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Old 05-07-2010, 08:55 AM   #121
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Is this the financial adviser's vocabulary for "I told you so"? Or is this just calling attention to the clock twice a day?
Not at all, I was just responding to 73Ss454 stating that I told everyone to get out last July.

I may be more bearish than most, but I would have rather seen a gradual increase in the market than a 60% return in a year. Sometimes euphoria and giddiness are not great bedfellows............
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Old 05-07-2010, 09:06 AM   #122
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No wonder the crazy swings yesterday. When the NYSE stops trading, the price is free to plunge on infinitesimal volume. A recipe for disaster. We should breath a sigh of relief that we didn't have total. Meltdown yesterday.
Well, actually we did. Down 700 points in 15 minutes is a major meltdown. And I consider trades executing with bids of $0.01 as a "total meltdown" as that is the lowest price you can offer! Ridiculous!

It was just when the media started pointing out some ridiculous trades (like P&G) and how there must be some kind of error that the meltdown halted, and then reversed. I guess that was how long it took for humans to respond to the situation.

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Old 05-07-2010, 09:12 AM   #123
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We seem to keep running into situations where the proprietary trading takes precedence (big surprise that!) and everyone else (including customers) gets hurt.
Yeah, I suspect these institutional traders were first in line to get their sell orders executed on the way down and first in line to get the buy orders executed off the brief bottom.
I just don't see how this could work. If the large selling drove the prices down, then any large buying would drive them up. The low prices were because there were few buyers relative to the amounts being sold. The $.01 prices would not exist if there was an order there.

I think this is much ado about nothing. The only people I could see being hurt by this are those with stop limit orders - and those people are ALWAYS taking the risk that they can get stopped out way below their stop price. So if it happens once every couple decades, well - it happens. As stated previously, I NEVER use stop limit orders.

How does this once-in-a-blue-moon event affect the average investor? Nada, IMO. I almost always place limit orders on my buys and sells, and if I don't, I'm watching the price closely. If I'm unlucky enough to get hit by this rare event and sell into a down market, I was just as likely to be buying and get lucky with a great deal.

IMO, this is a big yawner that the news will make try to make a big deal out of, and Congress will cry for more regulation (of what?).

I guess we shouldn't allow furniture stores to have liquidation sales either - the market price of my sofa might be affected for a few days - heavens!

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Old 05-07-2010, 09:14 AM   #124
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Well, actually we did. Down 700 points in 15 minutes is a major meltdown.

Audrey
And if I napped through it, or was cleaning the basement - the effect on my portfolio was a yawner. It is still above where it was in February.

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Old 05-07-2010, 09:16 AM   #125
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I guess we shouldn't allow furniture stores to have liquidation sales either - the market price of my sofa might be affected for a few days - heavens
Comparing a depreciating asset purchased for utilitarian purposes to a pure investment which people only buy for income and/or capital appreciation seems rather odd to me.

And I disagree that it's no big deal. To a long-term investor who didn't get stopped out with a 40% loss, yeah -- in the end it was just another lousy -3% day on the market and didn't produce any enduring financial damage. But the market largely depends on trust, and I think Wall Street was already on shaky ground in terms of trust.
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Old 05-07-2010, 09:20 AM   #126
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..we need the ability to place trades that will not be routed to less liquid exchanges. If someone could have placed a sell order on PG that could *only* be executed at the NYSE, they wouldn't have sold for less than 56 ...
The solution already exists - place a limit on your sell order. You want 56, enter 56. Done.

I routinely do this on a sale. If I *really* want to sell, and am not trying to squeak out every last penny (and risk missing the sale), I'll set my limit just a bit below the current bid/ask. On liquid stocks, it almost always gets sold at the higher price - I've never seen any evidence that they try to scoop it up at my lower offer. I've routinely seen it blip up as I'm submitting, and it gets sold a fair amount higher than my entered limit. The bid/ask system seems to work, IME.

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Old 05-07-2010, 09:24 AM   #127
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It seems like some ETFs were hit more than others, and surprisingly, among them were some large Vanguard ETFs.

This from Bogleheads
Bogleheads :: View topic - Vanguard ETFs crack under stress
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Old 05-07-2010, 09:24 AM   #128
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Comparing a depreciating asset purchased for utilitarian purposes to a pure investment which people only buy for income and/or capital appreciation seems rather odd to me.
But my point is, unless you are actively selling at the exact time of this rare event, the market price really isn't a factor. The people who only bought (and held) for income and/or capital appreciation were really not materially affected. They will get their dividends, and their capital is more than it was a few months ago.

I'm much more worried about just about everything else than I am that some trader liquidates an account and causes a half-hour drop in the market. I slept fine last night with a pretty high equity AA.

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Old 05-07-2010, 09:28 AM   #129
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Look out!!!!

I think support is 1040 S$P

King Obama will be speaking soon... This will be interesting...
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Old 05-07-2010, 09:56 AM   #130
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Making a small side bet on this. I just placed a limit order to buy JUNE $111 Strike Calls @ $4.70 (the low end of the bid/ask when I submitted) and was filled @$4.70.

I then entered a limit sell @ $6.70 for an even $2 profit (minus fees/comm). Already up to $5, I may bail early on a smaller profit - that is pretty much based on 'gut feel', which is what I go by on these little 'side bets'.

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UPDATE - got out at $5.35 for a quick little profit. Gut said take it.
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Old 05-07-2010, 10:14 AM   #131
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I just don't see how this could work. If the large selling drove the prices down, then any large buying would drive them up. The low prices were because there were few buyers relative to the amounts being sold. The $.01 prices would not exist if there was an order there.

I think this is much ado about nothing. The only people I could see being hurt by this are those with stop limit orders - and those people are ALWAYS taking the risk that they can get stopped out way below their stop price. So if it happens once every couple decades, well - it happens. As stated previously, I NEVER use stop limit orders.

How does this once-in-a-blue-moon event affect the average investor? Nada, IMO. I almost always place limit orders on my buys and sells, and if I don't, I'm watching the price closely. If I'm unlucky enough to get hit by this rare event and sell into a down market, I was just as likely to be buying and get lucky with a great deal.

IMO, this is a big yawner that the news will make try to make a big deal out of, and Congress will cry for more regulation (of what?).

I guess we shouldn't allow furniture stores to have liquidation sales either - the market price of my sofa might be affected for a few days - heavens!

-ERD50

Just as an FYI... I think you have your terms messed up a bit...

A stop LOSS order is executed once you reach the trigger price... and it is a market order... so you CAN sell at a lot lower price than you intend...

A stop LIMIT is a stop loss order with a limit price... so say you set the trigger at $10 and the limit at $9... the stock can not sell at less than $9... if the price goes down from say $11 to $8 right away... your trade does not execute...

So using a stop limit is the way to go if you want to put one in place... a stop loss is the one to avoid...
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Old 05-07-2010, 10:16 AM   #132
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Apparently Bloomberg went offline again (or at least its homepage wouldn't load) around 9:30 EDT. Big market drop and rebound then.
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Old 05-07-2010, 10:40 AM   #133
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Just as an FYI... I think you have your terms messed up a bit...

A stop LOSS order is executed once you reach the trigger price... and it is a market order... so you CAN sell at a lot lower price than you intend...

A stop LIMIT is a stop loss order with a limit price... so say you set the trigger at $10 and the limit at $9... the stock can not sell at less than $9... if the price goes down from say $11 to $8 right away... your trade does not execute...

So using a stop limit is the way to go if you want to put one in place... a stop loss is the one to avoid...
I think you are right. Like I said, I never use them so I guess I forget the exact terminology! Thanks for setting me straight.

Ah yes - I just tried that with my brokerage web page. Stop LIMIT gives two terms, stop LOSS just one. I still think they are a bad idea, you get sold out on a blip. If you are that afraid of a drop, reduce your AA or just buy a PUT. A PUT gives you the OPTION of selling at that lower price - you can decide if that is attractive or not. It will only automatically trigger if it is an advantage at expiry (3rd Friday of the month close).

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Old 05-07-2010, 11:58 AM   #134
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What does it mean to be a "taker of liquidity"?
I think it means that they sucked it up.

Or maybe they just sucked.

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It feels like it's to the point that we need the ability to place trades that will not be routed to less liquid exchanges.
Fidelity offers a limited choice of directing orders to some exchanges. But it also probably makes orders once more that much harder to fill. Let's see:
- round lots
- limit order, not market
- set a reasonable limit after checking the real-time bid/ask spread
- day order, especially after this volatility
- fill or kill? Nah, let the market maker deal with it

... and now we have to pick an exchange?

And because that's not complicated enough, let's see what options contracts are pricing at today!
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Old 05-07-2010, 01:35 PM   #135
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A little more information on impact of the NYSE halt to trading - Art Cashin on NYSE, Cancelled Orders | The Big Picture

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Old 05-07-2010, 02:28 PM   #136
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A little more information on impact of the NYSE halt to trading - Art Cashin on NYSE, Cancelled Orders | The Big Picture

Audrey

OUCH!!!!!


"One other oddity occurred after the close of business. Several venues decided to cancel a variety of those “outlier trades”. Under their rules, they can announce a trade void and participants often have no right to appeal.
So, if you bought XZY at “bargain” prices at 2:43 and then sold it much higher at 3:30, then at 4:30 your buy order had been canceled. Your sale is still good, however, so you are now, accidentally, net short, at what looked like a good price but now looks like a bad one.
That could bring some buy interest this morning as folks seek to cover these accidental shorts. It all depends on how pervasive the cancellations were.
Another factor could be the rumored trader error. If it occurred, did they cover by the close? Did they hedge overnight? We may know on the opening."
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Old 05-07-2010, 08:40 PM   #137
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I always use limit orders when buying/selling and I always use "all or none" on larger buys/sells. I want to know exactly what my max purchase price or lowest sell price will be. I set my prices at values I am happy with it and don't worry about my bid not getting hit immediately or missing out on some small amount of money that I could have theoretically gotten with the best price.

Better to be safe than sorry.
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Old 05-07-2010, 09:35 PM   #138
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Better to be safe than sorry.
I don't know if my BIL-the-CPA uses stop orders for every one of his holdings, but now I know what to tell him if he's grousing at having ended up 100% cash yesterday...
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Old 05-07-2010, 09:46 PM   #139
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I always use limit orders when buying/selling and I always use "all or none" on larger buys/sells. I want to know exactly what my max purchase price or lowest sell price will be. I set my prices at values I am happy with it and don't worry about my bid not getting hit immediately or missing out on some small amount of money that I could have theoretically gotten with the best price.

Better to be safe than sorry.
That's all I've ever used, all-or-nothing limit orders.

And I've never ever felt comfortable with stop loss orders and thus never used them, always been convinced I'd be taken out on a whiplash. After yesterday - no way will I ever use them.

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Old 05-08-2010, 08:34 AM   #140
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That's all I've ever used, all-or-nothing limit orders.

Audrey
I'm curious about the all-or-nothing. I've avoided them, afraid that I will miss being filled. I assume all the smaller orders go ahead of me. If it's a case where I'm trying to grab the little movements in bid/ask, I often find that I get filled in many small chunks. Seems I might miss that price with an all-or-nothing. Unless it moves through my price at some point.

Have you had any problems getting these orders filled? I guess you might not really know, but logic tells me I have a better chance by not specifying all-or-nothing?

I suppose if I just want the trade to happen, and am not concerned about pennies (and I just want to avoid a wacky trade), I could put the limit at the ask or bid and specify A-O-N, but I find those get sucked up in microseconds anyway.

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