At roughly 2:45 p.m. EDT on May 6, 2010, the market went to zero. Not literally zero, but at one point things had gotten so hairy that you could have bought the entire S&P 500—all of it—for the cost of a Big Mac. It was a swift kick in the junk bonds, a phenomenon known as the “flash crash” (aka The Hindenburg Effect).
Those wacky trades were ultimately canceled, of course, but who cares? I slept like a baby that night—I woke up every 15 minutes and cried.
But as I sit here in the middle of the summer doldrums, sipping iced coffee on the veranda, I look back at those frantic moments with a kind of nostalgia. May 6 was certainly a day that taught me a few things about the markets:
- Don’t let The Flash near a trading desk. Save the superheroes for fighting regulators.
- Spilling your third Scotch on a Bloomberg terminal does not fix a liquidity crisis.
- The KFC Double Down is so potently unhealthy, it can give even the NYSE a heart attack.
- “Fat Finger” would be a great name for a Meatloaf cover band.
- Skynet is finally online. All we need is Arnie telling us to “come with me if you want to live.”
- Note to SEC Chairman Mary Schapiro: Next time you throw a Cinco de Mayo party and forget to invite Mark Zuckerburg, don’t post about it on your Facebook page. Mafia Wars isn’t just a game.
- “Flash Crash” is not some naughty movie on an SEC staffer’s laptop. At least, it’s not just some naughty movie on an SEC staffer’s laptop.
- 2:45 p.m. is a terrible time to go to the bathroom. Time to open an “adult diapers” store at the corner of Wall and Broad.
- Being bearish shouldn’t involve actual live bears.
- When in doubt: Blame it on speculators. They have no union, and they never fight back.
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