Not because of the economy or terrorism, but because of the market's short-term orientation, fed by instant electronic information and rule changes like 2001′s decimalization, which narrowed bid/ask spreads.
Vahan Janjigian, chief of investments for Forbes, notes that financial guru Jack Bogle would likely say decimalization, and its narrower trading spreads, led to a trader's mentality for retail level investors, a bad idea.
In particular, the repeating circle, invented in about 1787 by Borda, himself a strong proponent of decimalization, was adapted to use decimal angles.
Reg FD, like mark-to-market and the uptick rule (decimalization?) has had unintended consequences even if intentions were appropriate.
All of this is very well, but decimalization has also brought us quite a few unexpected surprises, like the repeal of the Uptick Rule.
A decimalized share price of 3.63 would have been 3 5/8 prior to decimalization at the turn of the century.
Decimalization System that requires the prices of securities to be quoted in decimals rather than in a fractional format.
Graham et al. (2003) observed that statistically the median ex-day premium declined from 0.8929 to 0.7500, and hence the median ex-day returns [(1 − premium) × (dividend/cum-day price)] increased from 0.0002 to 0.0027 during the period of tick size decimalization (i.e., tick size fell from 1/8 to 1/16 and more decimals, where denominator values of fractions increases).
And would decimalization make the strains worse? A. The investment community as a whole, including the public, cannot handle decimalization right now.
