Tuesday, 9/11 -- a car backfire will take it down 600 points

The market is more skittish than it has ever been. Upsand downs of hundreds of points daily have become common occurrences. The slightest news causes ecstasy or panic. There is very little reflection, very little tempered reaction. Many say the volatility that we are becoming used to is the result of the spread of technology and the speed with which herd behavior happens. Whatever the reasons, we are in dangerous times where the herd can literally take the market and the economy down significantly. It is a hell of a time to be rounding the corner of the 6th anniversary of 9/11.

The market is more skittish than it has ever been. Upsand downs of hundreds of points daily have become common occurrences. The slightest news causes ecstasy or panic. There is very little reflection, very little tempered reaction. Many say the volatility that we are becoming used to is the result of the spread of technology and the speed with which herd behavior happens. Whatever the reasons, we are in dangerous times where the herd can literally take the market and the economy down significantly. It is a hell of a time to be rounding the corner of the 6th anniversary of 9/11.

If you think back days or weeks to the kind of news that caused panic in the markets or, conversely, that spiked hope you quickly realize how little it takes to turn the tide and to push the indices to new lows and new highs. This kind of behavior and volatility couldn't be coming at a worse time. I just hope Osama and company keep busy in Pakistan because I would hate to think what might happen to the market and the economy were they even to try something small on Tuesday. When the markets opened on September 17, 2001 (after being closed since the 11th) the market dropped almost 700 points, it biggest drop in history. We were not in the same place then as now -- we were not experiencing this crazy and technically driven volatility. God help us if it happens now. Even a car backfire on the 11th, given the baby behavior we have been witnessing of late, could cause a panic. If ever there were a time to short the market, this September 10th is the time.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

Comments

  • jonathan

    September 09, 2007

    We all need to be on our toes next week. The market will continue to be quite volatile regardless, but this concern is real and could really rock things.

  • I doubt that Sept 11 will have any impact

    September 10, 2007

    In 2001, it was a shock ... now we have become used to it. The war in Afghanistan and in Iraq and terror attacks in Britain and recent foiling of a plot in Germany. We see it everyday now ... knowing well that if markets recovered from the 2001 shock, they would do it again.

    When London's buses were targetted by terrorists, the markets barely moved - shot down when the news broke, then recovered by end of day.

    We have become used to the fact that we live in a different world.

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