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Tweet From Hacked AP Account Causes High Freq. Traders To Drop DOW 150 Points
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.'"
It serves no purpose.
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.
I almost wonder if it was deliberately done to make a quick buck off a short sell. Sell high, make everyone panic, buy low.
my, your, his/her/its, our, your, their
I'm, you're, he's/she's/it's, we're, you're, they're
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?
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.
"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.
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.
Privacy is terrorism.
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.
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.
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
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.
I was promised a flying car. Where is my flying car?
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.
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.