The Dow was off 998 points at its worst level yesterday, but that was not valid. The 30 Dow stocks did not fall anywhere near that much on the NYSE. For example, Procter and Gamble was 61 on the NYSE when the exchange slowed trading for 90 seconds to keep an orderly market. Electronic exchanges continued trading, but since there are few bids under current prices in those markets automated selling programs kept hitting the bids again and again. In the case of PG, in 90 seconds it fell to 39. When trading re-opened on the NYSE 90 seconds later, PG was 60 or so. That 21-point slide to 39 in one stock took between 160 and 200 points off the Dow. The same happened to MMM, another Dow stock. Many of those trades will be broken. During those few minutes there were eight stocks that traded down to one penny. Accenture fell from 41 to zero. So did Centerpoint Energy and Excelon. The SEC will look into this. The NYSE performed well; the electronic markets did not. Rules don’t apply to them. That has to change.

The Dow’s closing level (off 347) was legitimate and reflects to some degree a concern for foreign debt and where we’re headed, but that is a convenient excuse. It was mostly profit-taking. The panic — to the extent that is the right word — was in the bond market. I saw it begin the day before. Most bank trust preferreds trade lightly, so a little selling with market orders can knock prices for a loop. For example, the JPMorgan issue (J) fell from 25.15 to 19.28 before rebounding to 23.50. Most fell 10-15 percent at their worst. All then rallied, some even closing higher for the day. TEI, the Templeton Emerging Market Income fund, fell a point from 14, but in electronic markets the low was 6. The NYSE low was 11. Again, the electronic markets with little liquidity did not perform well. Many of those trades should be broken.

We have not heard the end of this. Late yesterday there was a report that a trading firm sold 16 billion index futures contracts instead of the intended 16 million. That caused the 15-minute slide of 700 points, mostly away from the NYSE where markets were orderly. Something has to be done to put people back in charge, not computers. Firms that do high-frequency trading can enter between 10,000 and 20,000 orders in the time it is taking me to type one character on this e-mail. Chaos ensued yesterday. We’ll see it again. It was a similar story in 1987 on what was the best buying opportunity of our lifetimes, one created by program selling.

Yesterday’s lows, to the extent that they are trades that hold up (many won’t), will be at prices not likely to be seen again. That is surely the case for P&G, Accenture, Centerpoint and others. Also true for income vehicles.

The long-lasting impact of what happened yesterday is to further turn off ordinary investors, many of whom believe the deck is stacked against them in an insider’s game. Just what they’ll invest in remains to be seen. For now many are buying bond funds. Not a good idea. Others are buying Treasurys and selling the euro and pound. Treasurys are not a good bet at all. They are rallying as a safe haven, that’s all.