How to Prevent Market Crashes According to the Pseudo-Intellectuals and Why Their Proposals are Pseudo-Sensible

12 Pages Posted: 27 Feb 2018

Date Written: October 12, 1987

Abstract

There has been considerable finger pointing since the Crash of 1987, much of it devoted to the tail wagging the dog idea. This concept may be typical of many that will influence regulators and exchanges as they decide what new measures to adopt to prevent another Crash. It is wrong, and it misses the point.

Measures being considered include circuit breakers, closing the market, trading halts, price limits, restricting access, and position limits. This paper shows how ridiculous they are. Along the way, it provides a few laughs.

Keywords: market crash, price limits, market closure,trading halt, position limits, market stability

JEL Classification: G00, G10, G14, G18

Suggested Citation

Ferguson, Robert, How to Prevent Market Crashes According to the Pseudo-Intellectuals and Why Their Proposals are Pseudo-Sensible (October 12, 1987). Available at SSRN: https://ssrn.com/abstract=3125508 or http://dx.doi.org/10.2139/ssrn.3125508

Robert Ferguson (Contact Author)

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