simply are not enough people left to sell shares but they are pounding them down day after day and you have to know this has an agenda. How can I say that? Because George Soros with his billion single-handedly crashed the British pound back in the 1990s. So he has in fact done this before. Imagine what it would be if some of these who want President Trump gone pooled their resources. I believe that is what we have right now. So I would actually let the market go back up a little bit today and then close it for 10 days. At that point President Trump can rally the troops trumpet all of the good things get the virus under control with quite frankly I think it already is, and then reopen the market. Somewhere in there I would like him to unmask the manipulators or call them out. He can do that very subtly or bluntly.
Agreed. Weak reporting.
As an aside I also thank you for getting up early not that you would be anywhere else because we all are basically at home to order and posting editorials because you had actually killed off my entire 30 minutes on the treadmill this morning in what seems like 5 minutes. So thank you for telling off my 30 minutes and making it go faster. This is probably also why I’m the worst speller and punctuated Iran freerepublic because I do a lot of voice texting from the treadmill that in itself is dangerous.
More like the bottom drops over the week, with the odd 1 up day thrown in once in a while. Thats not alternating days balancing one another out, thats a trend.
Yes and not a coincidental trimmed either. A very malicious nefarious purposeful one indeed.
At 4 a.m. this morning the market futures were + 700, right now they are just about flat. This is more anecdotal evidence of my theory. And I’m certainly not alone in this Theory. I am not going to be surprised if the market is down another fifteen hundred points today they wanted below 20,000.
The futures have the DJIA at +24 as of the moment. Not much to brag about, but better than a minus.
But you and I are not going to change that.
So knowing as much as we can about the pre-existing conditions, we need to go into the stock market aware of these conditions and our limitations for knowing more, and make investments accordingly.
And we need to pay attention to current events. When people like Senator Cotton are making noise about paying some sort of payment to Americans for the time being, it may be a good time to start researching TIPS, and more Gold and Silver. Silver is a great buy right now (to me it seems). And it does not need to be physical silver, although I think that's a part of any portfolio, it could be something like SLV.
Be careful out there.
I would not pay attention to the futures today - they are un unreliable indicator at present.
Have not watched Cramer in years, but her his what he said today about futures:
"The futures are a total joke. Don't even look at them. You can't have a bull market at 3:30 a.m. and have it end by 7 a.m."
- see https://www.cnbc.com/2020/03/17/stock-futures-are-swinging-all-over-the-place-cramer-says-theyre-a-total-joke.html
“I would not pay attention to the futures today - they are un unreliable indicator at present.”
Normally, I would agree. But I think, in times like this, most people have “a feel” for where the DJ is headed and will react on that feel. It’s like TP panic buying. But basically, what you noted is the best usual take to keep in mind re:futures.
I would ban shorting entirely and forever. It is the tool of the manipulators. I can't borrow a house to sell it with the promise of buying back later, when the price is lower, to return it to you. The uptick rule as "protection" is a joke.
Lol, just keep your hands on the bars.
What happens if trading is suspended for a couple weeks?
What happens if trading is suspended for a couple weeks?
Since the uptick rule was removed a few yrs back, it would rebalance the market forces. Right now, if Soros, Bezos, Gates, and some other global elites pooled a few billion and shorted every day -especially after a sucker rally or two - they can beat it down under 20,000...That is my fear. To me it would be fairness.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.