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CNBC Software Flaw Worth $1 Million?
Strudelkugel writes "BusinessWeek tells the story of one obsessive fan who unraveled a software glitch worth one million dollars. Jim Kraber was a regular CNBC viewer, and when the opportunity arose he took the 'Million Dollar Portfolio Challenge' very seriously. At one point, he was spending 12 hours a day on the contest, using three computers to trade 1,600 different portfolios in a theoretical stock game. His efforts got him into the top 20 finalists, but in the last round of trading he noticed some unusual patterns. 'One trader had a stream of near-perfect picks, consistently placing huge bets on shares that soared in after-hours trading. Kraber suspected the trader and perhaps others were getting help from someone who was changing their picks after the stocks' increases — and he quickly notified CNBC ... Kraber says CNBC rebuffed him at the time, but now it looks like he may have been right.'"
Not true - according to the article, he won $10,000 for winning one of the first round weekly games that got him into the final.
ccalam - acoustic versions of new songs.
Margin is just taking a loan using your existing investments as collateral - nothing to get excited about there.
Personally I don't see what's wrong with shorting - it does provide some balance. Anyway, shorting has its place for regular investors also in the form of "shorting against the box" which means shorting a stock that you already own to lock in a profit - typically for tax purposes. e.g. Say it's December and you own a stock that has appreciated that you now want to sell but don't want to pay taxes for in the current tax year... so you short the stock in December (same amount as you own), then in January you close the short by handing over the shares you already own. What you've effectively done is get the December price, but not actually completed the trade until January, so you've got another year to pay the taxes on your gain.
Wow. I'm surprised this could still happen. Back in the 90s, there was a mutual fund that got ripped off by the same practice. Basically they would let you buy into the fund after the market close, and still get that day's price. Well you can guess what happened. People would watch the stocks that were in the fund and if they went up, they'd buy into the fund at the old price. Of course that ended up costing someone real money since the fund would then have to buy those stocks the next day at the higher price.
According to the artile, the only reason he believed he could win was because the contest allowed him to maintain over a thousand simultaneous portfolios and only the top scoring one mattered. His strategy was to take high risk knowing that most would lose but some would win big time.
If he was using real money he'd lose out over all but in this contest he's guaranteed to have one great portfolio. He had a very high chance of winning $1m for his efforts if the game had been more secure but only because he understood statistics, not because he made good stock picks.
The whole contest sounds terribly conceived given that not only is there this glitch that allows after hours buys at closing time prices, but the contest rules themselves can be gamed by this kind of many-portfolio strategy.
The $10K was for making it to the final 20. The weekly prize was a bunch of stocks. So its more then just the $10k.
Gamingmuseum.com: Give your 3D accelerator a rest.