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
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.
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
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.
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.
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.