Ex-lawyer turned relationship coach

Troubles Of A Hero

On May 6th 2010, the New York Stock Exchange dove almost 1,000 points in minutes. Hundreds of billions of dollars in market value were erased and nobody knew why.

Did the system fail? Was it a cyber-attack? Or did a fat-fingered trader mistakenly supersize his order? 

Although the index took a terrible and inexplicable hit, stock experts took no action. Instead, the experts held their breath and hoped everything would soon return to normal.

And over the next 24 minutes, investors across the world watched the wiggly line of the Exchange climb its way up to normal, and wiped their sweaty brows.

All seemed to be right.

But markets are not supposed to crash and immediately rebound. So the world demanded an explanation.

Which we wouldn’t get until six months later.

In September, the SEC (the government body responsible for protecting investors) published a 104-page report that did nothing but prove its own ignorance.

Why?

Because the federal explanation of the crash didn’t make sense.

In short, the SEC blamed a single order for the brief disappearance of almost one trillion dollars.

Which was far too simplistic an explanation. Robust and complex systems only ever buckle under the weight of multiple factors.

What factors actually caused the crash is beyond the scope of this post. More interesting is why the experts at Wall Street didn’t act during the crash, and why the brilliant minds of SEC gave a bogus explanation.

The answer is simpler than you think:

Barely anyone understands the computer-driven systems that drive the stock exchange.

The times where people filled trading floors and shouted orders at each other is gone. Today’s trading floor is eerily quiet. 

The people who ‘run’ the trading floor don’t run or make orders. They calmly clack away on keyboards to ensure the computers that run the orders work.

But nobody knows exactly what the computers do.

Which is only part of the issue.

Suppose you do poke around and discover that the experts know very little and that much of Wall Street floats on horseshit.

Will you speak up and risk losing your place in the system?

Or will you be quiet and play ball?

While it’s your duty to understand the system, changing it is a choice.

Don’t be a hero unless you can deal with the consequences.

By Jeroen Elsing
Ex-lawyer turned relationship coach