In a recent blog post, adjunct finance professor Davide Accomazzo discussed the serious structural deficiencies that exist in our financial markets, and the liquidity vacuum that may result. On May 6, 2010, the stock market took a drastic dive, resulting in the second largest point swing and the biggest one-day point decline in Dow Jones Industrial Average history. While the market recovered almost as quickly as it fell, Professor Accomazzo explains in the video below the underlying explanation for this “flash crash,” and revisits his previous warnings about the dangers of machine-generated, or high-frequency trading.
Can’t see the above video? Click this link to watch.
Professor Accomazzo teaches global capital markets and investments/portfolio management and is a frequent writer on the topic of markets and other economic issues. He co-founded Cervino Capital Management in 2005 and is the company’s principal trader.