As everyone knows, the first US stock market meltdown happened in 1997.
The second meltdown happened in 2020.
The third meltdown happened in 2020.
The fourth meltdown happened in 2020.
The fifth meltdown happened in 2020.
Cough … cough … But we are not talking about the entire US stock market meltdown. We are talking about the meltdown mechanism of each individual stock market.
According to the US stock market rules, once a stock's share price rises or falls by more than 10% within five minutes, the stock will stop trading. Trading will only resume after five minutes.
This mechanism is good. It is to let the crazy shareholders calm down for five minutes and think clearly about what to do next.
So, Microsoft successfully triggered this meltdown mechanism, and Microsoft shares, which had fallen to 115 USD, stopped trading. Trading will only resume after five minutes.
In that case, would circuit breakers be able to stabilize the stock prices?
Most of the time, it can. But under special circumstances, the situation might be worse.
For example, after Microsoft's meltdown, many US stock market institutions had just reacted. They immediately called for a meeting with their top management to discuss how to deal with the situation.
At this moment, everyone on Wall Street is nervous. With Microsoft's failure, a terrifying truth is revealed to everyone. Microsoft's reputation is about to be destroyed, and the tech bubble might burst. This is a terrifying outcome.
These financial institutions must immediately make the right decision to protect their own interests.
"I think this is the result of an accidental phenomenon!" A senior official said in the meeting room. "I had asked the IT department. The Atlantic Cable had a small glitch, and our internet connection to Europe was disrupted. Until now, it is still not fixed."
"Microsoft's collapse is because of this small network glitch. The European investment institutions and individual investors are unable to buy our shares, and no one bought our 16 billion USD shares."
"But this is only a small glitch, and it can be fixed quickly. I estimate it will be fixed before 6: 00 pm tonight!"
"That's why I think the hot money from Europe will enter tomorrow, and the stock market will stabilize. We don't need to evacuate a large number of people because of this small incident."
"I believe everyone knows what the consequences will be. I'm afraid none of us will be able to escape!"
"No, I don't think it's a coincidence today. 16 billion USD of empty orders is something that has never happened before. How could there be so many empty orders at the same time? I think some organizations are planning to escape in advance. They want to leave us behind and escape by themselves. They want us to stay and block the disaster for them!" Another executive stood up and refuted straightforwardly.
"No, it's not like that. I've also checked the 16 billion. Indeed, most of them are the guts of the organizations. However, these orders belong to more than 100 different organizations. It's impossible that an organization wants to escape in advance. It should be because of Monday that so many orders happened to be put together. Don't forget, the orders we sold these days are more than three times more than usual!" The senior executive who supported calmness quickly explained.
"Hehe, that's amazing. It's not just one company that wants to escape in advance, but more than a hundred companies that want to escape in advance!" Another executive said coldly.
"… …" Everyone in the meeting room shuddered. If more than 100 organizations want to escape at the same time, it's too scary.
"This is impossible. This must be a coincidence!" The senior executive wanted to insist, but the General Manager, who had been quiet all this while, said. "Enough. I announce that after the trading resumes, we will sell all our Microsoft shares at all costs!"
"What? General Manager, we cannot do this. We will suffer huge losses, and this will not end here. We will cause the entire market to crash!" The senior executive said loudly.
"I don't care if our actions will lead to the consequences you mentioned. I don't know who is right or wrong, but I do know one thing, and that is that all of these organizations are sly old foxes."
"Even if 20% of them do not care about the big picture and escape, and the remaining 80% continue to persist, the market will collapse in an instant!"
"I know those people too well. It's not just 20%. 50% of them will escape at the first opportunity!" The General Manager sighed. "Since the market is doomed to collapse, then we should escape in advance and stay to help others take over." “
"Yes, General Manager!" The senior executive who had been clamoring to take care of the big picture also shut his mouth. The general manager was right. They couldn't expect everyone to take care of the big picture. The only way to protect themselves was to be the first to escape before the big picture collapsed. The faster they ran, the less they would be affected by the losses.
— — —
There are no fools on Wall Street, and everyone knows the big picture is not over. They can still hold on.
But everyone knows that if they stay now, they might be the ones to take over the market.
These smart people understood other smart people too well. These smart people also knew that once a group of smart people gathered together, their intelligence would add up, but it would add up in the form of a negative number.
After five minutes, all the shareholders went crazy. Within two minutes, Microsoft's share prices plunged by 10%. Within a day, Microsoft had successfully triggered a second circuit breaker.
This time, no one had any illusions. All the organizations understood that the next step would be a game of speed. Whoever was slower would die without a burial ground.
All the United States' shareholders witnessed a historic moment. Microsoft, the world's number one company, is worth more than a trillion USD, triggered five lockouts in a day. Their share prices fell from 128 USD to 75 USD. The total drop is 41%. Microsoft's market value of more than 280 billion USD evaporated in a day.
The rapid drop in share prices stunned everyone. Three people jumped out of the market on the same day and saved themselves from the troubles of the world.
No one could believe that Microsoft's share prices had plummeted so drastically, and it had only been a day. Who knows what will happen to Microsoft in the future?!
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