When I was in elementary school, we played a stock market game in which each team was given $10,000 to invest over the course of a month. It was about the time of the first Gulf War, when Iraq invaded Kuwait, and someone on our team suggested we purchase shares of Caterpillar. Then, as the days would pass, we’d review our copies of the New York Times business pages for the closing price of the stock the previous day.
That’s right… we checked the newspaper and saw only the closing price from the night before. No after market trading, no level 2 market data – none of that stuff. We were only eleven and it would be many years before you could even get real time data (everything was 20 minutes delayed, unless you paid).
The deluge of stock information only serves one purpose – increased activity. That’s why I thought it was funny that this story about a Google glitch on Apple’s ticker was even a story. The sad part is that as you watch it tick down, you don’t know if it’s a glitch or a flash crash.
If it’s a glitch, you won’t freak out when you see it. If it’s a flash crash, you won’t freak out when you see it. If it’s a real crash, chances are you wouldn’t have beaten the computer traders, institutional experts, and all the other folks who are in line ahead of you… and you won’t freak out about it either. 🙂
The lesson? Don’t check stock prices every minute.