Take the credit, get the blame

Lu Wang and Sarah Ponczek, Bloomberg: “Don’t take credit for the stock market, President Trump is often warned, you’ll be blamed when it crashes. Well, maybe that can be avoided, too. With the help, specifically, of Congress, which Treasury Secretary Steven Mnuchin warned must pass tax cuts or be saddled with a correction in equities after their 20% jump since Election Day. His words came a day after Trump tweeted pictures of the Dow crossing 23,000 for the first time.”

David Floyd, Investopedia: “When the Dow crossed the 20,000 mark in January, the media went wild. When it ground out another 15% to hit 23,000 on Wednesday, the festival of headlines repeated itself. ... We should resist the temptation. Not because there’s any problem with the milestones. There’s a problem with the index. ... There wasn’t much in the way of precedent for designing index methodology when it was founded in

1896; it was only the second equity index, and its inventor, Charles Dow, had also invented the first. ... If Dow had put every mathematician east of the Mississippi to work in unison, he could not have begun to match the computing might we wield by fiddling with our phones. So should we let Charles Dow’s average go the way of the telegraph? ... If it’s too broke to fix, don’t. On the other hand, it’s probably not wise to pay too much attention to it, either.”

Howard R. Gold, MarketWatch: “On Oct. 19, 1987, the Dow lost 508 points, 22.6% of its value. It was early in my journalism career and I remember the fears that, like Oct. 29, 1929, it would lead to a second Great Depression. That didn’t happen, of course — the next recession began nearly three years later, in July 1990 — and because of that, people dismiss the 1987 crash as just a one-day blip. ... Nothing could be further from the truth. ... When the crash came, the new technology, program trading, acted not as a hedge but as an accelerant to the sell-off on stock and options exchanges. Regulators from the Securities and Exchange Commission and the Commodity Futures Trading Commission were stuck in their silos during the general market contagion. ... The 2010 ‘flash crash’ showed the perils of computer-driven markets going haywire. To this date, no one knows why it happened.”