Doing Less Doesn't Mean Doing Nothing

August 20
"Goldman Sachs experienced a trading glitch Tuesday that resulted in a large number of erroneous single stock and ETF options trades. Many of the trades may wind up being erased but the error could still cost the firm upwards of $100 million..."

August 22
"Trading in thousands of U.S. stocks ground to a halt for much of Thursday after an unexplained technological problem shut down trading in Nasdaq securities, the latest prominent disruption to the operations of U.S. markets."

Flatline? no just the NASDAQ freeze (WSJ Graphic)

Tech advances have made capital markets more accessible to the public than ever before, but so-called "glitches" keep happening.  The "Flash Crash" of 2010, when the Dow Jones Industrial average plummeted almost 1,000 points in a few minutes then quickly recovered, was and is alarming because there hasn't been a definitive explanation as to the cause, much less assurance that it won't happen again.

Small investors in the stock market should never place market orders because prices can change too suddenly. In other words, whether buying or selling, always place limit orders (where the price is specified). And if one no longer receives paper reports, one should make it a habit to download and store statements, instructions, and other correspondence on a hard disk or memory stick. One never knows when one may need to back up a transaction.

We live in the quick and convenient electronic age, but just because we do less doesn't mean that we do nothing. © 2013 Stephen Yuen