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03-16-2020, 08:02 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 2,872
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close the markets?
I was thinking about this last night...is it possible that the government decides to close the markets for a period of time?
This has happened in the past, most recently 9/11. After 9/11, the markets were closed for about a week.
I'm sitting on a bunch of puts expiring 4/17 and 5/15. If the market were to close, beyond these dates (unlikely?), then I'm assuming that they would lose a ton of value? And what happens if the markets open post expiration? Would there be a chance to do anything with the options?
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Eat, Drink and Be Merry.
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03-16-2020, 08:21 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,584
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I am not sure how closing the markets would help anything. It just limits access to funds and creates fear.
Treas Sec Mnuchen said markets will stay open. Of course all pronouncements subject to change.
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03-16-2020, 08:33 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 2,872
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Thanks Michael. I missed that thread.
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Eat, Drink and Be Merry.
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03-16-2020, 08:39 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,255
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No. I do not believe that would be a good idea. It would only create more stress and uncertainty. We already have plenty of that given our tools for fighting this virus. People know we are relatively impotent. Why remind them again?
What we need is leadership that provides some reason to think these methods will work, that the suffering we will endure is worth it, and that the result will be a return to normal.
__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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03-16-2020, 08:57 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2003
Location: Kansas City
Posts: 7,968
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Practicing semi isolation here. Plenty of toilet paper. Football season is over. The lust is slowly building.
Vanguard Total World Stock ETF lest I miss the bottom? 26th year of ER.
Talk me out of it. I need to stick with gardening and putzing with my hobby level solar panels.
heh heh heh - I have enough and I can't take it with me. But a few good stocks??
You think they might close the Market to keep me out of trouble? Don't think so.
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03-16-2020, 08:59 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2013
Posts: 11,078
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After 9/11 the market did close. A portion of the decision was about fear over the systems that run the financial services industry. There was a fear they might be compromised. To the best of my knowledge there was no real evidence that occurred.
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03-16-2020, 09:06 AM
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#8
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Full time employment: Posting here.
Join Date: Feb 2011
Location: chicago
Posts: 541
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To me the more interesting question is what happens to options if the market closes. If trading is halted on an option I believe you can still exercise options but say the market was closed for a week at what price?
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03-16-2020, 10:19 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 2,872
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^^^ Yes, I'm curious as to what would happen to existing options contracts. I wonder what happened after 9/11 for short-term options, ones that expired before the 9/17 opening.
Maybe somebody here knows? If not, I'm going to try and do some research on this later today.
I agree that the markets should stay open, but I could also see the logic from higher powers saying, hey, we know the economy is in the tanks, what if we hit the pause button until things blow over. I would think this would have to be in conjunction with dumping large amounts of money into people's bank accounts (or defer mortgage/rent payments, etc) to keep them afloat until this thing subsides. Which if Asia is an indicator, should be sometime in the next couple of months.
Lots of speculation on my part. I think the likelihood that this would happen is low, but not zero. And mostly I'm trying to figure out when I should bail on my puts. I'm willing to ride it out a bit longer, but if the markets closed, well, that would be a bummer.
__________________
Eat, Drink and Be Merry.
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03-16-2020, 10:31 AM
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#10
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gone traveling
Join Date: Jan 2019
Location: NW Ohio
Posts: 1,156
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I think a quick recovery would be helped by banning short sales for a period of time...(not sure why anyone would hope for prices to go down anyway !).
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03-16-2020, 11:29 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 2,872
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Stopping shorts is a bad idea. Let the markets do their thing.
In my case, it’s worked as insurance. What I’m making in puts is helping offset the losses in my AA. And at this point, it was incredibly cheap insurance.
__________________
Eat, Drink and Be Merry.
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03-16-2020, 11:39 AM
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#12
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,704
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I think capital markets should remain open and unhampered. It is a place for risk capital.
Too much policy is directed toward markets. We need more policy directed toward the economy.
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03-16-2020, 03:05 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,358
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Quote:
Originally Posted by tulak
Stopping shorts is a bad idea. Let the markets do their thing. ...
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I disagree. Why should anyone be able to sell an asset that they do not own?
We don't allow that any where else that I can think of other than stocks and bonds. Allowing short selling just converts investing into legalized betting.
P.S. If short selling were prohibited you could still have puts and calls... totally different thing and they have a legitimate purpose.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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03-16-2020, 03:12 PM
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#14
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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Stacey Cunningham, president of the NY stock exchange said on CNBC just moments ago the stock market would not be closed. She said right now it would not accomplish anything.
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Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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03-16-2020, 03:15 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by UnrealizedPotential
Stacey Cunningham, president of the NY stock exchange said on CNBC just moments ago the stock market would not be closed. She said right now it would not accomplish anything.
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I saw that interview and her reasons were sound and made a great deal of sense.
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FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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03-16-2020, 03:54 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Jan 2016
Location: Rural Alabama
Posts: 1,359
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Quote:
Originally Posted by tulak
I was thinking about this last night...is it possible that the government decides to close the markets for a period of time?
This has happened in the past, most recently 9/11. After 9/11, the markets were closed for about a week.
I'm sitting on a bunch of puts expiring 4/17 and 5/15. If the market were to close, beyond these dates (unlikely?), then I'm assuming that they would lose a ton of value? And what happens if the markets open post expiration? Would there be a chance to do anything with the options?
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I seem to remember that the phone lines to the trading floor were damaged and they couldn't open for trading until communication was re-established. It opened back up as soon as phones were up and running again.
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Projected retirement--2020 at age 48 (done!)
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03-16-2020, 04:24 PM
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#17
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Moderator
Join Date: Nov 2014
Posts: 9,171
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Quote:
Originally Posted by pb4uski
I disagree. Why should anyone be able to sell an asset that they do not own?
We don't allow that any where else that I can think of other than stocks and bonds. Allowing short selling just converts investing into legalized betting.
P.S. If short selling were prohibited you could still have puts and calls... totally different thing and they have a legitimate purpose.
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Don't merchants that use a drop shipping model essentially do this? Also, it seems like it would be possible for just about any commodity. The farmer sells the rights to his crop and someone buys that right. Then, what about a continual supply chain operation - like TP (to use a current topic ). Seems likely that the supplier would be selling all the time with the expectation that new stock is going to come in.
Not trying to argue, but it would seem odd if it was just stocks and bonds that have this characteristic. Doesn't seem likely.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
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03-16-2020, 04:43 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Posts: 2,232
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It seems to me that closing the markets, in the long run, reduces confidence. What if I need the money NOW!! and can't get access to it? It would inhibit my willingness to invest if I had a strong reason to believe that in a time of crisis I would be denied access to my funds.
Investing is risky.
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03-16-2020, 05:17 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,950
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Quote:
Originally Posted by MRG
After 9/11 the market did close. A portion of the decision was about fear over the systems that run the financial services industry. There was a fear they might be compromised. To the best of my knowledge there was no real evidence that occurred.
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The NYSE closed because they were not fully electronic trading, and the financial district was a mess. I know, I was there on 9/11- two blocks away when the first tower collapsed. There was no power, and companies were running some systems on back up generators - facing the prospect of running out of diesel fuel as trucks weren't being allowed into lower Manhattan.
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03-16-2020, 05:19 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,950
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Quote:
Originally Posted by ckelly78z
I think a quick recovery would be helped by banning short sales for a period of time...(not sure why anyone would hope for prices to go down anyway !).
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People also short as a hedge to other holdings. It isn't a simple matter of "hope for prices to go down".
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