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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.
Google News crawled an obscure reprint...
The story was then picked up by other news aggregators...
This triggered automated trading programs...
Is there even a live person at the wheel anymore? Or is SkyNet just fucking with us now?
Never approach a vast undertaking with a half-vast plan.
Who's responsibility though? Should Google have people fact check every news story their bots pick up before putting it up on the aggregator? Should stock companies put fact checkers between the newsfeeds and their stock sale bots? Should online newspapers have fact checkers on every article they put online?
This does show just how fragile a system can be when there is a strong disincentive to going second or third on tasks that one would normally think you should have human interaction.
I read the internet for the articles.
I'm curious about the trading bots. Were the trading bots dumping the stock in 2002? So, if this story were *current* would the bots have simply destroyed UA?
Under the influence of Post-Cyberpunk Gonzo Journalism
Ouch.
That said, are automated trading systems going to be this decade's great Ponzi scheme? I can't believe so many people can be so lazy with their investments to send the stock tumbling that much.
It looks like the ones who'll ultimately get burned from this are are those who are careless with their money. But how soon before people take advantage of viral networking to manipulate Google's algorithms for determining popular news, bring up old doom and gloom articles to intentionally tank a stock so they can buy while it's cheap?
Charisma is the measure of someone's ability to lie with a straight face.
How and why would a 5-year old story about bankruptcy suddenly get "voted up" in at the South Florida Sun-Sentinel so that news aggregators (and google-bot) would pick it up? Sounds very suspicious to me.
So are you telling me that I could set up a "click-bot" to vote up old-news and make myself rich in the ensuing mayhem?
Wow. Take a look at Monday's trading history for UAUA. Look at that drop. And notice that it happened on huge volume; several hundred million dollars changed hands within fifteen minutes. It wasn't just a few traders running the price down in light trading.
The stock hasn't come back all the way. It's still down 20% for the week.
Here's the newspaper page that started it all, as archived by Google.
Another point that no one seems to be picking up on is the problem of a lot of news sites neglecting to include a dateline on their stories. I've run in to this a number of times, and it makes it difficult to determine the relevance of a given story. It's a very simple thing to include the date the story was published, but a lot of sites don't seem to bother.
I don't care why you're posting AC
Yep only if these stupid people are not these who manage your pension fund ? Because they are of these who use this kind of software...
When a blip at a local Florida newspaper can combine with a trivial bug to destroy a major American airline in a morning, the economy and the "reporting" that the economy depends on is revealed to be a giant joke.
This episode was remarkable because it was huge, fast, and concentrated in a single high profile corporation. But how much of this broken system's smaller problems go "unnoticed"? Unnoticed as problems, at least, but showing up in all kinds of market valuations and economic decisions based on them that are all built on a landscape of errors, omissions and misunderestimations?
How can you trust an economy that makes mistakes like that? Anyone smart would find any alternative that's less crazy and put their money into it.
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make install -not war
That's not how the systems work.
It's PEOPLE who decide to dump stock based on the headline. Dumping stock makes the price go down. The SOFTWARE part of the story is called a "stop-loss order", which is an automatic "sell" order based on stock price. The theory, which works in practice, is that dumping a stock that has lost 50% of its value (or some other trigger level) will prevent a complete loss of money on that stock. Half of what you had is better than 10% of what you had.
It replaces the need for someone to sit at the computer monitoring the stock prices every minute of the day. It also prevents the time delay (and loss) for someone who does monitor prices every minute having to enter and execute the sell order.
If they need something, perhaps going after those companies for artificially deflating the stock's value would be the best course. It's not like this couldn't have happened with humans.
That's right -- the source of the story should be liable. And it's not like this couldn't have happened with humans, because it started with humans.
Now, as someone else commented, it's day trading (or short term) that causes this kind of thing. If you buy stock and sit on it (not literally), it will usually go up. My $5 Sony stock has split once and is much higher. Of course, I bought it 30 years ago. And only ten shares. Sigh. It's been higher than it is now, but it's still higher than when I bought it.
This kind of information tempts one to say "make a law" that all stock bought must be held for six months before it can be sold. That's still not a solution. It will just move the problem over to options, and keep short term money out of the market, making it smaller.