Tweet From Hacked AP Account Causes High Freq. Traders To Drop DOW 150 Points

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Tweet From Hacked AP Account Causes High Freq. Traders To Drop DOW 150 Points

Posted by Soulskill on Tuesday April 23, 2013 @08:11AM from the our-culture-will-eventually-collapse-due-to-an-errant-tweet dept.

New submitter Mike Lape writes "Stocks plunged and recovered within minutes after the hacked AP Twitter account sent out a tweet that indicated that the White House had been the victim of an explosion and that President Obama had been injured. '...the Dow Jones Industrial Average took a quick 143-point plunge, before recovering most of its losses within minutes. The three-minute plunge triggered by the tweet briefly wiped out $136.5 billion of the S&P 500 index's value, according to Reuters data. Interestingly, Tuesday has been the best day of the week for the blue-chip this year with an average return of 0.46 percent. If the index closes in the black today, it will have been up for the 15th consecutive Tuesday. The last time the Dow rose for 15 straight Tuesdays was in 1927.' An analyst said, 'That goes to show you how algorithms read headlines and create these automatic orders – you don't even have time to react as a human being.'"

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First for banning HFT by Anonymous Coward · 2013-04-23 08:12 · Score: 5, Insightful

It serves no purpose.
1. Re:First for banning HFT by noh8rz10 · 2013-04-23 08:14 · Score: 3, Interesting
  
  internet prank with stock market side effects, or intentional market disruption and subsequent gain? btw this is why I don't read tweets.
2. Re:First for banning HFT by interkin3tic · 2013-04-23 08:15 · Score: 5, Insightful
  
  How about we emphasize that it hurts productive industries and threatens the stability of the economy, rather than just say it serves no purpose. We don't want to discourage it simply because it doesn't help anyone but a few people, we want to discourage it because it HARMS the rest of us.
3. Re:First for banning HFT by msauve · 2013-04-23 08:21 · Score: 2
  
  You're apparently out of the loop. HFT stabilizes the market by adding liquidity, or so we're told.
  
  --
  "National Security is the chief cause of national insecurity." - Celine's First Law
4. Re:First for banning HFT by tnk1 · 2013-04-23 08:28 · Score: 5, Insightful
  
  And it probably does do that... but the stabilization is probably offset entirely by the strategies that the HFT algorithms use. In short, many of them are playing a meta-game of "this line will do that because lines usually do these things", as opposed to: "this looks like a good investment because it has good revenue and solid assets".
5. Re:First for banning HFT by AuMatar · 2013-04-23 08:29 · Score: 5, Funny
  
  Also, they aren't pissing on your leg- they're adding to your leg's liquidity.
  
  --
  I still have more fans than freaks. WTF is wrong with you people?
6. Re:First for banning HFT by Anonymous Coward · 2013-04-23 08:30 · Score: 5, Insightful
  
  But in this case, the HFT lost money while everyone else made money (those who bought at the cheaper prices). This may be a reason not to use HFT, but it's no reason to ban it.
7. Re:First for banning HFT by Anonymous Coward · 2013-04-23 08:34 · Score: 5, Insightful
  
  That goes to show you how algorithms read headlines and create these automatic orders
  No they don't. That would be the most stupid trading strategy ever imagined, you would loose your shirt in less time than you can say "Goolge translate".
  What happened is that actual people reacted to the news and the trading algorithms (not necessarily HFT, but trading bots) thought they hit a pattern and amplified the movement. Nobody lost anything except the bot herders that sold at -150 because they trusted their bots. I really can't see how that "hurts productive industries and threatens the stability of the economy" as you say.
8. Re:First for banning HFT by Opportunist · 2013-04-23 08:37 · Score: 2
  
  HFT is basically betting on race horses with incredibly fast horses. When this headline hits the news, that number will go up/down and hence we have to buy/sell.
  Incidentally, it does indeed do what the HFT algos predict. Self fulfilling prophecy. When HFT algos predict that the value will go up and buy, the value will go up...
  
  --
  We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
9. Re:First for banning HFT by llZENll · 2013-04-23 08:42 · Score: 5, Interesting
  
  We need a new exchange that only executes trades once per month. If a company is on this exchange it is not allowed to be on any other exchanges. Problem solved. If you need your money out early there is a small fee. No more flash crashes, much less speculation, invest in a company due to dividends and growth and not emotionally fabricated stock appreciation.
10. Re:First for banning HFT by TsuruchiBrian · 2013-04-23 08:49 · Score: 5, Interesting
  
  The problem isn't more regulations vs. less regulations. The problem is coherent system vs. incoherent system. You can have less regulation, but then you can't have bailouts. You can have bailouts but then you need more regulation. The problem of the recent financial collapse was that the system wasn't coherent. There was less regulation and bailouts, That's a recipe for disaster. The authoritarians blame the lack of regulations and the libertarians blame the bailouts. Neither is right or wrong. They just prefer moving to different coherent systems.
11. Re:First for banning HFT by ackthpt · 2013-04-23 08:49 · Score: 4, Insightful
  
  internet prank with stock market side effects, or intentional market disruption and subsequent gain? btw this is why I don't read tweets.
  It's very revealing in what sort of morons do and base their trading upon it.
  
  --
  
  A feeling of having made the same mistake before: Deja Foobar
12. Re:First for banning HFT by alexander_686 · 2013-04-23 09:03 · Score: 3, Insightful
  
  Headline algorithms exist and make a lot of money. They only have to be right 51% of the time to work.
  Mind you, most of the algorithms work off expected vs. actual earnings, revenue, or some other such number rather than the headlines. Of course, those numbers are released first and then humans write the headlines, but still
13. Re:First for banning HFT by NatasRevol · 2013-04-23 09:17 · Score: 4, Interesting
  
  My uncle-in-law retired early, and well off, by writing scripts that key off certain reports & keywords. Trades in before actual people can, then trades out after ~1/4% change.
  
  --
  There are two types of people in the world: Those who crave closure
14. Re:First for banning HFT by kilfarsnar · 2013-04-23 09:19 · Score: 3, Informative
  
  What happened is that actual people reacted to the news and the trading algorithms (not necessarily HFT, but trading bots) thought they hit a pattern and amplified the movement. Nobody lost anything except the bot herders that sold at -150 because they trusted their bots. I really can't see how that "hurts productive industries and threatens the stability of the economy" as you say.
  I'll just leave this here. http://247wallst.com/2012/12/04/high-frequency-trading-a-grave-threat-to-the-markets-and-the-economy/
  
  --
  "What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
15. Re:First for banning HFT by operagost · 2013-04-23 09:26 · Score: 2
  
  I'm sure that will be really convenient for people in retirement... or people who hit on hard times... or people who have stock in companies that are suddenly shown to have acted immorally.
  
  --
  
  Gamingmuseum.com: Give your 3D accelerator a rest.
16. Re:First for banning HFT by alexander_686 · 2013-04-23 09:35 · Score: 4, Interesting
  
  Let’s see, when France enacted their Tobin Tax, prices went down, liquidity went down, and volatility increased. And I have seen studies that argue the opposite.
  I don’t think a Tobin Tax is the answer. It is often put forward by people who are suspicious of the chaotic energy of the market and of wealthy people – suspecting it is just a game of no real value. I would say that you were treating the symptoms and not the disease – expect that I am not even sure what the symptom or disease they are trying to cure.
  Why not tackle the issue from the other end? For example, index long term capital gains to inflation. This would encourage investors to hold their positions for longer.
17. Re:First for banning HFT by jfengel · 2013-04-23 09:35 · Score: 4, Insightful
  
  Coherence is, I'm afraid, not really an option in a democracy. Every decision is a compromise, and it's not even the same people hammering out the compromise from year to year. The best way to get coherence is to put one person in charge, but the downsides of that are well known.
  We can try to design our system to be robust to the failures of democracy, though these days even that seems beyond our reach. We've grown so adept at blaming each other that even the flawed process of hammering out a compromise has become secondary to trying to get a brief moment in which to impose our will on our political enemies while they are down.
18. Re:First for banning HFT by CanHasDIY · 2013-04-23 09:43 · Score: 2
  
  Coherence is, I'm afraid, not really an option in a democracy
  Hence the reason this country is supposed to be a Constitutional Republic.
  Pure democracies suck.
  
  --
  An enigma, wrapped in a riddle, shrouded in bacon and cheese
19. Re:First for banning HFT by Fluffeh · 2013-04-23 10:14 · Score: 2
  
  I agree with this as well, but then that opens up another can of worms. You have these massive banks and generally "safe" investments for mom and pop share portfolios. They suddenly go belly up due to some badly placed trade. You have the option, let them fall flat on their face (and many nerds here would say that's the best thing to do) but the flipside is that if they do fall over completely, you aren't just punishing those bad traders, but you are punishing all the mom and pop investors. At that point, what is the lesser of two evils? Do you let the company fold as a "Well, you were the idiot..." and in turn pass that message on to all the investors - or do you try to tighten up regulations, save the company and tell them not to do it again?
  If it was as simple as a bunch of hot-head-traders being kicked out on the street, no brainer in my books, but it really isn't as simple as that. That's the whole point of "too big to fail". It means that if *this* company failed, then the knock on effect not only to direct investors, but also to the greater marketplace and economy in general might well be too great and it is better to throw money (ableit that no-one seems to have, lets print some) and make everything okay for the next few months and hopefully things will pick up.
  I personally think that the bailouts were a terrible lesson to the traders and the entire country (if not world) is paying for it now, but at the same time, I don't even want to imagine what would have occured had the bailouts not been given.
  
  --
  Moved to http://soylentnews.org/. You are invited to join us too!
20. Re:First for banning HFT by BrentNewland · 2013-04-23 15:17 · Score: 3
  
  >suspecting it is just a game of no real value A game in the way that pyramid schemes are games. The root purpose for stocks is to be paid dividends. You pay the company some money for a portion of ownership, and when they pay out to the owners, you get your cut. However, it seems that many companies don't do dividends, and that people buy stocks in the hope that they can sell them to someone else at a better price - eventually, that price drops, and someone loses money. Just like a pyramid scheme, someone is left eventually holding the bag. The article summary says "the tweet briefly wiped out $136.5 billion of the S&P 500 index's value", except that stocks have no inherent dollar value. When I buy $10 worth of stock from Google, Google has $10 and I have an IOU which may or may not be redeemable at face value. When I sell it to someone else, now I have money and they have an IOU. You can't buy anything with stocks, you can only trade them, and no one is required to buy them. So yes, the Stock Market is a game with no real value, only perceived value. You alter people's perceptions, those stocks are worthless. If you have $10 million in the bank and $1 billion in stocks, you are worth $10 million, not $1.01 billion, because other people have the $1 billion you spent on those stocks. Eventually, the market will completely collapse, as it needs constant care and attention to stay afloat. Also, just came up with a great analogy: A share of stock is like a raffle ticket. You might get a prize for it (the "dividend"), you might be able to sell it to someone else, or it may just become completely worthless.
21. Re:First for banning HFT by tehcyder · 2013-04-23 21:14 · Score: 2
  
  How about the Patriot Act (the most unpatriotic piece of legislation prior to Obama's NDAA), it turns banks and other financial institutions into FBI and IRS agents.
  Good. If you are going to have laws and taxes, you should improve the ways of catching those who break or do not pay them.
  I know your answer would be not to have the laws and taxes in the first place, but that is because you are an extreme libertarian with no concept of history, morality or real-life economics.
  You want to revert to the Nineteenth Century world of a few ultra rich capitalists paying no tax and being effectively above the law, with the vast majority forced to live on starvation wages, and powerless to oppose their employers. You might say, and even believe, that what you will get is a country full of happy, successful individually free-trading businessmen, but you won't. You'll just have even more powerful corporations with no check on their power.
  
  --
  To have a right to do a thing is not at all the same as to be right in doing it
22. Re:First for banning HFT by tehcyder · 2013-04-23 22:06 · Score: 2
  
  Regulations is what allows for "gambling and thievery", without regulations such behaviour would immediately be punished by the market.
  Yes, and the only reason there are murders is because there are laws making it illegal to murder people.
  In a pure free market you wouldn't need to make murder illegal, because the victim (or rather victim's family) would be able to sue the murderer and ruin him, therefore the logical outcome would be no more murders.
  Once you abolish government, laws, regulations and taxes, mankind will revert to the pure innocence of a free market Eden. We'll have flowery meadows and rainbow skies, and rivers made of chocolate, where the children dance and laugh and play with gumdrop smiles. There will be just One Invisible Hand to rule us all.
  
  --
  To have a right to do a thing is not at all the same as to be right in doing it
23. Re:First for banning HFT by tehcyder · 2013-04-23 22:14 · Score: 2
  
  Try and start one and see how fast you are shut down because you are not complying with literally about fifty thousand regulations. It's not about one particular thing, it's about the fact of just how much you have to comply with before you can run your exchange. Obviously it does not do anything to make exchanges 'more safe' for anybody, what it does it prevents you from competing in that market.
  Similarly, there are evil government regulations that prevent you from setting yourself up as a doctor, engineer, architect or lawyer without any qualifications. What a terrible intrusion on the free market.
  No doubt you're a qualified doctor, engineer and lawyer as well as Financial Colossus and so could do all of those jobs with one hand tied behind your back. Meanwhile, in the real world, I like to know that if you build me a house or take my appendix out you have some idea of how to do it, and that I don't just have to rely on my grieving family to sue you after I've died of septicemia and fallen roof joists.
  
  --
  To have a right to do a thing is not at all the same as to be right in doing it
24. Re:First for banning HFT by __aaltlg1547 · 2013-04-24 00:45 · Score: 2
  
  USSR had a track record too.
  Of-course Madoff worked in a completely regulated environment, your point is backwards. Madoff was the product of the moral hazard created by the government, where people just assumed that gov't was all over his business, checking what's going on there, when in fact his previous ties to the government allowed him to be completely unregulated in an environment where everybody assumed he was.
  That's what moral hazard does, that's what FDIC does, that's what Cyprus just went through (and will keep going through), that's how USA banking system collapsed (and was bailed out).
  If I lose money with any business that is unregulated, don't worry about it, it's my money. Worry about yourself.
  Err, no. Even the regulators trusted him because they knew him and thought he as a good guy so they let him skirt the regulations. A tighter regulatory regime would have forced them to audit him and then he wouldn't have been able to do what he did. That and you should note that every financial deregulation move by the government has resulted in a flurry of new shady and ill-advised deals resulting in a wave of business collapses.
Wow! by MightyMartian · 2013-04-23 08:15 · Score: 4, Insightful

You know, twenty five years ago, everyone was convinced it would be computers built by the military-industrial complex that would become self-aware and take out the human race. Now I'm beginning to wonder if HFT algorithms will be the ones that do it.

--
The world's burning. Moped Jesus spotted on I50. Details at 11.
1. Re:Wow! by Hentes · 2013-04-23 08:19 · Score: 4, Funny
  
  If they are this easy to fool then we have little to fear.
2. Re:Wow! by MyLongNickName · 2013-04-23 08:22 · Score: 4, Insightful
  
  Here's the rub. For someone like me, I couldn't care less about HFT. I am in it for the long haul. I've invested for almost all of my adult life. I don't invest on hunches, instead I buy broadly and then hold for a long time. My investments do about as well as the broad market and I have almost no trading costs. Even if some doofus thinks he can beat the market (no, they can't), he'll eat up 1-2% of his money on fees.
  So let folks be stupid and market time and talk about dead cat bounces and triple witching hours and other mumbo jumbo. In the long-run I will beat the vast majority and I will do so with very little effort on my part.
  The reality is the only investors who can beat my strategy are active investors who are involved in the management of the assets they own (like Buffett) and those with insider information (real insidr info, not what your brother in law told you at the cocktail party). So, let the market tank for a couple hours, a couple days or even a couple years. I couldn't care less.
  
  --
  See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
3. Re:Wow! by 7-Vodka · 2013-04-23 08:28 · Score: 3, Informative
  
  You couldn't care less...
  Maybe you should know that the big banks who do HFT also co-locate inside the exchanges and front run orders making hundreds of billions per year.
  Also, you might want to know that if the market crashes and restarts like today the big banks can get their losing trades reversed and you can't.
  All the profit they're making has to come from somewhere. Are you so certain it doesn't come out of your pocket?
  
  --
  Liberty.
4. Re:Wow! by alexander_686 · 2013-04-23 08:39 · Score: 5, Informative
  
  I will point out something to buy and hold investors
  The Bid / Ask spread has dropped by 90% in the past 30 years. You used to pay .5% to 2% for each trade – not it basically nothing. Moving to decimalization helped, but it is the HFT that really collapsed the spread. This is even truer for ETFs then for normal stock.
  The fees that mutual funds and ETFs (which a lot of buy and hold investors hold) have also collapsed the past 30 years. Specifically for index funds, they have fallen by 90%. There are a lot of reasons for this, but about a quarter to a third is lower trading costs, which can be traced backed to HFT.
  So, you save about 1% to get into a investment, and about .25% each year if that investment is a mutual fund.
5. Re:Wow! by kilfarsnar · 2013-04-23 09:29 · Score: 3, Interesting
  
  Here ya go. That wasn't hard.
  http://www.globalresearch.ca/computerized-front-running-and-financial-fraud/18809
  http://247wallst.com/2012/12/04/high-frequency-trading-a-grave-threat-to-the-markets-and-the-economy/
  
  --
  "What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
6. Re:Wow! by PoolOfThought · 2013-04-23 09:45 · Score: 2
  
  I read your comment about why one should care about HFT, and it all sounds sinsister and scary, and yet, as the buyer you still get the stock at exactly the price you said you were willing to pay. Sure you might have gotten it for less (maybe) without these other automated traders, but if you wanted it for less then you could have simply bid less and gotten it at that lower price. The HFT would have still satisfied your bid as long as there was a profit to take, right? And if it was a perfectly even trade then it wouldn't get involved. And if it was a bad offer (lower than asking price) then your bid will just sit there anyway.
  
  Take the boogie man out of the picture and you got exactly what you wanted right? If anything you got it faster so your money is tied up in actual shares instead of bids for shares.
  
  Am I missing something or are you just bothered that someone else got in on the action by hopping in the middle?
  
  --
  My present is the activity I am currently engaged in with the purpose of turning the future into a better past.
7. Re:Wow! by Algae_94 · 2013-04-23 10:31 · Score: 4, Insightful
  
  I follow similar investment strategies, and here's my take:
  
  Maybe you should know that the big banks who do HFT also co-locate inside the exchanges and front run orders making hundreds of billions per year.
  That's very nice that those banks are making money. Front running is illegal already. This practice may affect my purchase prices by a couple pennies if true. That is miniscule compared to the gains realized over holding a good investment long term.
  
  Also, you might want to know that if the market crashes and restarts like today the big banks can get their losing trades reversed and you can't.
  If I'm a long term investor, I generally have no trades on a given day, therefore, I have no trading loses to reverse. If I were going to trade an investment, I would have established what I believe the value to be. If the market went awry like today and the prices where not what I thought the values were, I WOULD NOT TRADE DURING A PANIC.
  
  All the profit they're making has to come from somewhere. Are you so certain it doesn't come out of your pocket?
  The profit of every company and individual has to come from somewhere. Why would I assume it's at my expense with no evidence that it is?
8. Re:Wow! by Jane+Q.+Public · 2013-04-23 10:33 · Score: 3, Insightful
  
  "The money might be coming out of the pockets of other investors. It also might be coming from efficiency that HFT enables"
  I don't know that I'd call it "efficiency". Ease, maybe. Not the same thing.
  
  "Efficient allocation of resources leads to less waste and more total wealth."
  Show me where HFT leads to efficient of allocation of resources. I do not agree at all.
  
  Trading in goods leads to efficient allocation of resources. But HFT today happens FAR too fast to have much impact on physical goods or manufacturing. It's only "efficient allocation of resources" if you consider numbers in a computer to be resources.
  
  And in exchange, as this event demonstrates, we have to contend with dangerous and unhealthy volatility.
  
  The Stock Market was intended to "efficiently allocate resources" when stocks represented actual investment in actual goods and services. Today, as often as not they are just derivatives being shuffled around, which don't much affect "resources" other than cash in somebody's pocketbook.
  
  It's hardly anything anymore but a big casino. And even worse, with HFT it isn't successful companies that gain or lose, it's whoever can place his bet first. People who think that makes for a healthy market are off their nut.
Was this really HFT by PhamNguyen · 2013-04-23 08:17 · Score: 2

Where is the evidence that this drop was caused by HFT algorithms? Unless there is evidence to the contrary, I don't believe that computers are yet capable of parsing that tweet and recognizing that its content is extraordinary (as opposed to the usual tweets that come from that account and others). A few minutes is easily enough time for humans to react.
1. Re:Was this really HFT by noh8rz10 · 2013-04-23 08:24 · Score: 2
  
  nobody said it was caused by the algorithms themselves. it was caused by the HFT traders who are always on a hair trigger to buy/sell.
Get rich quick scheme? by almitydave · 2013-04-23 08:17 · Score: 5, Interesting

I almost wonder if it was deliberately done to make a quick buck off a short sell. Sell high, make everyone panic, buy low.

--
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I'm, you're, he's/she's/it's, we're, you're, they're
Massive potential for fraud and abuse by benjfowler · 2013-04-23 08:20 · Score: 4, Interesting

Everything that we're taught is illegal and unethical, the del boys in the City of London and Wall Street will do anyway.
Wouldn't surprise me in the slightest, if the same sort of self-entitled white collar criminals who brought us Liborgate, arranged for the AP Twitter feed to be hacked, and then primed their HFT bots to start shorting like mad?
Gosh! by fuzzyfuzzyfungus · 2013-04-23 08:21 · Score: 5, Funny

I sure am glad that, unlike crazy neckbeard stuff like bitcoins, Serious Professional economic instruments don't suffer hilariously baseless volatility because some goofy website got hacked...
That would, like, reduce my confidence in the rationality of the market.
Our idiot overlords by PopeRatzo · 2013-04-23 08:23 · Score: 2

What kind of trader sells on an uncorroborated news story about the President being shot? It takes all of thirty seconds to see if anyone else is reporting the story.
I understand that they're trying to front-run the many big investors that are getting information in advance, and the high-frequency trading algorithms, but the willingness to hit the dump button on a sole report is just dumb.
The problem is the damage they do to everyone else. Otherwise, I'd say they deserve to lose.

--
You are welcome on my lawn.
1. Re:Our idiot overlords by djmurdoch · 2013-04-23 08:28 · Score: 2
  
  How did that do any damage to anyone other than idiots? If you had been smart, you'd have a buy order in place ready to buy if the market dipped enough. Then you would have made 1% today without even paying attention.
  Seems to me like this was an entirely deserved shot in the foot to anyone who suffered from it.
2. Re:Our idiot overlords by PopeRatzo · 2013-04-23 08:53 · Score: 2
  
  How did that do any damage to anyone other than idiots?
  Because a huge number of investors are people with retirement accounts, index funds, etc. They're not sitting at a computer watching the market because they're too busy working for a living. They have 401ks with market exposure because money gets 0% in the bank.
  I don't give a shit about day traders. Like you say, they'd have option spreads on to protect from a sudden drop, and if not, screw them for being dopes. But there are a lot more people who are exposed to market moves who are not actively managing their portfolios because they're not trying to get rich, but only trying to outperform the damage done by our idiot overlords (Ben Bernake, the Fed, etc). They're just working people who thanks to Reagan and Clinton have 401k accounts instead of proper pensions.
  
  --
  You are welcome on my lawn.
3. Re:Our idiot overlords by PopeRatzo · 2013-04-23 13:43 · Score: 3, Informative
  
  If they didn't respond to the drop, they weren't affected. The market dropped and rose again within a few minutes.
  You probably know that mutual fund movements happen at the end of trading.
  Someone who saw the precipitous drop and hit the panic button on their mutual fund (say, a retiree or soon-to-be retiree) would have lost, but good.
  A lot is made of the notion that mom and pop should be in the market. It's been a hallmark of the past decades that the market is where retirees should put their money, and current Fed policy almost forces it. Fact is, small investors are shark food in today's environment. The days of being able to see who's doing the buying and selling are over.
  I wonder if we'll ever find out what kind of trades were made by whomever manipulated the market today. The person who hacked the account and tweeted out that story could easily have netted 7-8 figures, unless it was not an individual, but a larger entity, in which case it could have easily been ten figures- on the dip and again on the rip.
  It doesn't help that while the Boston Marathon bombings were dominating the news, congress saw fit to gut that bill they passed around the election that outlawed congressional insider trading. Suddenly, on "security grounds" lawmakers and their staff can again trade on the knowledge of bills that are about to be passed (or not).
  I'm old enough to have heard Milton Friedman speak in person, on the campus where I used to teach (not business or economics, don't worry). I remember him saying that insider trading should be completely allowed, but only because back then you could actually see who was on both ends of a trade. Today, it is no longer possible to know who's trading what. All transparency is out of the market. That one fact does more damage to the so-called "free market" than any "socialist" policies coming from the administration.
  
  --
  You are welcome on my lawn.
Brilliant! by mareksokal · 2013-04-23 08:26 · Score: 2

If one knew that such a hoax would cause DOW to drop that much it would be pretty easy to make a quick buck. I'm no stock market genius but buying low and selling high is always a win, am I right?
1927 + 2 = 1929 by maxwell+demon · 2013-04-23 08:26 · Score: 4, Interesting

"The last time the Dow rose for 15 straight Tuesdays was in 1927."
And two years later it crashed.

--
The Tao of math: The numbers you can count are not the real numbers.
What they don't mention... by ggraham412 · 2013-04-23 08:29 · Score: 2

They're big on blaming high frequency traders when the market drops in 3 minutes on bogus news.
They're not so big on crediting high frequency traders when the market recovers in 3 minutes when the news is recognized to be bogus.
I guess it was the army of Wilford Brimleys in bow ties and green eyeshades that did that.
1. Re:What they don't mention... by Opportunist · 2013-04-23 08:49 · Score: 3, Funny
  
  You sound like a programmer who wants to get some pat on the back for spending his weekend fixing the dumb error he made that nixed a week of work.
  
  --
  We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Retirement account by JobyOne · 2013-04-23 08:30 · Score: 2

Damn the almost-perfect timing of my retirement account contribution this month!

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Porquoi?
Thanks. by Fuzzums · 2013-04-23 08:31 · Score: 5, Insightful

I want to thank the stock market, once again, for fucking, I mean speculating with my, no, our economy.
Traders don't give a shit. The man in the street gets fired because stock prices need to go up and up and up and then - oh surprise - they crash.
My world can do without stock market.

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Privacy is terrorism.
Here's the thing by Sycraft-fu · 2013-04-23 08:35 · Score: 4, Insightful

Bitcoin moves like a stock (a thinly traded one at that), not like a currency. You are making false equivalence here. This caused a 1% drop in stocks for a couple minutes. Bitcoin has a bid-ask spread higher than 1%. The US Dollar didn't move at all based on this, and indeed changes in value around 2-3% per year.
The criticism of Bitcoin's volatility is highly valid when it wants to be a currency. I wouldn't use stocks as a currency due to their volatility either.
aha! by sootman · 2013-04-23 08:35 · Score: 2

"Stocks plunged and recovered within minutes"
See? The system works.
</sarcasm>

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Dear Slashdot: next time you want to mess with the site, add a rich-text editor for comments.
1. Re:aha! by luis_a_espinal · 2013-04-23 09:22 · Score: 2
  
  When a large portion of the country is taking risks big or small, lose on those risks, and proceed to tank the economy. It hurts even those who did not take risks. Not everyone understands the repercussions of their risks. You should care about negligent risk takers.
  So, what is the percentage of the economy that was directly/substantially afflicted by this brief fluctuation on the stock market?
Easy come easy go... by WaffleMonster · 2013-04-23 08:58 · Score: 5, Funny

sell sell sell
NASA reports asteroid on collision course for earth expected to "obliterate" housing market.
sell sell sell
Gold prices expected to reach a 20 year low as Lord Ganesh spotted on Indian TV favoring peanuts over gold.
sell sell sell
Acme Toothpick Company announces it will be laying off 1 million workers as the last tree in the amazon rain forest is cut down.
sell sell sell
North Korea launches devastating nuclear attack against giant sea turtles invading its territorial waters. Fears of radioactive fish expected to have catastrophic effects on east Asian seafood markets.
sell sell sell
Exactly, put a gambling tax on it by dutchwhizzman · 2013-04-23 09:03 · Score: 4, Interesting

Don't ban it, tax it as gambling. 50% of profits go to government, losses aren't deductible. If you buy a stock and sell it again within a week, it's considered speculation and subject to gambling tax. This will make high volume trading not impossible, but much harder to actually make a profit with, while actual investors in stock that think companies will make money by honest profits are protected. This is for stocks. Any derivatives are by nature all speculation and should be taxed regardless of how long they are held before being sold, bought or exchanged for actual stock or product.

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I was promised a flying car. Where is my flying car?
1. Re:Exactly, put a gambling tax on it by lgw · 2013-04-23 09:42 · Score: 4, Insightful
  
  So, basically, what your saying is "I don't understand most of how the market works, so please ban everything I don't understand." Your post reminds me strongly of a senator writing about copyright on the Internet.
  
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  Socialism: a lie told by totalitarians and believed by fools.
Re:Lower transaction costs, but you're still screw by lgw · 2013-04-23 09:56 · Score: 2

timing your sale for the time of day they want to say it occurred so that you get the lowest possible price and timing your purchase for the time of day so that you get the highest possible price.

My broker offers me a 2-second execution guarantee on most trades. Maybe you should look into that.

The big brokers, as market makers, can game your transactions so as to make themselves, as market makers, the most amount of money and still be able to say with a straight face that "they carried out your transaction as you requested".

I see my trades work as expected - if the bid or ask displayed is bigger than my transaction, I get that price or better. If the market is thin I'll use a limit or stop order to make sure I don't get burned. It's good to pay attention to this stuff when trading, but really it's not like a broker is going to cheat his customers without it getting noticed.

They can also play on the "dark markets" where bigger transactions and movements occur, so that the rest of the market and the little schmoes never really see the momentum of the full market.
The best scam of the past few decades was conning a con-man into believing there's some secret market on which only the super-rich get to trade. If your a broker on NASDAQ or the CME (NYSE, CBOT, etc), you're required to report all trades by the end of the day. All sorts of private deals can get brokered, sure, but if a broker is involved the transaction will show up. Of course, two private individuals can trade just about anything privately, but that's not the market (and for many securities, the tradxe still has to be registered the same day, because you're buying or selling a contract with that requirement written in!)

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Socialism: a lie told by totalitarians and believed by fools.
Why did it even matter by pclminion · 2013-04-23 10:13 · Score: 2

Suppose the White House DID blow up, and Obama WAS injured. Why the hell should this affect the price of corn?
Re:Where do we start? by the+eric+conspiracy · 2013-04-23 15:19 · Score: 3, Informative

1. Government spending as a percentage of GDP has been dropping since 2009. Some would say this is why the current recovery is so anemic. This issue is being addressed.
2. Arbitrage does not suck money from slower traders. It sucks money out of price differences across exchanges thereby reducing spreads. For an average Joe trader it's much more likely that having good arbitrage is going to be a benefit. Strong markets must have efficient price discovery and arbitrage.
3. The bulk of the people in the current system who do not pay income taxes are either retired or have incomes in the lower quintile. If you want to get people to have more skin in the game the way to do it is by having a broader income distribution; not by making the tax system more regressive. The US has a horrible income distribution pattern, one of the worst in the world, and it is getting worse. To get an idea of how severe this problem is, in 1980 the top 1% in the US collected 10% of the income. In 2010 the top 1% collected 24% of the income. The general population cannot possibly have skin in the game with this atrocious economic structure.
Information asymmetry by NewYork · 2013-04-24 04:35 · Score: 2

Implementing https://en.wikipedia.org/wiki/Information_asymmetry#Adverse_selection would have prevented this mess.

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Casteism