With heightened volatility, lots of uncertainty, and some liquidity issues in markets, what are the chances that regulators might consider closing the stock market?
The market has been closed before in periods of crisis. After the 9-11 attacks, the market didn’t reopen for three business days.
Treasury Secretary Mnuchin has so far pledged to keep markets open. He reiterated that pledge again today, saying the administration would like to keep markets open but may consider reducing trading hours.
On the surface, closing the markets might seem like a good idea, but keeping them open is the right decision. The financial system is complex with markets and positions intertwined. There could be unintended consequences to shutting the markets that haven’t been carefully considered. There is also the problem of cutting Americans off from their liquid assets in a time of potential need.
What happens if things get worse and the administration changes its mind? For investors, it shouldn’t make much difference. At Young Research, we have long invested in the spirit of Warren Buffet, who said “I never attempt to make money on the stock market. I invest on the assumption that they could close the market the next day and not reopen it for five years.”