It’s no secret the stock market has been in shambles of late. While the mayhem has been disappointing to many, what has been even more disappointing is the flaws in Wall Street that are now being exposed. Many traders have struggled in buying and selling exchange-traded funds (ETFs). An ETF is marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. An ETF trades like common stocks Netflix (NFLX) or Apple (AAPL) would.
Many ETFs exchanged at steep discount compared to their components worth. This led to investors who hit the panic button looking to sell with heavy losses. In this time of a plummeting stock market, it was hard for traders to consistent prices on contracts that offer insurance against S&P 500 declines.
To give you an idea of just how volatile the market has been, circuit breakers, which are put in place to halt trading in a single stock or ETF during big moves, were set off 1,300 times Monday. Stocks that have experienced the most growth year to date were faltering. Disney (DIS), which on August 4th was valued at $121.69 fell to as low as $95.36 on Monday August 24th. It has had a bit of a bounce back trading near $102 per share. On August 6th, Netflix (NFLX) was trading at $126.45 but plummeted to $96.88 on August 24th. Netflix has also experienced a bit of a bounce back since currently trading at $116. It was believed that only about 18 total stocks had net gains on Friday in the Dow Jones. In a six day span, United States stocks have erased $2.1 trillion.
For more on this topic, check out this article here on wsj.com.
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