It is appalling that the NASDAQ and other exchanges, along with the SEC, seem to only now understand the dilemma. We have a significant amount of information being passed around social media, and when someone speaks ill of a company – that stock has dropped often in many cases.
This however is no new event. Rather, for over a decade social media has played a role in trading. More than that, trading and investing has always had relationship with a faith in the company producing better financial results over time, or lack thereof.
My Take
I see the largest problem with the NASDAQ, and potentially other exchanges, moving to Halt Trading on individually affected stocks is; where do they stop?
If we have always had this sort of manipulation in one way or another*, why is it only now that they are choosing to act on events that have occurred for a long time? It’s as if they are bias and only performing actions based on familiar interests.
*Example: News Paper campaigns prior to the release of the internet.
The whole point of the market is volatility, although one can argue it is not to be based on pure gambling and since a single tweet can essentially be a nuclear bomb when it comes to financial stability, including in a stock/bond market, bitcoin, or a specific country’s currency – the solution would need to be one that could encompass all of these possibilities.
Silencing is not the way to go.
So what is? Do we need a solution?
Perhaps, the problem is the reliance of retirement being based on someone else manipulating financial markets to give 7% to a 401k pocket.
Bitcoin is fully embraced by the lack of halting, going from 40,000 to 32,000 back and forth relatively quickly. (really Bitcoin can only be halted on Bitcoin exchanges, but that would not impact any sort of transfers done outside of each.) But, I am not so positive on this being a good expectation, given the history of bitcoin.
References (mostly gamestop):
https://www.nasdaq.com/articles/how-does-social-media-influence-financial-markets-2019-10-14
https://www.fool.com/investing/2021/01/26/gamestops-gargantuan-gamma-squeeze/
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