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
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: Suggested Citation