A Brief but Terrifying Nightmare on Wall Street
I could have written about any of dozens of topics today. I was tempted, after reading for the second time Julian Barnes’ Nothing to be Frightened Of, a meditation on death and dying, to plump for death – as a subject of discourse, you understand, not as a final existential act.
No, I’m not dying, not any more than anybody else my age is trundling toward oblivion, with the grim reaper, eternally spry and youthful, gaining in enthusiastic pursuit in my side-view mirror.
My reason to revisit Barnes’ book wasn’t because I’m about to pop my clogs, as the Brits so colorfully describe the sudden process of ceasing to exist, but because it’s a deserving topic, an inevitable outcome and irrefutable reality, that most of us prefer to persistently ignore right up until we reach the point of no return. Barnes, to his credit, gives the matter serious and humorous thought, examining various would-you-rather dilemmas and providing insights into how past literary greats prepared for and met their demise. Spoiler alert: Things rarely proceeded according to intention or plan.
Death will come for us all, but I hope it doesn’t come today, for you or for me. I am sure you will agree that we still have some unfinished earthly business to conduct.
I also could have written about the layoffs of scores of employees at Microsoft Azure and Google Cloud, booming businesses that are generating impressive revenue growth and enviable profitability. I will address this topic imminently.
We’ve entered a strange period in the technology industry, where the industry behemoths are shedding employees in businesses and divisions that are growing and making scads of money. Perhaps they’re dumping personnel in response to persistent goading from imperious venture capitalists, who believe that industry giants can generate even greater profits by slashing costs associated with the upkeep of allegedly superfluous employees, who do “no real work,” as one princely moneyman put it. Are these accursed employees as irrelevant to business success as the VCs allege, or is some other factor at work (unlike the redundant employees)? Stay tuned for the discourse tomorrow.
Sudden Accidental Value Obliteration (SAVO)
For today – now, in this moment, to be cherished as much as the moments that have come before and those we’ve yet to live – I want to turn my attention, and yours, to an inexplicable cataclysm that temporarily demolished approximately 40 stocks on the New York Stock Exchange (NYSE) earlier this week.
According to reports, the affected stocks – including Berkshire Hathaway, BMO, Barrick Gold, as well as others – experienced price declines of nearly 99%, due to what was unsatisfactorily explained as a “technical glitch” in what is known as the Consolidate Tape Association’s Securities Information Processor, a software-based system that disseminates real-time quotes and trading information to the NYSE and other exchanges.
The snafu resulted in publication of erroneous price bands, replete with precipitous crashes in share prices and valuations, resulting in temporary trading halts.
A buggy software update was ultimately identified as the culprit, but some observers continue to fear that the trading system might have been compromised by malefactors, of which there is never a shortage in this world. The issue was ultimately resolved, when the Consolidated Tape Association reportedly reverted to a backup datacenter running a previous version of the software.
Stock prices ultimately returned to their previous trading ranges, or thereabouts, and trading activity that occurred during the chaotic breakdown was canceled.
At this point, I must make a confession: I own shares in one of the stocks that was affected by this unplanned and unwelcome episode. I will not tell you which stock, though it is mentioned somewhere in this article. You are free to guess the name of the stock, but be forewarned: the answer isn’t obvious. Still, those who have followed my musings on this forum might solve the mystery more in the manner of Sherlock Holmes Inspector Jacques Clouseau.
Fortunately, I was not watching the ticker tape when disaster struck. If I had been monitoring my portfolio then, in real time, I might have suffered a medical event that would have brought me a more intimate understanding of the topic I had initially considered for this post.
A Monument to Fallen Day Traders
Others were perhaps not so lucky, assiduously monitoring their investment portfolios when confronted by the ephemeral abyss. Indeed, we have yet to learn how many day traders expired at their keyboards as dozens of stock prices fell to rock bottom like a malfunctioning elevator plunging to the terminus of a 70-storey office tower. To those day traders who met their demise earlier this week, we extend our heartfelt condolences, and we pledge to build a monument in their honor, perhaps in the capital of day trading, which is said to be New York. The monument should take the form of a life-size statue depicting the penultimate moment of the stricken day trader’s life – eyes bulging, eyebrows flaring skyward, coffee spewing onto keyboard, mouth agape, chair sliding away from desk – just before an officious psychopomp punches the final ferry ticket.
May God, and the day traders’ creditors and heirs, have mercy on their souls. They did not die in vain; or maybe they did. It’s a tough call, and, in the interest of decorum and tact, we graciously defer judgment.
At any rate, similar mishaps, not all as dramatic as this latest episode, have occurred. Per a Reuters report:
Exchange outages, caused by software and hardware glitches, cyberattacks, and even hungry squirrels, have roiled markets and shaken investor confidence for decades, as trading has moved from the floors and pits of bourses to electronic systems that match trades at nearly the speed of light.
In February 2023, the NYSE said it would reimburse investors for losses due to a glitch that caused widespread confusion and resulted in thousands of trades being nullified.
The NYSE did not respond to a request for comment about whether it would reimburse investors potentially affected by Monday's issue.
You would think this most recent failure was preventable. Considering the amount of personal and institutional wealth coursing through the veins and arteries of the NYSE, one would like to hope the institution’s vital systems are not chronically sclerotic. Shouldn’t comprehensive software testing, change management, and software validation and verification be typical, if not standard, practice involving any quotes or information feeds integral to the operation of the world’s largest stock exchange (by market capitalization)?
It is, after all, the NYSE, not a hobbyists’ fantasy football league. Greater care, rigor, and precision are required in the Big Apple’s big exchange. Be better, NYSE: If you can’t motivate yourself to strive for self-improvement, then do it for the stricken day traders, bless their anxious souls.