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https://tradingeconomics.com/venezuela/stock-market

Was looking at the graph above for the Venezuela Stock Market and the Caracas Stock Exchange Stock Market Index crashed 99.90% over the weekend of March 15th, 2021. It dropped from 2,700,000 to 2,700.

What happened and why did the stocks crash? I can't find anything about it in the news.

Flux
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Wandering Fool
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    The fact that the "crash" was the elimination of exactly three zeros should inform you that it's something artificial, not an actual crash. – RonJohn May 25 '21 at 14:01
  • @RonJohn Three zeros went away; nothing was lost, three times over. – Yakk May 25 '21 at 14:03
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    A picture is worth a thousand words.... moreso when it is built out of numbers. – J... May 25 '21 at 14:55
  • @Yakk your comment puzzles me, because it seems to imply that I think something was lost, when I said no such thing. – RonJohn May 25 '21 at 22:22
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    @ronjohn An @ does not mean "you are wrong". The things that were lost were each nothing; and three of them where lost. – Yakk May 26 '21 at 01:41

1 Answers1

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Not a crash, an adjustment. Because of the insane inflation, they have adjusted it periodically by dividing by 1000. Last one was March 2021.

https://en.wikipedia.org/wiki/%C3%8Dndice_Burs%C3%A1til_de_Capitalizaci%C3%B3n

Mattman944
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    So it's the market-level equivalent of a stock split -- the numbers change, but the values don't. – Barmar May 25 '21 at 15:26
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    @Barmar - yes, similar to a stock split. Stock splits are more common so the online tools will compensate when showing historical data. It wouldn't be that hard for them to do the same for this index, but they don't want to bother for whatever reason. – Mattman944 May 25 '21 at 15:37
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    @Mattman944: "Didn't want to bother" is most likely (by Occam's razor): "the tool makers didn't foresee this happening, and so did not add code to address this". – sharur May 25 '21 at 16:26
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    @sharur: There's also "The tool makers don't make a lot of money from Venezuelan clients and therefore don't care if data from Venezuela looks funny." – Kevin May 25 '21 at 17:44
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    @Kevin I'm less cynical, but then I am a software developer. So from my "in the trenches" point of view, its more of a "handling this wasn't in our requirements" thing than a "we did the cost benefit analysis and decided against it" thing. – sharur May 25 '21 at 18:43
  • @Barmar More of a reverse split. – Acccumulation May 25 '21 at 21:51
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    @sharur: For the programmers in the trenches, yes, it’s “it wasn’t in the requirements”. But those requirements come from somewhere, and the people setting them probably either did a cost-benefit analysis and decided against it, or else it was never big enough on their radar to merit a cost-benefit analysis at all. – Peter LeFanu Lumsdaine May 25 '21 at 22:23
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    I wonder how many automated software trade bots either bought or sold after that change. It possibly wasn't in their requirements either. – Thomas Weller May 26 '21 at 11:15
  • @PeterLeFanuLumsdaine If I had to bet on "things fall downwards when dropped" vs "people gathering requirements didn't think of something", I will pick "people gathering requirements didn't think of something" every time. It's more likely that I forgot that I'm in outer space than that the requirements people really thought of everything (even big, obvious things, much less something really weird). – user3067860 May 26 '21 at 17:49
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    @PeterLeFanuLumsdaine I so wish you were right. Alas I would be quite surprised if this clean, rational kind of decision making accounted for more than 30% of requirements that landed in my teams' buckets over the years. – spectras May 26 '21 at 20:06
  • @ThomasWeller professional bots have safeguards against things that fall out of their model. They would typically react by de-risking - possibly going flat - and alerting a human operator. – spectras May 26 '21 at 20:11
  • It may not be the absence of a software feature, but the absence of data entry. This is a future event, and without inserting the (reverse) split data in the database it produces the same result as not having the feature. – André LFS Bacci May 27 '21 at 16:19