Slashdot Mirror
Automated News Crawling Evaporates $1.14B
cmd writes "The Wall Street Journal reports that Google News crawled an obscure reprint of an article from 2002 when United Airlines was on the brink of bankruptcy. United Airlines has since recovered but due to a missing dateline, Google News ran the story as today's news. The story was then picked up by other news aggregators and eventually headlined as a news flash on Bloomberg. This triggered automated trading programs to dump UAL, cratering the stock from $12 to $3 and evaporating 1.14 billion dollars (nearly United's total market cap today) in shareholder wealth. The stock recovered within the day to $10 and is now trading at $9.62, a market cap of $300M less than before Google ran the story." The article makes clear that Google's news bot only noticed the old story because it has been voted up in popularity on the site of the South Florida Sun-Sentinel newspaper. The original thought was that stock manipulation may have been behind the incident, but this suspicion seems to be fading.
Slashdot Idle had this story 24 hours before the main page.....
"I planned within my means and got a fixed rate mortgage, so where's MY bailout?" -cafepress
Money doesn't just evaporate, I'm sure it's still somewhere!
I agree. I worked a lot with stock trading management software, but I didn't know about automated ones that would buy/dump stocks over news items. (The one I worked on would simply analyze a set of rule and then dumped a recommendation, with all of its reasoning and justifications, that a human then reviews, check/unchecked their modification, and then ran -that- through automated trading systems).
Doing it 100% automatically just sounds crazy to me. Especially if its based on uncontroled, automated -news- for christ sake.
The stock was down only very briefly, presumably as other automatic programs (or maybe even the same ones) triggered a BUYBUYBUY! when the stock dove like that. The price was $11.71 at 10:56am, then the stock price bottomed out at $3.72 at 11:00am, then bounced back to $7.28 at 11:04am. Someone paying close attention could have made quite a nice pile.
upon the advice of my lawyer, i have no sig at this time
And, now you know "the rest of the story".
That's Paul Harvey's tagline, not Casey Kasem.
Virginia is for lovers. EVE is for griefers.
I think you mean Paul Harvey.
No big deal. It's not like you reported a six-year-old story as if it were a current event.
I don't care why you're posting AC
You're confusing the common stock with the company. UA destroyed UA. The common is *supposed to* go to 0 when a corp goes bankrupt - the bankruptcy proceedings are a way for the company to survive or at least pay off senior debtors, but junior debtors get nothing.
Socialism: a lie told by totalitarians and believed by fools.
So...they're evil because their crawler posted a recently placed news article that didn't have a published date? Or are they evil because the automated trading applications grabbed it and ran to the bank?
On all ends it was a failure of new technology, but what really caused all of the $$ to fly was human error: no one at Tribune put a date on the initial article, no one (or at least quickly enough) from Google put a date on the crawled article, and the stock investors didn't look carefully at their applications.
Seems like there is an opportunity to create a purely online stock exchange, where all subscribers trade on equal terms?
Seems like there's at least one purely online stock exchange. Though that may not mean internet, and I'm not sure about equal terms.
(T>t && O(n)--) == sqrt(666)
_Debt of Honor_ - Tom Clancy
It also involved a easter egg in the trading computers.
Oh, I disagree; you can invest in individual stocks without the crazy BS, as long as you don't attempt to day-trade (that is, to make short-term profits by timing the market).
Even a huge price fluctuation like this barely registers with me, because I only look at my stocks' performance about once a quarter. (If that.)
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
What it comes down to is that readers of an expensive Bloomberg news service saw a news story that free google news algorithm broke. Bloomberg looses more face here than anyone... don't they check their sources?
I am a v1ral sig. Plse c0py me and h3lp me spread. Thank y0u?
The implication seems to me to be that an automated trading program made a decision that an actual human trader wouldn't have. In fact, automated trading programs typically make the same decisions that human traders do, they just make them faster. A trader who sets up an automated trading program typically will set the program up to do just what he himself would do; he just wants to gain some leverage from a decrease in lapsed time before the order gets placed. Without automated trading programs, the same problem might easily have occurred as human traders read the flash from Bloomberg.
Full disclosure: I work for a company that produces automated trading software.
No, newspapers mostly publish AP and their own stories. Even so, fact checking is a responsibility that goes with any "newspaper" that wants the right of a free press to apply to them.
Ask yourself, how long could Slashdot go with an automated submission editor?
Slashdot is not a newspaper. Slashdot is a news concentrator and comment board. Every article in /. has, or ought to have if it doesn't, a source link that takes you to the source. Further, there are a large number of people who are ready, willing and able to post immediate "that's crap" comments, while online newspaper response comments are slow to appear, if they do at all. You have to get past the newspaper censor, who, for our local newspapers, seems biased against any comments that point out factual errors in the newspaper. (I posted THREE comments describing why a recent article about this HHO gas-milage aid stuff was physically impossible, but the paper had reported how well it works and needed to protect its own image. None of the three made it online.)
Yes, my local paper has links to the AP for other stories, but anything they run under their own name has no links. I expect those stories to be fact checked, but I know they are not. It is the same old story: read an article in a newspaper about something you know, you'll realize how wrong they get things, but read an article about something new and you'll assume they know what they are doing. Why do we do that? What part of human nature causes us to trust things we know are inherently untrustworthy?
And they don't, because that's not even possible. Many humans read the story, each thought, "Hmm, bad news for UAL, good time to sell," and the wide selloff caused a quick drop in stock price. That quick drop is what set off the automated systems, some of which aren't discretionary -- i.e. even if a human had been in the loop they would have been required to take the same actions. Think margin calls, for example. The automated (or mandatory) reactions to the quick drop caused a further drop, until the sell pressure was balanced by buy pressure from bargain hunters.
Sleazy market manipulation like that happens all the time. Usually most of the money sees right through the scam and it doesn't have much effect.
Unfortunately, we're not letting that happen... That's why the government is bailing out Fannie Mae & Freddie Mac.
Look at the trend for UAL, and you'll see that it was going down anyways. I don't think the blip caused by the error made nearly as much difference as the WSJ article would lead you to believe.
Wrong! A great many stock markets throughout history have been wiped out completely, usually through war and invasion.
And they don't, because that's not even possible
That's not true. The hedge fund "black boxes" and the "advanced trading platforms" available from some brokers and trading groups let you base automated trades on news tickers. A bloomburg ticker with "UAL" or "United Airlines" closely associated to "filled for/going into", and "Bankcrupcy" would certainly kick off a lot of these automated trade systems. As would "missed earings by" > x. I agree, once the sale was on, "stop-loss" targets and margin-caps caused it to continue its slide, but the news ticker trades are real and do exist. (This is in large part due to the fact the news generally breaks on the tickers and starts the trading long before any numbers or flags show up in a stock database or report).
I mentioned tinker-toys once in a post - now I'm modded down for life.