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Automated News Crawling Evaporates $1.14B

Posted by kdawson on from the who-shall-watch-the-watchers dept.

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.

24 of 546 comments (clear)

  1. BEHOLD.... by Jaysyn · · Score: 5, Funny

    ... the power of the GOOG!!

    --
    There is a war going on for your mind.
    1. Re:BEHOLD.... by Anonymous Coward · · Score: 5, Funny

      The story begins in the summer of 1995 when a Standford graduate student finds himself -- without a suitcase -- pacing back in forth in front of an empty United baggage carousel at 4 AM. ....

      That graduate student's name: Sergey Brin.

      And, now you know "the rest of the story".

      With apologies to Casey Kasem.

    2. Re:BEHOLD.... by cthulu_mt · · Score: 5, Informative

      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.
    3. Re:BEHOLD.... by larry+bagina · · Score: 5, Funny

      That's an honor usually reserved for /.

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

    4. Re:BEHOLD.... by Shade+of+Pyrrhus · · Score: 5, Informative

      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.

    5. Re:BEHOLD.... by Thelasko · · Score: 5, Funny

      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.

      Hmmm... Quick! Everybody click this link!

      --
      One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
    6. Re:BEHOLD.... by dpb42 · · Score: 5, Insightful

      Automatic trading applications take their inputs from Beta software?

  2. Holy crap. by Anonymous Coward · · Score: 5, Insightful

    When you're talking about numbers like that then there is definitely a responsibility somewhere to try to prevent it happening again.

    1. Re:Holy crap. by Underfoot · · Score: 5, Insightful

      If the interactions were truly due to automation and not active stock manipulations, then I think the responsibility lies in the investor who was stupid enough to use automation and "triggers" to place their trades. That said, I am sure anyone who day traded today made a bundle of money if they hit the swings right. The market has become emotional, and often lacks reason. A lot of it comes from things like "lack of research" and making the market a pure number / target / trigger driven game that the hedge fund can sell you in their little black box.

      Wild. That's all I have to say.

      --
      I mentioned tinker-toys once in a post - now I'm modded down for life.
    2. Re:Holy crap. by jandrese · · Score: 5, Interesting

      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.
    3. Re:Holy crap. by Obfuscant · · Score: 5, Insightful
      Should online newspapers have fact checkers on every article they put online?

      Abso-fracking-lutely.

      Along with the right to a free press comes the responsibility to be right. Most newspapers ignore the responsibility while hiding behind the right.

    4. Re:Holy crap. by Whatsisname · · Score: 5, Insightful

      Why is outlawing them even remotely necessary? It is the responsibility of the investor to make sure their tools are functioning properly, and noone elses.

    5. Re:Holy crap. by lgw · · Score: 5, Insightful

      "Program trading" only sometimes refers to anything automated. The name doesn't imply "computer program", merely a set of rules to be followed upon certain events. Computer automation adds little to the problem - people reacting to the news flash with orders to trade on such news will screw up just as badly, and almost as fast.

      Being the first to react to news has *always* been a way to make money in the stock market, and in todays world where news speads at internet speed, staying ahead of the public spread of fresh news requires acting before there's time to use any sort of judgement.

      If your not comfortable with this sort of crazy BS, investing in individual stocks is not for you. IMO, investing in individual stocks is a mistake for anyone tht doesn't do tht full time, and most who do (to judge by the track records of most indivdual money managers, hedge funds, and even mutual funds).

      --
      Socialism: a lie told by totalitarians and believed by fools.
    6. Re:Holy crap. by homer_s · · Score: 5, Insightful

      How about outlawing automated trading programs? sounds like a solution to me.

      How about letting stupid people lose money? Sounds like a better solution to me.

    7. Re:Holy crap. by timeOday · · Score: 5, Insightful

      I fail to see the problem. Some investors jumped the gun and sold stock that was worth more than they sold it for, because they relied on bad information. The fact that they used automated systems to do this is irrelevant. There was no deception here; anybody could have checked the story themselves in a few seconds and realized what happened. So, you can always be first, or always be right, take your pick. Let the market choose a tradeoff between speed and accuracy.

    8. Re:Holy crap. by jstott · · Score: 5, Insightful

      If your not comfortable with this sort of crazy BS, investing in individual stocks is not for you.

      That's not investing, that's gambling (aka speculation).

      -JS

      --
      Vanity of vanities, all is vanity...
    9. Re:Holy crap. by SatanicPuppy · · Score: 5, Insightful

      If you're in it on a "timely" basis, you're doing it wrong.

      The playing the margins crap only works if that's your job. Otherwise you need to diversify, pick decent stocks, and stick to time windows of at least a week.

      And I'll tell you this for free. People who are wealthy aren't playing the stocks minute by minute. They're wealthy because they play the long game. Right now they're picking up bargains whenever the market drops, and they're holding on to them for when the market evens back out. It's the scrubs who are panicking and losing their shorts selling stocks based on rumor.

      --
      ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
  3. Next time... by Timothy+Brownawell · · Score: 5, Funny

    ...perhaps they'll be more careful about whose luggage they lose.

  4. This is too awesome by theverylastperson · · Score: 5, Funny

    I laughed so hard my coworkers made me go outside.

    I love Google.

    --
    ed duval the very last person
  5. that'll teach you. by sammy+baby · · Score: 5, Funny

    "I'm sorry, Mr. Schmidt. Your flight has been delayed by two hours."

    "Son of a... do you people know who I am? Dammit, get Brin on the phone."

  6. Re:It's clear. Automated trading programs are moro by powerlord · · Score: 5, Insightful

    Time to stop using you xBox to run your financial empire, kids. Get the grizzled old traders back and fire the children.

    Never happen.

    Every brokerage house in the country is increasing their presence in "Automated Trading". The majority of these companies income is now made on small percentage point fluctuations brokered very fast. With the automated systems pulling in that much more money than the traditional ones, and with more algorithms being designed (and held as proprietary info), what would YOU do?

    Ridiculous? Yes. Not going away? Also Yes.

    Might as well vote to bring back the horse drawn carriage since the price of gas has risen so much lately.

    --
    This space for rent. All reasonable inquiries will be entertained at proprietors discretion.
  7. A lot of people's fault, mostly NOT google's by porkThreeWays · · Score: 5, Insightful

    After reading TFA, it sounds like google is LEAST to blame out of the many many automated systems involved. First of all, the damn story should have been dated. That's the tribune's fault. Google doesn't seem to have claimed it as today's news, only ranked it high up. No one should have ever reprinted the story without actually CHECKING WITH UNITED AIR FIRST. That's neither google nor the tribune's fault. That's every service that reprinted the story as new without verifying its fault. Google and tribune seem least at fault because neither ever gave any indication it was a new story.

    --
    If an officer ever threatens to taze you, say you have a pacemaker.
    1. Re:A lot of people's fault, mostly NOT google's by arcmay · · Score: 5, Insightful

      From the article:
      "the UAL story began circulating widely via a posting by research firm Income Securities Advisors Inc. that was made available to users of Bloomberg L.P., the financial-news service widely watched on Wall Street."

      Some analyst at a research firm made a big deal about the outdated article, after seeing it on Google news. THAT PERSON is the point of failure.

      If you blame Google for this, you might as well blame Google for anyone posting any erroneous information they found after doing an internet search.

  8. Hello? Is this thing on? by szquirrel · · Score: 5, Interesting

    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.