Yesterday’s sudden 1,000-point drop in the Dow Jones Industrial Average was created when a trading glitch caused Procter & Gamble, like a sinking ship, to suck down lots of helpless victims along with it. PG shares dove from $62 to $36 per share faster than Jim Cramer could yell “Buy!” on CNBC.
After trading closed for the day, CNBC published a report claiming a typoed order for billions, not millions, triggered the mass selloff.
Today, the blame has shifted to the high-speed algorithmic trading that’s become the way Wall Street does business in the past two decades. As a New York Times report put it, “The glitch that sent markets tumbling Thursday was years in the making, driven by the rise of computers that transformed stock trading more in the last 20 years than in the previous 200.”
So what happened? Here’s the for-dummies version of the Times’ report:
- At 2:45 PM New York time on Thursday, there was “a huge, anomalous, unexplained surge in selling, it looks like in Chicago.”
- The source of the selloff is still unknown (or so the official story goes.) But the sudden trades set off more automated trading done by computers.
- The tradebots did what they had been told to do. Every time active share prices dropped below specified thresholds, the computers sold off more shares.
- By 2:46, the Dow industrials were down from Wednesday’s close of 10,868.10 to 9,869.62, nearly a ten percent loss in value.
- As Jim Cramer screamed “Just go buy Procter & Gamble!” on CNBC, prices turned around and climbed nearly as fast as they’d fallen. By the time Cramer finished his sentence, Procter & Gamble was back at 61.
- By 3:00 PM in New York, the market had straightened out. But the Dow is still down 200 points from Wednesday.
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Majesco, publisher of
Cooking Mama and ... other
stuff, has received a delisting notice from the Nasdaq stock market. The company now has 180 calendar days to bring its stock above $1 per share, the minimum required to remain on the exchange. It can't just pop its
fiscally hurting head above a buck for a day and everything will go back to being right with the world again. The company needs to hold the price for "a minimum of 10 consecutive trading days prior to August 30, 2010."
This is not the first time Majesco was
threatened with being kicked from the exchange. The company came
back from the brink of that potential delisting disaster early last year. If you're curious to see what happens after a company is delisted, here are two case studies:
Midway and
Atari.
Majesco threatened with Nasdaq delisting, again originally appeared on Joystiq on Mon, 08 Mar 2010 11:10:00 EST. Please see our terms for use of feeds.
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We know, we know -- you've been sitting around all day
worried sick about
GameStop. Ever since the recent announcement of a
cut profit forecast and the resultant
drop in share prices, we've been in exactly the same boat. Good thing then that the company has announced plans to repurchase $300 million in stock from investors as part of its 2010 "
Capital Allocation Strategy," with intentions to increase earnings per share by 10 percent.
Wedbush Morgan analyst Michael Pachter sees the announcement as "positive," echoing the company's statement of continued financial growth in 2010. "We believe that industry sales will rebound in 2010 and that GameStop is well-positioned to gain share the first half of the year. The company has high exposure to the hardcore software releases, which we expect to drive market growth in 2010, and comparatively low exposure to hardware, which we expect to decline," he says. It certainly doesn't hurt that GameStop plans to open 400 new stores over the course of the year -- the financials even leave $100 million on the side, reserved for "acquisition activity." It would appear that, at least for now, we can all can stop worrying.
Finally.
GameStop reveals 2010 capital allocation program originally appeared on Joystiq on Tue, 12 Jan 2010 18:30:00 EST. Please see our terms for use of feeds.
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