Bogle: Markets Need to Adapt to Changing Weather

Thursday, 01 Nov 2012 09:01 AM

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Global warming is intensifying weather systems, and markets need to take better steps to prepare, especially in this high-tech world of high-frequency trading, said John Bogle, founder of The Vanguard Group.

Superstorm Sandy morphed into a ferocious post-tropical storm that wreaked havoc along the eastern seaboard, closing markets for two days, a rare event.

Markets haven’t closed for two days due to weather since 1888.

Editor's Note: The Final Turning Predicted for America. See Proof.

While no one weather event can be blamed on global warming, markets need to at least prepare for more intense weather systems disrupting commerce.

“It requires us particularly in this technological age of financial markets and high-frequency trading and all that — for whatever value it creates, which is, I think, very small — it requires us to think long and hard about the positioning of all this equipment, whatever it should be worth,” Bogle told CNBC.

“The oceans are rising — there’s news for you — and it’s not going to get any better in New York. They have some work to do. I don’t know what it’s going to take for New York to have an infrastructure that can take these kinds of storms a little more in stride,” Bogle added.

Wall Street reopened on a Wednesday after Sandy halted trading for two days.

Trading went smoothly though investors were cautious and wary of technical glitches such as those that sparked the Flash Crash of May 2010 — when the Dow dropped hundreds of points and then regained it within minutes.

Stocks opened higher and then erased earlier gains ending mixed, as markets were still assessing the damage of the storm.

“This was a monster, no question about that, but all the experts on global warming are saying the whole nature of it is much more extreme, not just warmer weather, but much more extreme weather — extreme cold, extreme hot, extreme drought, extreme rain,” Bogle said.

“I think everybody, particularly in the financial world, should be thinking about how do we keep the markets open, how do we fulfill the needs of investors and traders.”

Many market participants were held up by floods, gasoline shortages or other storm-related issues.

Plus many traders were buying and selling to close out accounts at the end of the month, which allowed for a choppy session.

“There is some pent-up demand to trade after being closed for two days,” said Art Hogan, managing director at Lazard Capital Markets, according to CNNMoney.

“But you have to balance that with the fact that many folks are still not able to get back to work.”

Editor's Note: The Final Turning Predicted for America. See Proof.

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