The Michael Jackson Experience and the New Financial Systems

On June 25, 2009, the world definitely lost one of its greatest pop idols. Not a man to be set as an example - he was a tragic figure - the death and the events currently following his death are a microcosm of the sad life he lived. Soon, however, his songs will stand alone, people will forget his tabloid ways. And as always happens with time, the good experience people associated with Michael Jackson will be what is most remembered.

But his death was a major facebook and twitter moment, and pointed out to me, how much of a real time world we truly live in. It was about 4:30pm US EST when I left work on June 25. It probably took me 20 minutes to drive home. After getting home, I played with my 16 month old daughter for about 30 minutes and further read the mail and newspaper. Michael Jackson was pronounced dead at 5:26pm. By the time I got to my computer it was about 5:45. Upon firing up Firefox, and looking at my homepage, I saw the news on his death. I immediately went over to facebook to post the link and comment.

I was amazed by the amount of discussion on Michael Jackson's death already... pages of discussion. People had given their respects, their RIP's, commented on their favorite songs, and discussed the evils that also came with Michael Jackson. I couldnt believe, only 30 minutes after his death, I was late to the party! In the incredibly short time I was unplugged, (driving home listening to podcasts, and then playing with my daughter at home), I had fallen woefully behind.

In discussing this with a friend, who is a financial adviser (dont hold that against him!), we discussed how this realtime world impacts financial markets. Take that same piece of information, and make it something like "the Fed moves interest rates" - just a decade ago under Clinton, this would have taken at least 24 hours to have impact (10 years before that, maybe 2-3 days). At this point, if it wasn't already prefactored in before the decision comes out, it is put into the market within minutes.

I am not sure if this is good or bad. I am sure this causes us to move our markets much more wildly than they used to. Everything that I have been taught tells me that this is not good (calm thought through decisions are always the best for the long term). Decisions are made too instantly - in the case of hedge funds, when the market was freefalling, they were selling anything they could at any price. This even spilled over to stable government bonds... government bonds! The buyers of these also were looking for any liquidity and made incredibly poor decisions, causing the bond market to drop. On the flip side, a lot of buyers made a lot of money (there are always two sides to a coin).

Amazingly, for all that Michael Jackson was, and for the music he gave, I remember this moment... this being late to the party feeling for not knowing he was dead for 30 minutes. We have hit a point where all information is approaching zero in how close to real time it is. In some ways this is good to get timely information out to people, and to make all facets of life more transparent. But at the same time, this often leads to extremely poor decisions as people dont weigh information with other information. They are becoming decisions based on individual data points because they happen so real time, yet the decisions affect so many other factors and people.