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Let’s Not Fall Into The Gap: Balance and Harmony Pay Well Indeed
3. Technology Failures:
In conditions of severe uncertainty about what is happening in a game, common response is to abandon the field of play.
In 1987 the DOT Designated Order Turnaround system broke down on three times the usual volume. When traders got fills back at much lower prices over an hour later, they panicked and sold much more.
One AIM Accredited Incentive Management friend put in limit orders to buy at ridiculous prices on Monday and Tuesday 19-20-26 October 1987 and was filled.
Those days more than 80,000 mutual fund and stock holders called Fidelity, Schwab and Vanguard to sell and could not get through.
Today, many market participants still depend on Automated Telephone or Internet systems that may fail when the markets get busy with public orders. Surprise public selling volume or a cyberwarfare attack on computer telephone or internet systems could easily delay access long enough to spook investors, even with inverse Exchange Traded Funds and Plunge Protection Teams.
4. The Weak Dollar:
In 1987 there was the feeling that the promising efforts toward coordination of economic and exchange rate policies were breaking down. The Bundesbank was angry with the Fed for a weak dollar stealing German trade, and Congress was threatening trade sanctions against Japan and other Trade Surplus Nations. People feared the resurrection of 1970s inflation.
Today, the dollar fell 88% in 8 years versus gold.
China and Russia are talking about leaving the dollar as a reserve trade currency. The Administration has leveled trade sanctions against China and Korea. People fear hyperinflation.
5. Global Panic:
More than half of American households still own stock or bonds directly or indirectly in retirement plans. Babyboomer retirements are on hold and they are nonplussed.
