TJ 183: Systemic Risk and Elections

The markets appear stable enough, but are they really? There's systemic risk out there. Currency is pumped into the markets to keep them afloat, the Fed is deferring increasing the interest rate, and more. Should a particular drop occur, it could actually cause a runaway fall in the security.

If that sounds far fetched, look no further than the flash crash of the GBP over the weekend. Due to the volatility surrounding the currency combined with high frequency trading algorithms, once the Pound dropped below a particular level of support, the drop became precipitous. (High frequency trading algorithms are tradebots with trigger orders that act with millisecond speed.)

Volatility and black swan events such as the the GBP flash crash contribute to the systemic risk that's more present in the markets than usual. Want to know more? Listen to the latest episode of Trading Justice!

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October's book is 401(k)aos by Andy Tanner. You can find it on Amazon right here, or check your local library. We'll be doing a live audience podcast on October 27 at 7 PM ET to discuss the book. You'll be able to join us right here: Podcast Room

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