Friday, August 5, 2011

Why Did the Market Fall?

Said an equity trader, "I'll cop to this:
I can't tell why we tanked from the top to this,
But the punters of punts
All concluded at once -
There's no basis for being an optimist."

From London and Frankfurt to New York and Tokyo, stocks fell around the world on Thursday and continued on into Friday. The S&P 500 closed at 1200, a level not seen since last December. Many were caught by surprise and looked for the catalyst that would explain such a dramatic global correction; but, as Marketplace's Heidi Moore put it in her blog,
"No one knows... 'The Market' is too large, too sprawling, and is filled with people moving their own investments for their own reasons. Saying “the market was worried about recession today” is like saying “all the waves in all the oceans started to worry about global warming.”"
Still, once may hazard a guess that, with the removal of the US debt ceiling as a focal point for fear, market participants could look around and notice that nothing else was going right.

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