Oof! BRK.A price to $185

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Topic Author
TomatoTomahto
Posts: 17549
Joined: Mon Apr 11, 2011 1:48 pm

Re: Oof! BRK.A price to $185

Post by TomatoTomahto »

nisiprius wrote: Wed Jun 05, 2024 7:57 am. It was an attempt to grab some stock that fell off the NYSE truck. What legal area that falls in I don't know, but they deserve some moments of terror and some major financial inconvenience... nasty fees, forced closure of their brokerage account...
I agree with the sentiment, but Nisi, I suspect that those who tried to do this didn’t think of it as stealing from someone else any more than they think that benefiting from wrongful use of streaming services is stealing. I didn’t sell my share at $185, but others’ wrongful password sharing has made our use of Netflix a PITA for us (who basically have to remember to log in at home before we travel to our NYC apartment and then deal with some flaky authentication scheme). It’s IMO a symptom of mindlessness.
I get the FI part but not the RE part of FIRE.
gammalaser
Posts: 84
Joined: Wed Jun 28, 2023 11:55 am

Re: Oof! BRK.A price to $185

Post by gammalaser »

nisiprius wrote: Wed Jun 05, 2024 7:57 am I think anyone who tried to buy at $185 was doing something ethically questionable. Such a move had nothing to do with any legitimate function of the stock market. It was an attempt to, in effect--ethically and morally--steal $600,000 from the person whose stock they hoped to buy. It wasn't a legitimate difference of opinion on Berkshire Hathaway's future. It wasn't an update in the estimated present value of Berkshire Hathaway's future stream of earnings. It was an attempt to grab some stock that fell off the NYSE truck. What legal area that falls in I don't know, but they deserve some moments of terror and some major financial inconvenience... nasty fees, forced closure of their brokerage account...

However, I hope nobody will commit suicide as a result of seeing a temporary -$600,000 balance (much as twenty-year-old Alexander E. Kearns did in 2020).
Isn't this the reason to enter limit orders? If one were to place a market order, don't they assume all of the price risk of such a big drop?

I also do not know how an individual investor should be able to draw the line between a glitch like this, from a price volatility that might have been caused by a legitimate catastrophic event, or even such an event that individual believes might have occurred and is trying to trade on.
rockstar
Posts: 6944
Joined: Mon Feb 03, 2020 5:51 pm

Re: Oof! BRK.A price to $185

Post by rockstar »

nisiprius wrote: Wed Jun 05, 2024 7:57 am I think anyone who tried to buy at $185 was doing something ethically questionable. Such a move had nothing to do with any legitimate function of the stock market. It was an attempt to, in effect--ethically and morally--steal $600,000 from the person whose stock they hoped to buy. It wasn't a legitimate difference of opinion on Berkshire Hathaway's future. It wasn't an update in the estimated present value of Berkshire Hathaway's future stream of earnings. It was an attempt to grab some stock that fell off the NYSE truck. What legal area that falls in I don't know, but they deserve some moments of terror and some major financial inconvenience... nasty fees, forced closure of their brokerage account...

However, I hope nobody will commit suicide as a result of seeing a temporary -$600,000 balance (much as twenty-year-old Alexander E. Kearns did in 2020).
If the markets were a city, it would be Gotham. They’re neither moral nor legal. What people get away with on a daily basis is mind blowing. Lots of double standards. And I rely on this cesspool for retirement, which is even more disturbing.
User avatar
Topic Author
TomatoTomahto
Posts: 17549
Joined: Mon Apr 11, 2011 1:48 pm

Re: Oof! BRK.A price to $185

Post by TomatoTomahto »

gammalaser wrote: Wed Jun 05, 2024 9:30 am Isn't this the reason to enter limit orders? If one were to place a market order, don't they assume all of the price risk of such a big drop?

I also do not know how an individual investor should be able to draw the line between a glitch like this, from a price volatility that might have been caused by a legitimate catastrophic event, or even such an event that individual believes might have occurred and is trying to trade on.
I would place limit orders if I couldn’t take a legit 10% change in price. I don’t place limit orders, but use market orders because I don’t try to make investing a game. I would, however, expect to be protected from a momentary 99.99% anomaly. And, sure enough, market mechanisms worked.

Surely you’re not suggesting that someone believed that BRK.A was at $185 due to a legitimate catastrophic event (that magically spares BRK.B).
I get the FI part but not the RE part of FIRE.
gammalaser
Posts: 84
Joined: Wed Jun 28, 2023 11:55 am

Re: Oof! BRK.A price to $185

Post by gammalaser »

TomatoTomahto wrote: Wed Jun 05, 2024 9:50 am
gammalaser wrote: Wed Jun 05, 2024 9:30 am Isn't this the reason to enter limit orders? If one were to place a market order, don't they assume all of the price risk of such a big drop?

I also do not know how an individual investor should be able to draw the line between a glitch like this, from a price volatility that might have been caused by a legitimate catastrophic event, or even such an event that individual believes might have occurred and is trying to trade on.
I would place limit orders if I couldn’t take a legit 10% change in price. I don’t place limit orders, but use market orders because I don’t try to make investing a game. I would, however, expect to be protected from a momentary 99.99% anomaly. And, sure enough, market mechanisms worked.

Surely you’re not suggesting that someone believed that BRK.A was at $185 due to a legitimate catastrophic event (that magically spares BRK.B).
I think I am trying to understand at what point do we assume an investor is acting in bad faith. Here it is obvious because of multiple tickers affected and inconsistent between share classes. But I could envisage some other "glitch" scenario where a stock is observed to fall by some amount, there is not enough information to tell if it is an exchange/market wide issue, and then I as a retail investor assume that this particular stock is now highly undervalued and try to put an order to buy more of it. Then later it is found that this particular ticker had a glitch in published price and the price of the order I put in is not related to any true valuation or trading data. I am not sure investor should be punished for this despite also trying to take advantage of a price movement. How can I distinguish glitch that I should not enter order into from other irrational price changes that happen all the time. Especially retail investor who would not be able to affect overall market consensus of the price.
jbowman
Posts: 237
Joined: Sat Jan 09, 2021 4:34 pm

Re: Oof! BRK.A price to $185

Post by jbowman »

gammalaser wrote: Wed Jun 05, 2024 11:50 am
TomatoTomahto wrote: Wed Jun 05, 2024 9:50 am
gammalaser wrote: Wed Jun 05, 2024 9:30 am Isn't this the reason to enter limit orders? If one were to place a market order, don't they assume all of the price risk of such a big drop?

I also do not know how an individual investor should be able to draw the line between a glitch like this, from a price volatility that might have been caused by a legitimate catastrophic event, or even such an event that individual believes might have occurred and is trying to trade on.
I would place limit orders if I couldn’t take a legit 10% change in price. I don’t place limit orders, but use market orders because I don’t try to make investing a game. I would, however, expect to be protected from a momentary 99.99% anomaly. And, sure enough, market mechanisms worked.

Surely you’re not suggesting that someone believed that BRK.A was at $185 due to a legitimate catastrophic event (that magically spares BRK.B).
I think I am trying to understand at what point do we assume an investor is acting in bad faith. Here it is obvious because of multiple tickers affected and inconsistent between share classes. But I could envisage some other "glitch" scenario where a stock is observed to fall by some amount, there is not enough information to tell if it is an exchange/market wide issue, and then I as a retail investor assume that this particular stock is now highly undervalued and try to put an order to buy more of it. Then later it is found that this particular ticker had a glitch in published price and the price of the order I put in is not related to any true valuation or trading data. I am not sure investor should be punished for this despite also trying to take advantage of a price movement. How can I distinguish glitch that I should not enter order into from other irrational price changes that happen all the time. Especially retail investor who would not be able to affect overall market consensus of the price.
All the more reason to buy broad index funds. Not only am I avoiding the active management tax, I'm avoiding moral hazard as well!
TravelforFun
Posts: 2876
Joined: Tue Dec 04, 2012 10:05 pm

Re: Oof! BRK.A price to $185

Post by TravelforFun »

I always buy and sell stocks at market price (immediate transaction). Incidents like this now makes me question this practice.

TravelforFun
User avatar
Topic Author
TomatoTomahto
Posts: 17549
Joined: Mon Apr 11, 2011 1:48 pm

Re: Oof! BRK.A price to $185

Post by TomatoTomahto »

TravelforFun wrote: Wed Jun 05, 2024 5:14 pm I always buy and sell stocks at market price (immediate transaction). Incidents like this now makes me question this practice.
i don’t think that anyone who made a legitimate market order suffered for it. What are you questioning?

ETA: I use market orders all the time and will continue to do so. The only way I might have been burned is if I tried to buy another share of BRK.A at market, “got” it for $168, and then, if Nisi were in charge (j/k) I might have had my account closed. But, I’m sure I could have shown that I had sufficient funds in my settlement account and it was not my first purchase of BRK.A, and the brokerage would have been reasonable.
I get the FI part but not the RE part of FIRE.
TravelforFun
Posts: 2876
Joined: Tue Dec 04, 2012 10:05 pm

Re: Oof! BRK.A price to $185

Post by TravelforFun »

TomatoTomahto wrote: Wed Jun 05, 2024 5:20 pm
TravelforFun wrote: Wed Jun 05, 2024 5:14 pm I always buy and sell stocks at market price (immediate transaction). Incidents like this now makes me question this practice.
i don’t think that anyone who made a legitimate market order suffered for it. What are you questioning?

ETA: I use market orders all the time and will continue to do so. The only way I might have been burned is if I tried to buy another share of BRK.A at market, “got” it for $168, and then, if Nisi were in charge (j/k) I might have had my account closed. But, I’m sure I could have shown that I had sufficient funds in my settlement account and it was not my first purchase of BRK.A, and the brokerage would have been reasonable.
I'm sure someone did sell their shares at market order of $186 and they're going to have to spend some time straighten out this mess.

TravelforFun
User avatar
Topic Author
TomatoTomahto
Posts: 17549
Joined: Mon Apr 11, 2011 1:48 pm

Re: Oof! BRK.A price to $185

Post by TomatoTomahto »

TravelforFun wrote: Wed Jun 05, 2024 6:30 pm
TomatoTomahto wrote: Wed Jun 05, 2024 5:20 pm
TravelforFun wrote: Wed Jun 05, 2024 5:14 pm I always buy and sell stocks at market price (immediate transaction). Incidents like this now makes me question this practice.
i don’t think that anyone who made a legitimate market order suffered for it. What are you questioning?

ETA: I use market orders all the time and will continue to do so. The only way I might have been burned is if I tried to buy another share of BRK.A at market, “got” it for $168, and then, if Nisi were in charge (j/k) I might have had my account closed. But, I’m sure I could have shown that I had sufficient funds in my settlement account and it was not my first purchase of BRK.A, and the brokerage would have been reasonable.
I'm sure someone did sell their shares at market order of $186 and they're going to have to spend some time straighten out this mess.

TravelforFun
I think any order done at less than $603,000 was canceled.
I get the FI part but not the RE part of FIRE.
schmitz
Posts: 352
Joined: Thu Sep 01, 2011 5:21 pm

Re: Oof! BRK.A price to $185

Post by schmitz »

Gadget wrote: Tue Jun 04, 2024 2:18 pm
TomatoTomahto wrote: Tue Jun 04, 2024 2:13 pm According to Matt Levine,
About a dozen trades in Berkshire Class A shares went off at $185.10 around 9:50 a.m. The stock closed Friday at $627,400. NYSE said any trade between 9:50 and 9:51 at or below $603,718.30 will be canceled. NuScale Power Corp. had a similar glitch, with trades that printed at about 99% below the prior price.
The interesting part is that a few on wallstreetbets dumb enough to do a market order on a limited quantity stock actually bought it for well over $603,718 is my understanding. So now they're tens of thousands of dollars negative, sometimes in non margin accounts. It'll be interesting to see who eats that. I'm guessing most of them don't have the funds...
Why couldn’t they just sell the stock right back? Maybe they would only end up losing a few thousand?
User avatar
Topic Author
TomatoTomahto
Posts: 17549
Joined: Mon Apr 11, 2011 1:48 pm

Re: Oof! BRK.A price to $185

Post by TomatoTomahto »

schmitz wrote: Sat Jun 08, 2024 2:26 pm
Gadget wrote: Tue Jun 04, 2024 2:18 pm
TomatoTomahto wrote: Tue Jun 04, 2024 2:13 pm According to Matt Levine,
About a dozen trades in Berkshire Class A shares went off at $185.10 around 9:50 a.m. The stock closed Friday at $627,400. NYSE said any trade between 9:50 and 9:51 at or below $603,718.30 will be canceled. NuScale Power Corp. had a similar glitch, with trades that printed at about 99% below the prior price.
The interesting part is that a few on wallstreetbets dumb enough to do a market order on a limited quantity stock actually bought it for well over $603,718 is my understanding. So now they're tens of thousands of dollars negative, sometimes in non margin accounts. It'll be interesting to see who eats that. I'm guessing most of them don't have the funds...
Why couldn’t they just sell the stock right back? Maybe they would only end up losing a few thousand?
When the dust settled, it had moved quite a lot in absolute dollar terms. Yes, they could sell again, but I think at a price 5 digits lower per share. A four digit daily move is typical for BRK.A
I get the FI part but not the RE part of FIRE.
rockstar
Posts: 6944
Joined: Mon Feb 03, 2020 5:51 pm

Re: Oof! BRK.A price to $185

Post by rockstar »

TravelforFun wrote: Wed Jun 05, 2024 5:14 pm I always buy and sell stocks at market price (immediate transaction). Incidents like this now makes me question this practice.

TravelforFun
I limit all my orders only because the more I learn about how this stuff works behind the scenes the more paranoid I become.
gammalaser
Posts: 84
Joined: Wed Jun 28, 2023 11:55 am

Re: Oof! BRK.A price to $185

Post by gammalaser »

jbowman wrote: Wed Jun 05, 2024 4:30 pm
gammalaser wrote: Wed Jun 05, 2024 11:50 am
TomatoTomahto wrote: Wed Jun 05, 2024 9:50 am
gammalaser wrote: Wed Jun 05, 2024 9:30 am Isn't this the reason to enter limit orders? If one were to place a market order, don't they assume all of the price risk of such a big drop?

I also do not know how an individual investor should be able to draw the line between a glitch like this, from a price volatility that might have been caused by a legitimate catastrophic event, or even such an event that individual believes might have occurred and is trying to trade on.
I would place limit orders if I couldn’t take a legit 10% change in price. I don’t place limit orders, but use market orders because I don’t try to make investing a game. I would, however, expect to be protected from a momentary 99.99% anomaly. And, sure enough, market mechanisms worked.

Surely you’re not suggesting that someone believed that BRK.A was at $185 due to a legitimate catastrophic event (that magically spares BRK.B).
I think I am trying to understand at what point do we assume an investor is acting in bad faith. Here it is obvious because of multiple tickers affected and inconsistent between share classes. But I could envisage some other "glitch" scenario where a stock is observed to fall by some amount, there is not enough information to tell if it is an exchange/market wide issue, and then I as a retail investor assume that this particular stock is now highly undervalued and try to put an order to buy more of it. Then later it is found that this particular ticker had a glitch in published price and the price of the order I put in is not related to any true valuation or trading data. I am not sure investor should be punished for this despite also trying to take advantage of a price movement. How can I distinguish glitch that I should not enter order into from other irrational price changes that happen all the time. Especially retail investor who would not be able to affect overall market consensus of the price.
All the more reason to buy broad index funds. Not only am I avoiding the active management tax, I'm avoiding moral hazard as well!
A look at exchange data showed a handful of ETFs affected: ARGT, DFEN, NUSI, SPYU, XSD. A few of them are index funds. Maybe the only way to sidestep the whole issue is by using index mutual funds.
TravelforFun
Posts: 2876
Joined: Tue Dec 04, 2012 10:05 pm

Re: Oof! BRK.A price to $185

Post by TravelforFun »

rockstar wrote: Sat Jun 08, 2024 10:30 pm
TravelforFun wrote: Wed Jun 05, 2024 5:14 pm I always buy and sell stocks at market price (immediate transaction). Incidents like this now makes me question this practice.

TravelforFun
I limit all my orders only because the more I learn about how this stuff works behind the scenes the more paranoid I become.
There are also downsides with limit orders too.

TravelforFun
Last edited by TravelforFun on Mon Jun 10, 2024 1:29 pm, edited 1 time in total.
hoofaman
Posts: 1046
Joined: Tue Jul 14, 2020 3:39 pm

Re: Oof! BRK.A price to $185

Post by hoofaman »

Good reminder to never use market order, although it seems in this case they said they cancelled orders, but I'd rather avoid this all together.
User avatar
LilyFleur
Posts: 3613
Joined: Fri Mar 02, 2018 9:36 pm

Re: Oof! BRK.A price to $185

Post by LilyFleur »

TomatoTomahto wrote: Mon Jun 03, 2024 1:07 pm
rockstar wrote: Mon Jun 03, 2024 12:49 pm
[snip…]

I’m not advocating QQQ. That is what I’m doing to limit my dividends along with BRK.B. There is no guarantee that QQQ will keep up with VOO, but you can count on it being more volatile.
No worries, I won’t blame you if it tanks, and I know that it’s been high flying lately. But, we get loads of dividends from our taxable accounts, and maybe that would be a reasonable way to speculate a bit. We are in no danger of running out of money; my wife is still working and I expect to live off at most 1% SWR. Mostly our accounts are for bequests.
I bought some QQQ recently (just $50,000 worth). A close friend will be selling his QQQ to buy a boat soon. I didn't think about dividends, as mine is in my t-IRA.
Post Reply