Yesterday, the japanese stock market along with many others around the world, had some of the worst days in their history.
Some markets dropped by double digits, investors were scared, and it seemed like the global economy could be on the brink of collapse.
And then. This happened…
Just 24 hours after the japanese stock market had its worst day since 1987, it had its best day since October of 2008.
But there is something a little strange about both the collapse and bounceback. I mean, this is a pretty unprecedented situation. Having one of the worst and best histoircal trading days back to back is pretty unbelievable.
So lets take a step back. To the wild time of about 24 hours ago. The japanese markets are crumbling allegedly because japan, which has not raised their interest rates in 17 years, raised rates twice over the course of the last 5 months or so.
Investors dont like this, or get scared that rates will go higher, so they sell off a ton of japanese stock, and the japanese market crashes. This panic and fear spreads through the global markets with mass selloffs everywhere.
And when the american stock market opens, stocks initially plunge. Some of the bigger stocks like nvidia, initially dropped by 11% within the first few minutes of trading. However, something strange happened during this exact moment. You see, the popular trading platform, robinhood, along with tons of other trading platforms like td ameritrade, fidelity investments, vanguard, and others, reported mass outages, errors, and halts to their trading capabilities.
Essentially what was happening that morning was many average everyday investors were atleast temporarily not allowed to trade. So, as the minutes and hours went along, average people began to see their investments being wiped out and weren't allowed to trade stocks. And anyone who was invested in a company like nvidia or intel, was able to look at potentially thousands or tens of thousands of their own dollars being wiped out, and was not allowed to do anything about it.
However, you know who wasn’t affected by this trading halt? Every hedge fund, and multi billion dollar investment firm. You see, all of those companies were allowed to cash out, or buy the dip, or do whatever they wanted. But if you were an average person, you had to wait for all of the trading apps to let you trade again.
Now eventually, after most of the heavy losses came in within the first few hours, some of the trading platforms let their customers start trading again. And some cited that this was a third party issue, or a technical bug, rather than a trading halt. Some say that their system never went down, despite mass reporting. And others did say they halted trading for the day due to market volatility.
Regardless, yesterday was a little bit of a conspiracy laden day where large corporations had the freedom to trade and sell off their stock, while the little guy had to sit their and take losses. It is a strange state, but maybe in the end, it did miraculously end up helping out the little guy.
Because well, the markets rebounded with today in some countries. Because as mentioned earlier, japanese markets rebounded by 10% today after taking a 12% dip yesterday.
The taiwanese market saw a 3.5% gain after taking an 8% tumble the day before. The turkish markets are up 2% after taking a 7% fall.
And so, what does this mean, some massive gains after a massive decline. Well. Here are some historical comparisons.
Lets take you back to 2008…the glorious year when everyone lost their jobs, their homes, and their savings, all at the same time. During the week of october 6th to october 10th. The dow jones in the united states lost 18% of its value and had 5 consecutive days of moderate losses. Investors were panicked, and rightfully so. Average people were seeing their entire portfolio lose thousands or tens of thousands of dollars each day.
