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Tesla's April Fool's Joke Spoofs Market Algorithms

Posted by timothy on from the be-prepared-for-next-year dept.

Okian Warrior writes Yesterday, Tesla's twitter feed and blog announced the new "W" Model. Meaning "Watch" (as in "wristwatch"), the announcement Included a photo of a watch spouting a cumbersome "Big Ben" glued to the face and including this text: "This incredible new device from Tesla doesn't just tell the time, it also tells the date. What's more, it is infinitely adjustable, able to tell the time no matter where you are on Earth. Japan, Timbuktu, California, anywhere! This will change your life. Reality as you know it will never be the same." Clearly, this was an April fool's joke as anyone who reads more than just the headline would immediately guess. The problem is that Bloomberg's fast response team did not. The algos, on massive volume, spiked TSLA stock higher by nearly 1%.

42 of 163 comments (clear)

  1. Wow, a whole 1%? by Enigma2175 · · Score: 4, Interesting

    A 1% move on an individual stock is not that much, is this really a big problem?

    --

    Enigma

    1. Re:Wow, a whole 1%? by Anonymous Coward · · Score: 4, Insightful

      When you're trading in volume by the millisecond for pennies, a $2 swing for an April Fools joke would be a pretty big deal I'd think.

    2. Re:Wow, a whole 1%? by Defenestrar · · Score: 3, Interesting

      1% in a day is more than enough for a pump and dump! I'd love a portfolio which could make me 1% per day. Generally I'm happy with anything above 7% in a year. Good news here is that the increased volume didn't trigger additional artificial pumping by other auto-buyers.

    3. Re:Wow, a whole 1%? by gstoddart · · Score: 4, Insightful

      Well, think about it ... say you could pretty much push the value of any stock by 1% just by having your idiot boxes start actively trading.

      If you're the brokerage house, you can make a lot of money by planning to cause the price to briefly blip and then make money on the differences.

      A brokerage house shouldn't be able to change the price of a stock like that.

      Doing it based on a joke tells me just how damned broken that method of trading is. And since all of the trading houses have these algorithms, it's not unprecedented for them to set off a chain reaction.

      Basically a bunch of self-serving greedy bastards can materially impact the stock market any time they like .. even if they don't intend to. All to try to rip off money from the market

      --
      Lost at C:>. Found at C.
    4. Re:Wow, a whole 1%? by Okian+Warrior · · Score: 4, Informative

      Check out the actual bump.

      Anecdotal of course, but it sure seems like the announcement caused a massive spike in trading.

      Also note that TSLA is up $4 over yesterday's close, so that's a total of 3%.

      This is not nothing, given the scope of effort they made (a simple blog post and twitter announcement).

    5. Re:Wow, a whole 1%? by Amorymeltzer · · Score: 2

      1% increase a day is almost 38x by year's end, fwiw.

      --
      I live in constant fear of the Coming of the Red Spiders.
    6. Re:Wow, a whole 1%? by geekmux · · Score: 5, Funny

      When you're trading in volume by the millisecond for pennies, a $2 swing for an April Fools joke would be a pretty big deal I'd think.

      Excuse me while I play the worlds smallest violin for the financial addicts on Wall Street.

      You want to gamble by the millisecond, learn to live with winning and losing at that same rate.

    7. Re:Wow, a whole 1%? by Anonymous Coward · · Score: 5, Interesting

      Anecdotal of course, but it sure seems like the announcement caused a massive spike in trading.

      Once the algos learn to discount press releases on April 1st, that's when companies start scheduling their bad news for that date.

    8. Re:Wow, a whole 1%? by ceoyoyo · · Score: 3, Insightful

      That's how stock markets work - the price is set by a bunch of greedy bastards. If you're also a greedy bastard (or you're the original one) you might lose money trying to get in on these things. If you're not, you don't really care. Unless you make a point of selling on the spike and taking advantage of the greedy bastards.

      Of course someone throwing enough money around can change the value of a stock. That's the point of a stock market. This story just says bad things about Bloomberg. You should think twice about buying into anything they manage.

    9. Re:Wow, a whole 1%? by ShanghaiBill · · Score: 2

      1% in a day is more than enough for a pump and dump!

      Most stocks fluctuate more than 1% in a day. Right now, Tesla is up 2% on their opening.

    10. Re:Wow, a whole 1%? by shaitand · · Score: 3, Insightful

      It's not the like the normal up and down swings are based on anything beyond the emotional state of traders anyway.

      As for users of fast trading algorithms getting burned... yay?

    11. Re:Wow, a whole 1%? by CaptainLard · · Score: 4, Insightful

      Indeed. That high frequency trading has resulted in a single point of failure is the real story here. If bloomberg announced this to a bunch of humans, some would buy without thinking, a smaller amount would buy cause they're stupid but most would just laugh at bloomberg's mistake. Computers don't get jokes. Every time a previously unknown trigger occurs there is a chance a feedback loop will blow something up.

    12. Re:Wow, a whole 1%? by shaitand · · Score: 2

      If you aren't running a fast trading scam you aren't being hurt by this.

    13. Re:Wow, a whole 1%? by njnnja · · Score: 2

      Anybody can push the price of a stock up 1%, you don't have to be a brokerage house. All you have to do is place a buy limit at 1% above the current stock price. But then you would have just spent $101 on a share of stock that you could have bought for $100. That's kind of what happened here - computers that thought the joke was a real product were willing to spend $101 on a stock that everyone else know was still just $100. So the point is that they didn't make money off this, they lost money off this. Which is exactly how it should be.

      And as for how broken this system of trading is, a 1% change based on a joke is nothing compared to the 600 point drop in 5 minutes, which was reversed just as quickly as it dropped. Even humans could have fallen for a good April fool's day joke, but it takes computers to mess up a system that much.

    14. Re:Wow, a whole 1%? by Defenestrar · · Score: 3, Insightful

      Ever hear of a mutual fund, 401k, 403b, IRA, etc... When an auto-trade algorithm hits an action point - lots of people far removed from the system are affected. The effects can be quite serious when one trader's algorithm triggers another's... etc. There have been some very bad days on the stock market triggered by such events.

    15. Re:Wow, a whole 1%? by TWX · · Score: 2

      I don't get why you were modded funny. Your comment deserved to be modded up, but I didn't really find it that funny.

      --
      Do not look into laser with remaining eye.
    16. Re:Wow, a whole 1%? by sjames · · Score: 2

      It goes a long way to putting the lie to any claims of the market being anything but a casino driven by random fluctuations.

    17. Re:Wow, a whole 1%? by HornWumpus · · Score: 3, Insightful

      Investors are not hurt. Speculators are. I'm good with that.

      --
      John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
    18. Re:Wow, a whole 1%? by Immerman · · Score: 4, Informative

      380 days? That's not how exponential functions work. They clearly assumed 365 days: 1.01^365 = 37.78 (an extra 0.6 day would hit 38 exactly). With 380 days you'd be at 43.87, or with only 260 trading days that would be 13.29x

      --
      --- Most topics have many sides worth arguing, allow me to take one opposite you.
    19. Re:Wow, a whole 1%? by geekmux · · Score: 2

      I don't get why you were modded funny. Your comment deserved to be modded up, but I didn't really find it that funny.

      Dunno. Neither did I.

    20. Re:Wow, a whole 1%? by ShanghaiBill · · Score: 5, Informative

      Most stocks fluctuate more than 1% in a day.

      Outside of a market crisis, they sure as fuck do not.

      Yes they do. Besides Tesla, other companies that fluctuated more than 1% today include Microsoft, General Motors, Exxon, etc. Small companies tend to fluctuate even more. Perhaps you are thinking of the overall market average, which tends to fluctuate far less, because the individual companies generally do not move in unison.

    21. Re:Wow, a whole 1%? by Stuarticus · · Score: 3, Informative

      Who says they got burned? The whole idea of these trading algorithms is that you can make money from any movement in the price due to your rapid response times, price instability like this is what they thrive on. That's exactly why they should be banned, they are the highest volume traders and they are motivated to destabilise prices which is the exact opposite point of the market.

      --
      If you think someone isn't free to have a different definition of "freedom" you may be a tyrant.
  2. Holy crap ... by gstoddart · · Score: 4, Interesting

    The problem is that Bloomberg's fast response team did not. The algos, on massive volume, spiked TSLA stock higher by nearly 1%

    So the stock market is being actively manipulated by idiots?

    As usual, these people are just parasites on the financial system looking to skim off money before everyone else has a chance.

    High frequency trading is essentially skimming off the top for yourself without having done ANYTHING other than having a faster connection.

    I hope these clowns bankrupt themselves one day with their stupidity.

    --
    Lost at C:>. Found at C.
    1. Re:Holy crap ... by fightinfilipino · · Score: 2, Insightful

      The problem is that Bloomberg's fast response team did not. The algos, on massive volume, spiked TSLA stock higher by nearly 1%

      So the stock market is being actively manipulated by idiots?

      As usual, these people are just parasites on the financial system looking to skim off money before everyone else has a chance.

      High frequency trading is essentially skimming off the top for yourself without having done ANYTHING other than having a faster connection.

      I hope these clowns bankrupt themselves one day with their stupidity.

      this already happened, in 2008. except it didn't bankrupt the bankers, it bankrupted the rest of the U.S. and major parts of the globe.

    2. Re:Holy crap ... by romanr · · Score: 2

      If it's a bad bet, then they lose YOUR capital.

      What's your problem?

      FTFY

    3. Re:Holy crap ... by gstoddart · · Score: 5, Informative

      That wasn't high frequency trading, it was bad loans. Bad loans to people who wanted to buy houses. So the greedy children who just had to have that house they couldn't afford caused an economic crash. The clowns just let them do it.

      It wasn't only bad loans.

      It was the wholesale fraud which happened when bankers packaged up bad loans, and with the help of ratings agencies passed them off as AAA investment, and then hoodwinked the rest of the world into buying it. It was a scam on a massive scale.

      Essentially Wall Street and the financial industry made HUGE mistakes in who they loaned money to, and the lied to everybody else as they pawned off the debt.

      It was a fucking pyramid scheme, ran by con artists, and then foisted off onto everybody else.

      Had it only been bad loans, the idiots who made those loans would have been the ones to get hurt. But this was basically kiting checks and outright falsifying documents.

      This wasn't caused by people who bought houses they couldn't afford. This was theft by the financial industry to cover their own stupid losses.

      The scam could only have worked because the ratings agencies are complete whores who don't actually do anything meaningful other than "if you pay us, we'll say anything you want".

      --
      Lost at C:>. Found at C.
    4. Re:Holy crap ... by sjames · · Score: 2

      I hope these clowns bankrupt themselves one day with their stupidity.

      Sadly, all that would mean is that you'll be 'asked' to tighten your belt so their constant stream of hookers and blow can continue through a massive bailout.

      These people are truly the scum of the Earth.

  3. You don't get how Wall Street works by Aqualung812 · · Score: 5, Insightful

    I hope these clowns bankrupt themselves one day with their stupidity.

    No, based off what happened last time, they don't go bankrupt. They don't go to jail.

    Everyone else's retirement funds take a huge hit and lose value, but assholes^H^H^H^H business leaders like this are too important to fail.

    --
    Grammer Nazis - I mod you "troll" unless you actually add something on-topic. Yes, I know I have mispellings in my sig.
    1. Re:You don't get how Wall Street works by gstoddart · · Score: 2

      And, for anybody who hasn't thought of this ... don't take random financial advice from the internet, talk to a professional.

      There are quite a few scenarios in which indexed funds took a complete bath with the downturn in oil.

      Indexing is no magic bullet either, just a bet that in the long term things go up and keep doing so.

      --
      Lost at C:>. Found at C.
    2. Re:You don't get how Wall Street works by ceoyoyo · · Score: 3, Insightful

      Why? The professionals' performance is pretty much the same as random.

      Realize that investment carries risk and some kinds carry more risk than others.

    3. Re:You don't get how Wall Street works by Will.Woodhull · · Score: 2, Interesting

      [of comment subject] You don't get how Wall Street works

      Wall Street doesn't "work". It never has. There is no "work" being done by anyone involved solely with Wall Street activities. None of that activity produces actual goods or services. A laundromat contributes more to the real USA economy than all the mutual funds ever have, or ever will.

      The main problem with capitalism today is that it is a religion that has been completely subverted by heretical money changers from the original visions of John Locke and others.

      The most exciting and beneficial economic activity of the last ten years is the development and distribution of free open source software, which is putting the tools of production into the hands of everyone who is living above abject poverty. The impact is huge. Yet this is a gift economy that does not fit the capitlalistic model and has nothing to do with "finance".

      The age of finance is drawing to a close, and good riddance. It belongs in the history books, in a chapter after the age of slavery, along side the chapters on the age of colonial oppression and the age of consumerism. (The new ages of ecological balance and anonymous gift exchange ("freeware") are the first emerging ages of the anthropocene epoch).

      --
      Will
    4. Re:You don't get how Wall Street works by tomhath · · Score: 2

      None of that activity produces actual goods or services.

      I suppose it depends on how you define "services". But most people would consider the capital markets a service:

      Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets, where new stock and bond issues are sold to investors, and secondary markets, which trade existing securities.

    5. Re:You don't get how Wall Street works by Anonymous Coward · · Score: 2, Insightful

      Wall Street doesn't "work". It never has. There is no "work" being done by anyone involved solely with Wall Street activities. None of that activity produces actual goods or services. A laundromat contributes more to the real USA economy than all the mutual funds ever have, or ever will.

      It certainly works when taking a good company idea and getting investment needed for that company to grow and build more things. It also works pretty well when you want to mitigate risks associated with changes in things like raw material costs or certain business scenarios.

    6. Re:You don't get how Wall Street works by tomhath · · Score: 2
      The success of FOSS is due in large part to corporate sponsorships. It has changed the game, but in no stretch of the imagination does it pose any threat to capitalism.

      Just saw a remarkable first hand report of people driving donkey carts in the outback of Timbuktu while using cell phones to broker deals on their goods while still hours away from the market.

      Good example of capitalism and free enterprise at it's finest. Not sure what it has to do with Wall Street or FOSS though.

    7. Re:You don't get how Wall Street works by Anonymous Coward · · Score: 2, Interesting

      Believing that stocks are supposed to mirror some sort of intrinsic underlying value is just wrong-headed. Nothing has intrinsic value. The price of a stock certificate, like the price of a diamond, is based on supply & demand.

      And like a diamond, people have varying reasons to own it, which might not have anything to do with any practical function of the thing. Which isn't to say that practical applications don't effect the price.

      Supply & demand--it's a seemingly simple concept but in reality the vast majority of people just don't _get_ the concept, including many economists. People just can't wrap their heads around the notion that an object might not have any inherent purpose or inherent value separate from how it's treated in the market.

      It's kind like the concept of a soul. Even most atheists fall into the trap of believing that a soul exists. I think it's a limitation of our brains. We presume there's some kind of agency or other fundamental character of things independent from the interactions it has with the environment.

  4. April Fools by BurfCurse · · Score: 2

    This article is dated 4/1 submitted by Tyler Durden. You sure the joke isn't on us?

    1. Re:April Fools by CaptainLard · · Score: 2

      Good thought but a bunch of outlets are reporting that TSLA volume did indeed shoot up by almost a factor of 20 yesterday (and I checked for myself as well). So no, this story doesn't mean we're fooled, it means we're fucked.

  5. Quants don't get a joke?!? by NotDrWho · · Score: 2

    The hell you say!

    --
    SJW's don't eliminate discrimination. They just expropriate it for themselves.
  6. The joke's on us. by 140Mandak262Jamuna · · Score: 4, Insightful
    Don't laugh, cry. We slog all day and then dutifully maxout our 401Ks and "invest" in mutual funds and other such instruments.

    While these thieves on the other end are high on opium (OPM= other people's money) rolling high, taking insane risks, and all the profits and bonuses are theirs. If they make a loss, they are too big to fail and our taxes will bail them out. If they blatantly lie, cheat and commit felonies, they are too big to jail too.

    Realize this. The. joke. is. on. us. They are laughing all the way to the bank (which they own probably).

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
  7. Meanwhile down at the track... by WinstonWolfIT · · Score: 2

    Unless you have 20 hours weekly to become an expert in an investment sector, the only winner when a small investor buys and sells stocks is the bookie. Er broker. Managed funds are better. Or was it diamonds. I can't remember which.

  8. Re:Goebbels would've been proud... apk by mrchaotica · · Score: 2

    Wait, you say that in response to an APK post, and a misattributed quote is the part you're worried about?!

    --

    "[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz

  9. mortgages and financial crisis of 2007-2008 by clovis · · Score: 2

    I see a number of posts blaming the financial crisis of 2007-2008 on the sale of bad mortgages.

    If you are not familiar with the terms listed below, then you should not attempt to discuss the financial crisis of 2007-2008 because you would be wrong.
    If you are reading an article about the financial crisis, or listening to someone discuss the financial crisis, and you do not hear these terms then you should assume they are either ignorant or lying.

    hypothecation
    140% rehypothecation rule
    credit default swap (CDS)
    collateralized debt obligation (CDO)
    synthetic CDO
    repurchase agreement (especially internal repo and repo 105)