Slashdot Mirror

← Back to Stories (view on slashdot.org)

Knight Trading Losses Attributed To Old, Dormant Software

Posted by Soulskill on from the they-set-themselves-up-the-bomb dept.

New submitter alexander_686 points out a Bloomberg article about the cause of Knight Capital Group's $440 million algorithmic trading disaster from a couple weeks ago. The report says a dormant software system was accidentally activated on August 1, which immediately began increasing stock trade volumes by a factor of 1,000. The Wall Street Journal has further details: "Knight Capital Group Inc.'s accidental trades earlier this month were triggered by a flawed upgrade of trading software that caused an older trading system connected to the computer code to inadvertently go 'live' on the market, according to people familiar with the matter. The errors at Knight on Aug. 1 involved new code the Jersey City, N.J.-based brokerage designed to take advantage of the launch of a New York Stock Exchange trading program, which was introduced that day to attract more retail-trading business to the Big Board, the people say. ... When NYSE Euronext trading floor officials called Knight at about 9:35 a.m. to try to pinpoint the cause of unusual swings in dozens of stocks, just after the Big Board opened for trading, Knight traders and their supervisors had a difficult time detecting where in its systems the problem was located, say people familiar with the morning's events. The NYSE had to call Knight several times before deciding to shut the firm off, the people say."

53 of 223 comments (clear)

  1. The NYSE shouldn't reverse trades. by Thantik · · Score: 5, Interesting

    They really need to stop giving these high frequency traders these parachutes. You screw up your algo, its your own damn fault. Lost your butt on the market - oh well.

    1. Re:The NYSE shouldn't reverse trades. by MrEricSir · · Score: 4, Insightful

      The problem with that is these Wall Street companies have their tentacles everywhere. Whatever pleasure we'd get watching them crumble is nothing compared to watching our retirement savings drop to zero and millions of people losing their jobs.

      "Too big to fail" and free market capitalism are fundamentally at odds.

      --
      There's no -1 for "I don't get it."
    2. Re:The NYSE shouldn't reverse trades. by ThatsMyNick · · Score: 4, Informative

      This is not high frequency trading. Google it to learn what it is.

    3. Re:The NYSE shouldn't reverse trades. by trout007 · · Score: 3, Interesting

      You really don't know what you are talking about. Sure the market can get volitile but most companies in the S&P 500 actually do have value. If you don't panic and cash out during the crash you will be fine. All of the financials in the S&P 500 are about 15%.

      If you are investing long term and are diversified these panics are a good time to buy.

      --
      I love Jesus, except for his foreign policy.
    4. Re:The NYSE shouldn't reverse trades. by Anonymous Coward · · Score: 2, Interesting

      Free-market capitalism itself needs some serious revision. Not the fundamentals of it (which are sound, as far as they go) but the pervasive dogmatic faith that markets can optimise *everything* and that money accurately captures "value" at all times, for all things. This is just one exaggerated example that highlights how absurd this dogma is. Neoclassical economics has overstepped its mark by a huge margin, to the point were the economic mainstream is desperate to continue pretending the hard science of economics (maths laced with a tremendous number of assumptions) supersedes all the soft social sciences, and is actually the final word on sociopolitical arrangements and indeed human well-being.

    5. Re:The NYSE shouldn't reverse trades. by rritterson · · Score: 5, Insightful

      The problem with that idea is that sometimes these high frequency traders also cause volatility spikes in the market, triggering other computer programs, and, sometimes, humans, to react as though the spurious trades were intentional.

      While I also loathe HFT as a scourge on the market, I think the NYSE's overall response is a good one: when abnormal trades occur as a secondary effect of other's mistakes, abort them.

      Note that the ca. $440 million loss Knight took was BECAUSE they couldn't unwind the bad positions they bought into. Goldman Sachs bought the entire block from them at a discount. Knight didn't get any kind of parachute.

      --
      -Ryan
      AUWYHSTOT (Acronyms are Useless When You Have to Spell Them Out Too)
    6. Re:The NYSE shouldn't reverse trades. by NatasRevol · · Score: 5, Insightful

      There's no short term guarantees in the stock market. If you're 70 and need cash, you shouldn't be in the stock market.

      --
      There are two types of people in the world: Those who crave closure
    7. Re:The NYSE shouldn't reverse trades. by TFAFalcon · · Score: 3, Insightful

      For everyone that looses money, some one else would gain it. If enough pension funds go bankrupt, then perhaps people will stop gambling with their money.

    8. Re:The NYSE shouldn't reverse trades. by Anonymous Coward · · Score: 2, Insightful

      Behead corporate executives for gross negligence, massive fraud, theft... Things regular people do and it gets them put in jail for half their life...

      And every company (that continues to exist) WILL NOT do these things.

      Make someone responsible if they want these massive paychecks.

      Right now nobody is responsible for anything.
      Theres always an excuse.
      It's always someone elses fault.
      Or the blame is spread so thin to so many there's nothing left to find.

    9. Re:The NYSE shouldn't reverse trades. by Chris+Mattern · · Score: 5, Interesting

      Where do you suggest one goes for short-term, no-risk investments? I want to go to there.

      Money-market funds. They invest in short-term Treasuries and top-rated debt. They try to be diversified, so even an unlikely nasty surprise won't nick you much. You won't get much of a return, but your money will be most likely safe (there's no absolute guarantees anywhere, but if the money market funds go south, there's not likely to be any safe place elsewhere). With current low interest rates, you'll probably make a return of less than 1%, though.

    10. Re:The NYSE shouldn't reverse trades. by Compaqt · · Score: 2, Insightful

      Wait, the NYSE was thinking of reversing trades? Which article was that in?

      Not only that, but by definition, if they reverse $400 mil of trades, they have to get that money from somebody else. It's not "the market" they'd be getting it back from, but specific investors and shareholders who sold their securities.

      Can they even do that? Force people to give money back?

      Or is it like Paypal where they're linked in to your bank account and can take money whenever they want?

      --
      I'm not a lawyer, but I play one on the Internet. Blog
    11. Re:The NYSE shouldn't reverse trades. by dave562 · · Score: 2

      Where did you read that the trades were reversed? Everything that I've seen says that Knight had to eat all of the bad trades. They ended up unwinding their trades to Goldman Sachs, presumably because GS can hold onto them long enough to wait for enough of them to turn positive at some point in the future.

    12. Re:The NYSE shouldn't reverse trades. by trout007 · · Score: 5, Informative

      I use a method by the late great Harry Browne he called failsafe investing.

      Here is the summary. Divide your investment into quarters.
      25% S&P 500 stocks
      25% 30 year Treasury Bonds
      25% 100% Treasury Money Market (If you can find one. They pretty much all went under after they put FDIC on money markets)
      25% Gold Bullion Coins

      As you save add your funds to the Cash (Money Market) portion.
      Every once in a while check the balances. If any gets above 35% or below 15% of your total portfolio re-balance it to 25%.

      The beauty of it is that when anything bad happens it is usually people running from one of these to another. This allows you to automatically buy low and sell high.

      I've averaged about 12% per year for the last 10 years. You don't get as good of a return long term as the S&P 500 but it's also less scary.

      --
      I love Jesus, except for his foreign policy.
    13. Re:The NYSE shouldn't reverse trades. by dreamchaser · · Score: 2

      They need to go one step further and just ban automated trading altogether. People make trades. Machines make transactions. As long as they call it 'trading' then it should be a human doing to button pushing.

    14. Re:The NYSE shouldn't reverse trades. by Compaqt · · Score: 2

      Well, if you're 70, you didn't just start investing at 69 and a half, right?

      If you're 70, you probably didn't start when you got your first job (25). But you should have started at 35.

      Failing that, you should have started at 40 when you first got the notion that you might not live forever, and your body first started showing signs of aging.

      You probably would have 66 times your money.

      --
      I'm not a lawyer, but I play one on the Internet. Blog
    15. Re:The NYSE shouldn't reverse trades. by ortholattice · · Score: 4, Interesting

      No kidding. Although it wasn't reversed in Knight's case, there have been many flash crashes that have been reversed, making it so that profit is almost guaranteed for HF traders: good bets go through and bad bets get reversed.

      I was personally affected a couple of years ago. I had an outstanding bid (limit order) on a stock at what I thought the stock was worth, although significantly lower than the going price, so I could pick it up in case there was a temporary drop due to negative news or whatever. The "whatever" happened; my open order got filled by HF traders due to a flash crash they caused in that stock. I got a call from my broker later in the day to tell me the SEC reversed the trades during that flash crash, including mine. So a few thousand dollars that by all rights should have been mine went back to the HF traders.

      The little guy can't win.

    16. Re:The NYSE shouldn't reverse trades. by Anonymous Coward · · Score: 5, Insightful

      Ah, that classic libertarian chestnut. If we just wipe out enough peoples' retirement funds, the problem will correct itself! Let me guess, you also think the FDA doesn't need to exist because if a bad drug kills a bunch of people, those people will just take their business elsewhere, right?

    17. Re:The NYSE shouldn't reverse trades. by Prof.Phreak · · Score: 2

      What folks don't usually realize is that most stocks already have about 20 years worth of growth and prosperity priced into them. With GDP not expected to make great strides, it will be a miracle if anyone will be able to extract more than 2% real return out of their broad index funds. Similarly, no sane small-shop or pizzeria owner would be satisfied with 2-8% return... the folks selling hot dogs on the street get a higher return on their money... and yet the biggest and most profitable corporations are so overpriced that even when they make a killing (e.g. hershey corp had 63% return on equity last year, which is very typical of them), the investors get crap compared to their purchase price.

      --

      "If anything can go wrong, it will." - Murphy

    18. Re:The NYSE shouldn't reverse trades. by ceoyoyo · · Score: 2

      No, some trades were reversed. They suffered, but not the full extent.

    19. Re:The NYSE shouldn't reverse trades. by whoever57 · · Score: 2

      Note that the ca. $440 million loss Knight took was BECAUSE they couldn't unwind the bad positions they bought into. Goldman Sachs bought the entire block from them at a discount. Knight didn't get any kind of parachute.

      Only partially true, or perhaps, partially false. Some of Knight's trades were reversed -- I think trades where the price was 30% off the normal range. So Knight did get a parachute, just a small one.

      --
      The real "Libtards" are the Libertarians!
    20. Re:The NYSE shouldn't reverse trades. by Anonymous Coward · · Score: 2, Interesting

      So we revoke the "person" status from corporations. They become tools at that point.

      And like any tool which is used in a negligent manner, those responsible are held accountable.

      The trouble with this plan is that every major corporation, and a large portion of their production--and thus jobs--and the associated tax revenues would likely leave the country. That would hurt. A lot.

    21. Re:The NYSE shouldn't reverse trades. by ad0gg · · Score: 2

      It should have AAA, rating is based on the likelyhood of default. US can print money to repay debt, that means there's no chance of default.

      --

      Have you ever been to a turkish prison?

    22. Re:The NYSE shouldn't reverse trades. by hairyfeet · · Score: 4, Insightful

      Uhhh...how EXACTLY are you gonna do that when there is a revolving door between the DC swamp and Wall Street? Why do you think we now have over 400% of our GDP in the market, which is nearly 3 TIMES more than right before the crash of 29? Because they go straight from Wall Street to the halls of power, get laws written that give them moar monies, and then walk right back over to Wall street and reap the rewards.

      I'm sorry friend but until the whole thing crashes and we become another Greece or Zimbabwe there is not a damned thing you, me, or anybody else can do about it, the amount of money concentrated into the financial market means they can light bags of money on fire and the government will hand them new bags and pay for someone to clean up the ashes and just hand you the bill.

      --
      ACs don't waste your time replying, your posts are never seen by me.
    23. Re:The NYSE shouldn't reverse trades. by Alex+Belits · · Score: 2, Insightful

      Yess!!! Because it's the companies that make things, and not people who work there!

      Morons. All of you.

      --
      Contrary to the popular belief, there indeed is no God.
    24. Re:The NYSE shouldn't reverse trades. by CodeBuster · · Score: 2

      when abnormal trades occur as a secondary effect of other's mistakes, abort them.

      I disagree. All trades should be final with no refunds, do-overs, or reversals. If the algo traders want to play with fire then it's their job to make sure that they don't get burned. They want the benefits of their high frequency trades without taking responsibility when their bets go bad. That's bullshit and the NYSE and other exchanges shouldn't allow it.

    25. Re:The NYSE shouldn't reverse trades. by Sc4Freak · · Score: 2

      That isn't true. The pure idiocy and stupidity rampant in American politics means that the US government can default, just like they came close to doing a while ago. That's why the rating on government bonds was dropped to AA - the fact that default was even being considered as a possibility is utterly mindboggling.

      Economically there's no reason why the government would ever default. Instead it's the pure unadultered retardation of the politicans in this country that have ensured that an investment that should be risk-free, actually isn't. And that's just so insane that I still have trouble believing that we actually managed to get ourselves into this situation.

    26. Re:The NYSE shouldn't reverse trades. by Sc4Freak · · Score: 2

      I use a method by the late great Harry Browne he called failsafe investing.

      Here is the summary. Divide your investment into quarters.
      25% S&P 500 stocks
      25% 30 year Treasury Bonds
      25% 100% Treasury Money Market (If you can find one. They pretty much all went under after they put FDIC on money markets)
      25% Gold Bullion Coins
      [...]
      The beauty of it is that when anything bad happens it is usually people running from one of these to another. This allows you to automatically buy low and sell high.

      So in other words it's like traditional portfolio theory except worse?

    27. Re:The NYSE shouldn't reverse trades. by datavirtue · · Score: 2

      No, if the FDA didn't exist doctors would be liable for prescribing shitty drugs. Now they prescribe willy-nilly because the liability is removed from their shoulders. The market can handle drugs, look at the "black market." Your argument is yet another fallacious stinky pile of ill logic. Prescribed drugs rank on the list of top killers.

      --
      I object to power without constructive purpose. --Spock
    28. Re:The NYSE shouldn't reverse trades. by TFAFalcon · · Score: 2

      If the US government defaults, then the stock marker will probably crash so badly that NO stock investment will be safe.

    29. Re:The NYSE shouldn't reverse trades. by Bengie · · Score: 2

      Assuming his facts are correct and his reasoning is sound, which to the uninformed person I am it looks to be on face-value, is it still considered "astroturfing"?

      I could see his dooms days prediction being a bit tin-foil-hatish, but the rest seems within reason.

      I'm not saying that he is absolutely correct, but if you understand more of what's going on, please point out the problem with his "facts" or his reasoning as you either have more insight or you're just attempting to discredit his claims with no logic to back your own claims.

    30. Re:The NYSE shouldn't reverse trades. by rcamera · · Score: 2

      though knight does hft, that wasn't the problem here. it was a simple 4.5 billion dollar balanced portfolio that the client wanted to trade as a 5-day-vwap. "buy these stock over 5 days, sell these other stocks over the same 5 days". a 5 day vwap is in NO way "high frequency trading". it's almost the opposite of hft. if i wanted to buy 200 shares at market every 3 minutes for 5 days, would you consider that hft? (i know that's actually twap, but good luck explaining vwap to this genius). the purpose is to minimize market impact.

      flipping stock was not what was intended, and not what happened.

      the frequency was not high - the volume per transaction was incorrectly multiplied by 1000. the bug was that the "200" in the example above was converted into "200,000". 200,000 shares at market WILL have an immediate impact on most stocks.

      --
      Wave upon wave of demented avengers March cheerfully out of obscurity into the dream
    31. Re:The NYSE shouldn't reverse trades. by operagost · · Score: 2

      How would you like it if the company you worked for made a mistake, and the victim sued YOU for it? That's what happens when you don't have a corporation.

      --

      Gamingmuseum.com: Give your 3D accelerator a rest.
    32. Re:The NYSE shouldn't reverse trades. by hairyfeet · · Score: 2, Insightful

      Old Alex is a "FOSSie" aka someone who worships at the feet of RMS who can do no wrong and ever since I showed him over a dozen links showing how truly batshit RMS is he has been following me, saying that I'm some sort of "M$ Ninja" sekrectly hired to destroy his precious FOSS.

      Kinda sad, but FOSS does seem to attract a lot of nutters and maladjusted so there you go. watch the video and make up your own mind, please don't take my word for it. Right before the 29 crash we had 150% of GDP in the market, we are at 430% GDP and climbing now, that is simply unsustainable, it makes the entire market into Las Vegas East and it WILL fall down, just as it did in 29.

      --
      ACs don't waste your time replying, your posts are never seen by me.
  2. I keep laughing at my friends... by rsilvergun · · Score: 3, Insightful

    that say this stuff spells the end to high freq trading. The trouble is HFT is less about investment and more about skimming off the top. HFT Traders take a percentage of a company w/o ever actually owning it. The increase in liquidity is so small that legitimate investors don't even notice it (who cares if my stock sells in .1 milliseconds vs 5 minutes if it was an investment). No real money was lost for the HFT'ers because they were never actually creating anything productive in the first place. They'll recover from this and continue to be yet another bloated tick on the face of capitalism.

    --
    Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
    1. Re:I keep laughing at my friends... by jpmorgan · · Score: 4, Informative

      Liquidity isn't about time, it's about spread. Stock markets are double-auction systems, where you are free to bid and offer at any price you want. Trades only occur when someone offers a stock for less than someone else's bid price. The stock has a 'price,' and to buy stock you have to bid a little higher, and to sell you have to bid a little lower. The difference between the bid and offer price is the spread, and the spread represents an inherent transaction cost to most investors.

      Now liquidity is just how easy it is to convert your stock into cash. There is always some liquidity, as long as you're willing to accept a bad deal. You offer to sell your stock cheaply enough, or buy high enough, and somebody will buy or sell. Of course, on blue chip stocks, the spread has always been pretty small, so it has never cost a lot to trade in those stocks. But in medium-cap and small-cap stocks, where HFTs have had the biggest impact, they've reduced spreads enormously.

      Twenty years ago before the rise of HFT traders, you might had paid a market maker $0.50 / stock on the spread for a trade in a medium-cap stock. If you want to rebalance your investment portfolio annually, those kinds of transaction costs could wipe out your gains. It effectively priced individual investors out of the market, and if you wanted to save money you were forced into the hands of large institutional investors, who will happily charge you a 2% management fee for the pleasure of handling your money.

      Today we take it for granted that most stocks have very small spreads, and you can make regular trades without seeing all your gains lost to transaction costs. HFTs have put the Serious Men in Suits market makers out of business, and have pushed the cost of trading down to the point where the individual can manage their own savings, without having to fork over most of their profit to other Serious Men in Suits.

      So yeah, you may not like high frequency traders, but they're better than the old-boy networks of "specialists" and stockjobbers that they replaced.

    2. Re:I keep laughing at my friends... by ceoyoyo · · Score: 5, Interesting

      Twenty years ago it was also much harder to match up buyers and sellers, and actual trades took a lot longer. It's hard to say how much of the decrease in spread is due to high frequency traders and how much is due to improved technology providing a more efficient, easier to access market.

      Not that there seems to be anything particularly bad about encouraging people to buy long term investments.

    3. Re:I keep laughing at my friends... by infodragon · · Score: 2

      Knight Capital is not an HFT shop, they do not engage in HFT! Spend 30 seconds googling before you jump to conclusions.

      --
      If at first you don't succeed, skydiving is not for you.
  3. Dead Code by sconeu · · Score: 4, Interesting

    This is why mission critical systems should have a "No Dead Code" requirement.

    --
    General Relativity: Space-time tells matter where to go; Matter tells space-time what shape to be.
    1. Re:Dead Code by Compaqt · · Score: 2

      OK, but what could that have to do with the Knight situation?

      If there's no possible path (as opposed to an unlikely path), it'll never be executed, and hence it could not be responsible for the $440 mil loss, or the Toyota "brake failures" or whatever.

      --
      I'm not a lawyer, but I play one on the Internet. Blog
  4. Comment removed by account_deleted · · Score: 4, Interesting

    Comment removed based on user account deletion

  5. Should know better. by Sponge+Bath · · Score: 3, Funny

    Did nobody think to sound the alarm when the consoles started displaying... *BRAINZZZZ...* ?
    They probably sent IT techs into the server room one at a time.

  6. Re:As a Conservative by TapeCutter · · Score: 3, Insightful

    Since when was capitalisim a "merit based system"?

    --
    And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
  7. Stock trading robots are destroying the markets by hsmith · · Score: 4, Informative
    The Fool has a great article on this. You simply can't compete.

    http://www.fool.com/investing/general/2012/08/10/the-terrifying-graphic-that-shows-stock-trading-r.aspx

    ...the GIF charts the rise of HFT trading volumes across all U.S. stock exchanges between 2007 and 2012. The initial murmur, the brewing storm, the final detonation: Not just unsettling, it's terrifying. ... we don't know is [sic] what the long term consequences are of all this hyper-volume as depicted by the Nanex GIF and the kind of systemic risks created from the market's ongoing evolution from human traders to rapidfire AI. Sometimes things go wrong, a software glitch, an algorithm gone rogue and the music stops, like last week when Knight Capital (NYSE: KCG ) lost $10 million a minute when it's [sic] trading platform went haywire...

    1. Re:Stock trading robots are destroying the markets by jpmorgan · · Score: 2, Informative

      That is the most out-of-context thing I've ever seen on slashdot. You took the quote that the article was disagreeing with, and presented it as the article's thesis instead. For the curious, here's the final paragraph of the article linked:

      Whether increased participation from HFTs is a good or bad thing is up for debate, as is whether steps need to be taken to limit the activity of HFTs. And that's a debate that needs to happen, but it needs to happen based on solid facts and a good understanding of what's really going on.

      This particular graphic, however, was assigned meaning that was never actually there. To me, this suggests a high level of fear (whether warranted or not) of HFTs, a lack of understanding of what HFTs are doing, journalistic laziness, or, probably, a bit of all three.

    2. Re:Stock trading robots are destroying the markets by nedlohs · · Score: 2

      You should try citing articles that agree with your point rather than ones that pick your claim to pieces.

  8. When prod-1 != prod by michaelmalak · · Score: 4, Insightful

    This is what happens when the pre-production environment is not identical to the production environment. Got egg on my face (though no direct financial cost incurred) when the production environment had that 0.01 JRE increment that addressed the new-fangled daylight saving time, and the pre-production environment did not. It caused some very strange bugs due to the change in date handling, even though it wasn't anywhere close to spring forward time. (We developers had no access to the machine, so it took a while to figure out, too.)

  9. Re:As a Conservative by the+eric+conspiracy · · Score: 4, Insightful

    Yeah, with capitalism the birth lottery is often more important than merit.

  10. And great man once said... by smprather · · Score: 2

    You're fired!

  11. Mod parent down... by tomhath · · Score: 2

    Knight lost the money, there was no parachute.

    1. Re:Mod parent down... by rgbrenner · · Score: 4, Informative

      Knight lost the money, there was no parachute.

      You're right.. but how about some details?

      http://www.businessweek.com/news/2012-08-09/knight-says-it-may-face-more-burdensome-costs-from-trade-error

      Knight was saved from collapse on Aug. 6, when it received a $400 million cash infusion through the sale of convertible securities to a consortium of investors.

      Getco LLC, Blackstone Group LP, brokerages Stifel Nicolaus & Co. and TD Ameritrade Holding Corp., as well as Stephens Inc. and Jefferies Group Inc. invested in the rescue funding for knight, according to the Jersey City, New Jersey-based company. The investment will give the firms a 73 percent stake in Knight once the shares are converted into common stock.

      So there you go... they were forced to give away control of their company to a number of outside investors.

  12. Re:As a Conservative by tomhath · · Score: 2

    How is the stock market not merit based? Good companies succeed and are good investments for their owners.

  13. Re:As a Conservative by StormyWeather · · Score: 2

    Copypasta from the definitive study of millionaires. "Millionaire Next Door" by Thomas J. Stanley and William D. Danko

    Some Shocking Statistics about these Millionaires:

    -The average taxable income for them is $131,000
    -They live on less than 7 percent of their wealth
    -Many of their occupations could be classified as dull-normal such as: welding contractor, auctioneer, mobile-home owner, paving contractor, coin and stamp dealer
    -They invest on average nearly 20% of their household income
    -Most of them are homeowners (97 percent) and their average home value is $320,000
    -80% of millionaires today are first generation millionaires

    Everyone thinks millionaires are usually born that way, not really true at all. Most just save their way into it.

    If you are going to spew this stuff at least read some well researched books to back it up.

  14. Re:As a Conservative by ceoyoyo · · Score: 2

    You can argue that the end result of ANY system is merit based. Centrally planned monarchy? The king, or whoever controls him, must have gained and retained that ability by some merit.

    Capitalism, as a means of deciding what gets produced, isn't really a merit based system. Individuals will choose to invest in things for a wide variety of reasons. Some will succeed and others will fail. Warren Buffett might have gotten rich through intelligent investing, or he might have been in the right place at the right time. What will his heirs do?