A Market Decline in Search of a Reason (NYT – Sept 4)
Stocks on Wall Street plunged on Thursday, but few investors seemed to know why.
A broad sell-off sent the Dow Jones industrial average more than 320 points in afternoon trading, hours after the government reported that the number of Americans filing for unemployment benefits unexpectedly rose last week.
“Victory has many fathers, but failure is an orphan."
This article made my day. I actually laughed out loud. During a 300-point up day, trust me, there’d be LOTS of reasons given as to ‘why’ that happened. None of them would have been right, but at least there would be a slew of reasons like “investors cheered the low labor unit costs numbers released by the BEA today…” or some such nonsense.
Today the market went down because there were more sellers than buyers. We can start there. Next we might note that the stock market, more often than not, measures the amount of extra money floating around looking for something to do – think of it as a liquidity gauge. Were I trying to report on why the market went down sharply today, I’d begin by seeing if liquidity might suddenly be drying up.
Perhaps a good place to start would be the crumbling credit markets, where most of the hot money used by hedge funds to bid things up came from. Or at least used to.
