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Nasdaq's Flub Shows Warren Buffett Is Right Again

Matt Koppenheffer
August 22, 2013

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For a good chunk of the trading day today, investors weren't able to trade stocks listed on the Nasdaq OMX Group's (NASDAQ: NDAQ) namesake Nasdaq exchange. No buying. No selling. No shorting. You couldn't even throw on some last-minute hedges using options. The exchange was simply shut down, and investors who owned a Nasdaq-listed stock -- like Apple, Google, or, um, Nasdaq OMX -- had to be content continuing to own it until the exchange opened back up.

While there are undoubtedly many folks intensely frustrated with this failure -- which is being chalked up to a computer glitch -- I can bet there's at least one investor that hasn't even broken a sweat. That investor is none other than Berkshire Hathaway CEO Warren Buffett.

Here's what Buffett has famously said about stock trading and the existence (or not) of stock exchanges:

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

In this day and age, there's little reason to think that an investor would be put in a position where they wouldn't be able to unload a stock for five years. But there is good reason to think exchange glitches like this aren't an unheard-of anomaly. A trading glitch at KCG Holdings (NYSE: KCG) -- formerly Knight Capital Group -- disrupted trading for hours on end and nearly wiped the company out. When Facebook (NASDAQ: FB) held its infamous IPO, computer issues at the Nasdaq caused massive problems at the open of trading. Of course, there was also the Flash Crash. And if you Google "flash crash," you can spend days reading about a variety of other smaller glitches and flukes.

You don't have to look