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-- Posted Monday, 10 May 2010 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Monday, May 10, 2010 “Phenomenally accurate forecasts” So, was it thinking machines that put stocks into a death dive last week, or was it primal human fear? Either way, there’s a neurological disease at work and therefore little likelihood of a cure. Even worse, since these diseases tend to be degenerative, we should expect something still more disruptive in the future. Ham-handed regulations won’t be able to stop it, either. Let the exchanges install all the circuit breakers they want; supply will out someday, catastrophically overwhelming demand when buyers go AWOL. This is inevitable when you create a global electronic trading network connecting ten billion ganglions that at any given moment can channel the sum of all fears. Thus enabled, the stock market is like a vast nervous system lacking a brain -- kind of like Los Angeles, with mayhem always lurking just below the surface. Last week, for a few minutes, some large clusters of ganglions in the trading network got overstimulated, resulting in a five-alarm panic whose cause has so far defied forensic explanation. The sleuths should save their breath: It was an anxiety attack. Humans have them all the time. We once knew a guy who started having panic attacks whenever he dined in a restaurant 50 miles or more from home. If you’ve ever felt your scalp crawl, this is the sensation the guy said swept over his entire body, paralyzing him with a wave of cold fear. Heal Thyself He put himself through an endless battery of neurological tests, including an EEG, a brain scan, and all the rest. The results came back negative, but he kept having the attacks. Still more tests revealed nothing of medical interest. Finally, physically and psychologically depleted after being poked and prodded for months, having epileptic seizures induced by tormentors in white coats, and being treated like a lab rat for too long, he decided that the attacks were all in his head. He resolved to stop them by reassuring himself whenever he dined out that there was nothing wrong with his brain or nervous system. It worked. The attacks ceased, never to return. Far less sanguine are we about Wall Street’s ability to heal itself; for, to believe the stock market capable of calming its own nerves is to believe the Frankenstein monster, with his diseased brain, can be made docile with herbal tea and Rosary beads. Not only will an accident such as we witnessed last Thursday happen again, it is bound to recur with sufficient violence to close the markets for more than a mere day or two. That is because it is not just New York and Chicago trading exchanges that have been imbued technologically with the ability to magnify panic a million-fold, but the entire global financial system. This problem cannot be fixed by regulatory tinkering at the margin because it is a disease now embedded in the financial system’s DNA. *** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 10 May 2010 | Digg This Article | Source: GoldSeek.com
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