Yesterday, the Dow Jones stock exchange fell by 1000 points , S&P stock index down 10%, euro fell 2%, Yen rose 4% – all in a matter of minutes if not seconds. Up until that point, markets were just hanging in. Understandably so, even though last two weeks were somewhat volatile, but the record amount of fresh money was being poured into the system and equities were scaling new highs. Market had hope. But as television channels began relaying live images of Greek protests, everything broke down. The memories of the bloodbath following Lehamn collapse were still fresh in most market participants’ minds and nobody wanted to get caught on the wrong footing this time.
Some say it was a technical error on the exchange, some say it was program trading, yet some others give some conspiracy theory – whatever it was – those were the 15 minutes when panic ran high on the street and fear was telling in every eye.
This blog is not to analyze the pros and cons of our financial system, blame speculators or any a, b or c philosophical thing. This is just to share my experience and involvement in those 15 minutes :(
I had been bearish on the world for some time now and for this reason had missed the final days of bull rally and suffered a bit. The movement in the US markets had not allowed me to sleep properly for last 3 nights and this night was no different. So here I was lying on my bed checking the markets on blackberry and facebooking. The markets were falling…
T-60 minutes: S&P stock index was playing a ping pong ball between 1140 and 1150. I was still disinterested…
T-30 minutes: It broke 1140, but was still hanging in there. Eyes were watchful, but there was no fear yet. The bravehearts were using this opportunity to buy as for past 2-3 nights as the equity markets always managed to scale some sort of a small pullback and there was no reason to believe this night would be any different night.
T-15 minutes: Things started to warm up. S&Ps fell to 1135 first, then 1130, then 1125, then back to 1130, 35 then 25. Ears were up and loose hands started to cover their long positions. Credit started blowing up, Euro started falling from 1.2760s to 1.2700 but was being supported there. Dollar-Yen which was trading in high 93s earlier in the day was now near 92. Something was not right. And then…
T-10 minutes: The television was on in my living room and I could only hear bloomberg reporters saying something – exactly what I didnt catch.
And then… Euro started falling. 1.2730, 1.2720, 1.2710… something was different about this move. I had to be in. I started typing,”Pls sell 40 Ecm0s” (meaning please 5 million euros). Few seconds later I got the reply that I sold 5 million euros at 1.2695.
T-5 minutes: Euro was still falling. It had broken 1.2650. Dollar-yen was trading in 91 handle now. I had absolutely no doubt left that it is going to get very ugly tonight. Bloomberg reporters were still talking about Greece… Panic was now high. Dollar-yen was falling. I typed,”Please buy 50 Jym0s” (meaning please sell 5million dollars and buy yen). I got a fill at 91.93. A minute later Dollar-yen was at 91.24. I had to sell more. I checked my blackberry for the asset class to short. Euro was now at 1.2630.
T-3 minutes: Australian Dollar had not fallen like Yen and Euro. Boy, if tonight is going to be bloody, nothing would be spared. I typed,”Please sell 50 Adm0s” (please sell 5 million australian dollars). I got a fill of 88.84. I was very confident now. The world was going down and I would help it push over.
T-2 minutes: Euro was now in 1.25 handle, Dollar-yen in 90 handle, Aud at 88.50. For the first time I paid attention to what the television reporters were saying. They were saying something about Greek protestants trying to enter the parliament, talking something about the fire, violent clashes, somebody dying and equities markets tanking. They mentioned S&P index was at 1105.
T: The blackberry screen showed me 1099.45 for S&P index. This was it. The fall had only quickened in last 10 minutes, I had tasted blood and I had to plunge now. I gave my final sell order for the day,”Please sell 100 Esm0s” (meaning please sell 5 million equities). Then,
Screen froze…. The numbers stopped refreshing… I heard the reporter saying,”The Dow Jones is down 600, no 700 now, boy, its down 1000 points !!!!!” In these 10 seconds, my screen refreshed and the number I saw was —-1054 for S&P index. Damn…. I was horrified. If S&P index fell 5% in 10 seconds, where did I get my fill. Because even though I gave them an order to sell equities at 1099.5, by the time they would have executed it in exchange, equities might already have been at 1050 !! the reporter was still saying,”I have never seen in my life…”
I immediately asked,”Sir, where did I get my fill?” (At what level was I able to sell equities). He started typing… 10 more seconds… My heart was beating… I was praying that I was able to sell in 1090s….
and then the number came… 70 lots at 1067.75, 30 at 1068.75. “Oh no….”
“Please buy 50 Esm0s, buy 40 Ecm0s, buy 50 Adm0s and sell 50 Jym0s” (please buy 5 million equities, 5 million euros, 5 million australian dollars, 5 million dollars against yen at market and get me out). I wanted to sell at 1099, not at 1067. And if the fall had been so sharp the markets would rebound in no time. So I had to close out my position.
I checked my markets screen, it was still frozen. I jumped out of bed and went to the living room. S&Ps were back to 1118, Dow was down just 450 points. I knew I had lost…
T+5 minutes: I got all my fills. The equities which I had sold at 1068, I had to buy back at 1100. Euro, I bought back at 1.2624, Australian dollars bought back at 88.57 and sold yen at 90.24. Whatever I made in euro, aussie and yen, more than double of that I lost in equities… the perfect night was ruined !