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Subject:  SEC lays an egg on Flash Crash Date:  10/3/2010  1:32 AM
Author:  yodaorange Number:  340959 of 504649

Yesterday (10/1/10) the SEC and the CFTC issued their report on the 5/6/10 Flash Crash. It is 104 pages with lots of pretty multicolor charts that illustrate various aspects of the crash. After reading the report over, I started to write up the most essential points and post them. After further reflection, I decided that the SEC report and my summary of it were almost totally misguided.

Link to the SEC report:

http://sec.gov/news/studies/2010/marketevents-report.pdf

Factually, the SEC report is quite good and comprehensive in explaining various aspects of the crash. For the small minority of investors in America that enjoy learning about nitty-gritty details of what occurred that day, it is a worthwhile read. Exactly how many investors fit into that category? Let’s make an estimate. Let’s assume that 100 investors read the METAR board postings on a regular basis and would take the time to read the full 104 page report. How many non-METARites do you know that would be interested enough to read the report? I don’t see many hands. There are approximately 114 million US households. Let’s assume that half of them either have stock accounts, 401K accounts or some other interest in US equity markets. That gives us 57 million investors that “care” how US equities perform. (Yes, for purposes of simplification, I am assuming there is only one interested investor per household.)