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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.'"
Looks like Kraber wasted a lot of time, effort, and electricity and has nothing to show for it but 'TFA'.
I find that Marketing departments are completely unfit to provide a secure platform for fun & just competition.
It usually is a very talented guy, who however has his focus on the looks, not the engine.
I once, for curiosity's sake took part in one contest. Scoring poorly, I began to analyze the inner workings of that FLash site.
I have quickly found that the answers to the trivia question were stored in plaintext in my browser cache!
I notified the organizers, but no actions were taken, I also soon began to notice how people bagan to score more than it was possible according to the game's rules.
Eventually, they didn't change a thing, except banning people beyond certain score, in the end all my friends got the prizes, CD players, cups etc.
One year later there was a new contest, almost identical glitches, this time however I decided not to get my friends in trouble, just in case.
Capitalizing on real software glitches is something that happens frequently on more volatile markets like the foreign exchange (fully automated since for retail brokers since 2000). Once the cat gets out of the bag however, the immense loss of the brokers (who usually automatically place orders opposite the sheeple, who are expected to lose on average) causes an alert. Nobody can fool the money markets on things like this for too long.
On the other side, automated trading means that brokers can engage in dirty practices like sending incorrect data to a particular client connection to trigger a trade (they call this stop hunting). Again, this is found out when clients compare data streams from more than 1 broker.
Dangerous stuff. If you are good, try to stay invisible.
ccalam - acoustic versions of new songs.
Seems Kraber was certainly violating the spirit of the contest, if not the letter. Relying on 1600 portfolios and the law of averages to "win"? Seems like he's pissed that somebody else found a better, easier way to cheat.
The fact is, no matter how calculated a risk is... some people have more information at hand when doing the "calculations." Therein lies the profit making opportunity for the other trader, on the back of this first guy.
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.
Apparently you are unfamiliar with hedging. Shorting can be used as a mechanism to eliminate certain types of risks depending upon the relationship between two assets. Of course there are other hedging mechanisms that can be used in a similar role, such as options and futures, but shorting may be the specific thing you want. Futures require a margin account as well, but you'd be sort of silly to complain about their existence. I'm sort of curious what your opposition to speculators is rooted in, as the "taking money from people who produced it" talk doesn't seem very meaningful in general.
"Imagine, right... nononono, listen, listen. Just imagine... if all this was real money!!!
This has the same kind of feel to it.
And I have to ask, if the guy's prepared to spend 12 hours a day doing this with "Monopoly money", even sacrificing his professional accreditation studies in the belief that he might end up as the best market-player in over 300,000 and win $1m... why the hell isn't he just playing the stock-market??
Meta will eat itself
From: Mark Hoffman, CNBC, Inc.
Steve Ballmer, CEO Microsoft Corp.
To: Jim Kraber
Re: Software Glitch
Dear Mr. Kraber,
I regret to inform you that, after a thorough investigation of the alleged trading irregularities by independent Microsoft software engineers, we have determined that the perceived trading irregularities were not the result of a software 'glitch' or 'bug', but were in fact security features.
We sincerely apologize for any inconvenience this may have caused.
-Mark Hoffman
Steve Ballmer
Knowing Google's lust for data collection, the Soviet Union is still alive and well inside the psyche of Sergey Brin....
This reminds me of an old email/fax scam trick. You start sending 1600 messages to people on a stock that's going to have big news the next day, either very good or very bad, no one knows. To 800 of those people, you say it will be good, and the other 800, you tell them it will be bad. The next day, you take the 800 who you predicted the right answer for, take another stock with big news coming out, and 400 of those people will end up with the right answer. Then 200, and on the 4th day, 100. Now for those 100 remaining people, you send a message saying that you've been giving valuable stock picks for the past 4 days and how much would they be willing to pay for your tips. The moral, everyone is a winner when your losers don't count. If you were hoping to find a good stock trader from this contest, this wasn't the way.
As for the bigger picture, I'm not a fan of "trading", though it does have it's place. I'd rather use the market for long term "investing" and doing something that provides value to the world with the rest of my time. But just like with power and politics, money corrupts, so we should expect that people will abuse the system and just do our best job ensuring we aren't the ones they are abusing.
Even though some people have access to rumours earlier and have a better circle of friends, you can get yourself a Bloomberg and Reuters terminal and here you go you will have the same real-time news than the other traders !
...
It often comes down to the fact that some people are better at spotting/evaluating opportunities
Don't you know it is now both immoral and criminal to think beyond the next quarterly report?
42-years old and spending 12 hours a day playing a stock trading game. Wasn't there an MMO he could be applying himself to instead?
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
The Higher Criticism, which started out in Germany in the 19c with the aim of establishing a definitive chronology of Biblical events, laying out exactly what the historical evidence for them was, and to data all the various books, used this as a criterion. Scholars still do.
The rule is that if some publicly dateable event is clearly forecast in a text, the text was written after it. How long after is a question. Hume made a similar point. Miracles are by definition violations of natural law. To the extent that they are miraculous, it must be more probable that the natural law held and that either experimental conditions were not correctly reported or the story is false. So they end up either not having happened, or not being miracles.
Funny to see this stuff coming up in exactly the same reasoning about stock market predictions....
Keep all of your decision-making on the server where it belongs. Let the client be a view to the server, and validate input. But don't trust the client with any control of the process. It only results in problems like this.
My roomate found out at a certain sports book online they had a bet on the Kentucky Derby that paid some good odds, like 100-1 if you just clicked on the random selection button, instead of choosing horses. The trick was you just keep clicking it, sure you got some crappy horses, so he would obviously lose $20 on those cards, but just keep clicking it, eventually you would get one of the favorites, and instead of the regular 2-1 odds, you got the 100-1. So that $20 x 100, got him $2000, minus the crappy betting cards he had to get. The next race they got rid of the random betting button :)