An interesting phenomenon of the stock market crash

Originated in a report: In the U.S. Eastern time at 2:47 p.m. on the 6th or so, a trader selling the stock at a time had the wrong word to millions of wrong labeled billion, nearly led to the Dow suddenly point of collapse. Social psychologists study found that herd mentality that produced the most important factor is how many people insist on a certain opinion, and not the opinion itself. -Psytopic.com

"Black Swan"-style stock market crash

Before the discovery of Australia, before the 17th century, Europeans think that all swans are white. Human experience is always over-think, not that the emergence of a black swan is sufficient to subvert all.

May 6, 2010, the New York Stock Exchange traders working in the United States. The day in Europe under the weight of the debt crisis, the New York stock market crash, by the close, the three major indexes all fell more than 3%, while the Dow Jones Industrial Average intraday fell at nearly 1,000 points in one-day drop in history, the most points one. According to foreign reports, traders, trading systems error operations and technical problems may lead to the 6th session New York stock market crash of one of the main. ─ ─ Xinhua

Bloomberg reported that P & G shares at 6 pm abnormal fluctuations in stock price suddenly dropped to 39 U.S. dollars 64 U.S. dollars per share, then rebounded to post 60 U.S. dollars per share. According to the New York Stock Exchange, news of another day on the NYSE trading stocks, there are eight stocks trading at zero, or 1 cent abnormal.

Market traders believe that trading in the wrong operation, and technical trading systems in New York on the 6th session abnormal stock market crash of the main reasons. Currently the New York Stock Exchange and Nasdaq Stock Market are on the same day to investigate unusual fluctuations.

The phenomenon of deja vu?

American humorist James Thurber once wrote such an interesting text:

Suddenly people began running in the streets.
At this moment, he is likely to be remembered and his wife have a date, but now too late to appointments. Forget any reason, he ran east on Broadway. Another man began running, too, may be feeling good newsboy. Another man, a dignified public servants, is trot.

In 10 minutes, from the joint warehouse to the court building, commercial street, everyone was running. Soon as burble gradually evolved into a terrible word - "dam." "Dam break it!" The fear is people speaking out, this may be a bus in a thin old woman, may be an ordinary police, but also may be a little boy; no one knew that he was Who, and now it is also not important. 2000 people all at once to escape again. Everywhere sounded the "east, run!" Cry, you can run away from the east river, east would be safe to run. "Eastward run! Eastward run!" A stern look, look skinny tall strong woman, along the middle of the street ran east from me.

Despite all the shouting, but I am still not sure what was going on out in the end. I am struggling to catch up, and she ran in parallel, although she was almost 60 years old, but her running position in the beautiful light, could see that her body was great. "How is it?" I asked breathlessly. She glanced at me quickly, but also continue to look toward the front, slightly accelerated pace. "Do not ask me, ask God, go!" She said.

Why do people fall in the valuation when the rush to sell stocks?

Let me play the game, might find a partner with experience.
Within five seconds, please, do not carefully estimated 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 equal to how many?
Your answer is ----?

Now you let the other person (not done above the estimate) in five seconds without a careful calculation of the estimated 1 × 2x3 × 4x5 × 6x7 × 8 is the number?
His answer is ---?

Now compare your estimate answers and estimate the other man answers. Who answers to big, who answer to small? Your answer must be large, while the other person's answer is small, and your answer may have less than 40,320 (the actual calculation of the answer), right?

Why is this so? Because you and the other man's estimate of the answers are "anchored" in the calculation of the steps at the beginning, so you expect the answer to a person other than the estimated answer, but probably less than the actual calculated the answer.

The "Judgement and decision making anchoring effect" refer to Psytopic other articles:
Interestingly, "anchoring and adjustment heuristic" (I)
http://www.psytopic.com/mag/post/interesting-anchoring-and-adjustment-heuristic-1.html
Interestingly, "anchoring and adjustment heuristic" (below)
http://www.psytopic.com/mag/post/interesting-anchoring-and-adjustment-heuristic-2.html

Investors generally believe that what is happening in the near future there will be very likely in the near future to reproduce ─ ─ Unfortunately, the reality far from it. Many people do not understand: When an occasional situation persists, we should have done more long-term observation, so as to more accurately grasp the rules. In the above example of that, people tend to overvalue recent information, which misled the upcoming investment decisions. The result: individual investors seem overly optimistic when playing up, fall in the market have become too pessimistic.

"Stock price suddenly dropped to 39 U.S. dollars 64 U.S. dollars per share" is an extreme situation, the probability of their recurrence, in accordance with the historical average of view, than the market much lower probability of a smooth change. You will see them again soon happen?

Further reading: "fat finger syndrome"
In fact, the U.S. stock market's "black swan" type of crash is not the first play. Careless, stupid careless hand knocking on the billions of numerous examples in the financial sector, the financial industry this phenomenon is known as the "fat finger syndrome." Large number of which a few cases have entered the textbooks, warning stock practitioners.

March 16, 2000, 100 yuan face value of convertible bonds Hongqiao Airport, the first day's opening price listed is only more than one of money, and the prices displayed on the screen of the bonds fell more than 90%. However, less than 5 minutes time, Hongqiao CB from more than one opening price jump more than 100.

December 13, 2000, a foreign securities firms suddenly hang out 106.5 HSBC HK selling, the number of shares to 2 million, the lowest close of the previous day out of 9.5 Hong Kong dollars, about 8%, but there was no transaction.

December 2000 UBS UBS Warburg investment banking firm affiliated traders in seconds to a loss of UBS Warburg 71 million pounds. He would have gone to the price of 600,000 yen per share, the Japanese advertising company selling the shares, the results on the keyboard to make a small mistake in his last six yen per share price of selling 61 million shares.

September 2002 the European futures market, dealers intend to sell a futures contract trading market in Frankfurt, Germany. Index at 5180 points, Frankfurt. Finally traders sold futures contracts were 5180. European futures markets and Shimoji, 5 hours later was forced to cancel all transactions.

October 2002, a London stock market in a futures trader is not careful the wrong price, the result the world's largest futures market for financial derivatives market in Europe was forced to stop drive three hours, the stock index down 500 points.

June 27, 2005, Taiwan's Fubon Securities, a trader from Hong Kong received 80 million yuan of orders instructions, but incorrectly completed 8.0 billion. In order to stabilize the stock market, Fubon decided to buy back these shares in the company's funds, the error command to Fubon Securities NT carrying more than 400 million yuan loss.

suggest a better translation.