Dow tanks briefly after fake AP tweet
April 23, 2013 11:17 AM   Subscribe

 
Dude, change the default password will ya?
posted by shothotbot at 11:20 AM on April 23, 2013 [3 favorites]


When are we going to admit that the stock market is way too insane to tie our economy to in any way shape or form?
posted by lumpenprole at 11:21 AM on April 23, 2013 [98 favorites]


I wonder if anyone took advantage of this "market opportunity." The password to a reliable news org's Twitter is probably worth millions.
posted by exogenous at 11:21 AM on April 23, 2013 [16 favorites]


They thought they were being clever when they changed it to "APssword"
posted by MCMikeNamara at 11:21 AM on April 23, 2013 [19 favorites]


"twitter hack" is a thing now, I guess.
"60 Minutes" on Their Pro-Assad Twitter Hack: We're Working on It. Pro-Assad forces also hacked NPR, and edited articles.
In unrelated incidents, The Trumps's twitter was hacked.
So was Burger King's.

Note to Anthony Weiner: next time, just claim it was hacked!
posted by the man of twists and turns at 11:23 AM on April 23, 2013 [1 favorite]


APSSWORD? Last time I tried to hack the AP it was just straight out ASSWORD
posted by edgeways at 11:23 AM on April 23, 2013


In reality Obama was merely planning a party for the Ecuadorian ambassador in which he'd "blow the roof off this motherfucker". Easy to get confused.
posted by GuyZero at 11:23 AM on April 23, 2013 [2 favorites]


When are we going to admit that the stock market is way too insane to tie our economy to in any way shape or form?

I await your proposal to decouple the ownership of companies from the economy.
posted by GuyZero at 11:24 AM on April 23, 2013 [9 favorites]


exogenous: I was thinking exactly the same thing.
posted by Freen at 11:25 AM on April 23, 2013


The Invisible Hand is just our fragile, fragile egos.
posted by whimsicalnymph at 11:25 AM on April 23, 2013 [1 favorite]


I work at a trading firm, and this caused about 90 seconds of sheer panic.

The problem was that we (as many firms do) subscribe to a real-time news squawk service, where the dude broadcasting just reads and parrots back any damn thing he sees. Saw the AP tweet, said the president had been injured in an explosion at the White House, markets went berserk.

Goddamn twitter.
posted by phunniemee at 11:26 AM on April 23, 2013 [6 favorites]


I wonder what this would've looked like without HFT algorithms behind the helm of so much market activity?
posted by codacorolla at 11:26 AM on April 23, 2013 [2 favorites]


It's weird that NYT calls it an "erroneous message"--to me, it would be erroneous if there was only one explosion not two, or if Obama wasn't injured. This was a completely bogus message. Maybe Bill and Ted have poisoned the "bogus" well too completely for them to use it in a headline.
posted by Horace Rumpole at 11:27 AM on April 23, 2013


I work at a trading firm, and this caused about 90 seconds of sheer panic.

I work in a bank on the trading floor - and I had no idea this happened.

I'm not sure whether this indicative of my ignorance or my obliviousness.
posted by EmpressCallipygos at 11:28 AM on April 23, 2013 [2 favorites]


I await your proposal to decouple the ownership of companies from the economy.

I'm hurt. Didn't you see my post about how we already have?
posted by saulgoodman at 11:29 AM on April 23, 2013 [2 favorites]


An entire world built around being first rather than being right.
posted by 2bucksplus at 11:30 AM on April 23, 2013 [29 favorites]


This is substantially less hilarious than yesterday's hacking of Sepp Blatter which announced Sepp's corruption in the first person.*

*The hackers claimed to be a group affiliated with the Syrian government. Taking time to mess with the corrupted heads of international sporting organizations would seem like a low priority for the Syrians right now, but I guess not.
posted by Bulgaroktonos at 11:30 AM on April 23, 2013


Tanked is a strange word for "reverted to yesterday's trading range". Although it's also strange that enough traders think a presidential injury / death would substantially alter any DOW company's profits to actually move the needle, so to speak.
posted by pwnguin at 11:32 AM on April 23, 2013 [1 favorite]


It's easy to sound skeptical now, but honestly it did smell like bullshit from the moment it posted -- this is just not how breaking news gets dispersed on Twitter.

First, there'd be a few tweets about a loud noise in the White House. Maybe even personal staffers tweeting "what was that," WH correspondents tweeting about some sort of vague event or possible explosion. There'd be RTs and waiting and maybe pictures, then you'd get the AP tweet. Twitter is all about a trickle of unofficial information before any actual information. I would be really surprised to learn of a big earthquake, for example, by reading a tweet from the AP.
posted by (Arsenio) Hall and (Warren) Oates at 11:32 AM on April 23, 2013 [19 favorites]


But seriously, it really doesn't matter in a lot of cases what a company's stock is worth--unless the company is holding a lot of its own stock and/or its executives are compensated in stock.

The fundamental value of a company really has nothing to do with its share price (in theory, anyway; the accounting's gotten a lot more complicated over the years, but it's really only at the IPO that the company actually directly has any stake in the stock price because that's when they're first selling the stock to raise capital. All the trading that goes on between owners of the stock is just a really elaborate sideshow that's grown to be a bigger act than what's on the main stage).
posted by saulgoodman at 11:33 AM on April 23, 2013 [1 favorite]


The firm handling the guerrilla marketing for White House Down really earned their paycheck this time.
posted by entropicamericana at 11:33 AM on April 23, 2013 [4 favorites]


I noticed that this "tanking" wasn't bad enough to put it more than a point away from yesterday's closing price. Perhaps that's because the AP issued a correction so quickly? I'm also interested to see what trading happened during that time -- can you even track people who might have profited from sales in that time?
posted by boo_radley at 11:33 AM on April 23, 2013


I work in an asset management firm and I was in yoga class.
posted by shothotbot at 11:33 AM on April 23, 2013 [8 favorites]


An entire world built around being first rather than being right.

Note that everyone who sold 'first' was paired with a buyer who waited to be 'right' (and likely made some money doing it). And that the prevailing price went back basically immediately.

It's unclear what a better response could possibly look like.

Disclaimer: I work for a financial company.
posted by Skorgu at 11:33 AM on April 23, 2013 [4 favorites]


Markets recovered almost completely

The gap between "almost" and "completely" consisting of those who saw what happened and said "you mean my portfolio can be torpedoed by a fake tweet!??! Fuck that noise!"
posted by dry white toast at 11:34 AM on April 23, 2013 [2 favorites]


Note that everyone who sold 'first' was paired with a buyer who waited to be 'right'

Or they had stop-losses on their electronic trading accounts and their shares automatically sold when they hit a certain low price-point.
posted by saulgoodman at 11:35 AM on April 23, 2013


I wonder whether it would be easier to completely secure all of the various social media accounts and websites for news gathering organizations against any form of hacking whatsoever or to train every single trader in the markets to not immediately go into a desperate panic based on a single, wildly improbable snippet of news with no source or evidence.

Surprisingly, it might be the first one.
posted by Copronymus at 11:35 AM on April 23, 2013 [4 favorites]


An entire world built around being first rather than being right.

Note that everyone who sold 'first' was paired with a buyer who waited to be 'right' (and likely made some money doing it). And that the prevailing price went back basically immediately


I'm pretty sure they were referring to the news business.
posted by phunniemee at 11:35 AM on April 23, 2013 [3 favorites]


you mean my portfolio can be torpedoed by a fake tweet!??!

Only if your "portfolio" isn't actually diversified in any useful way.

I doubt the bond or REIT markets shit the bed. Or international equities. etc, etc.
posted by GuyZero at 11:35 AM on April 23, 2013



Genuinely curious: who's exactly behind the breaking911 twitter account ?!

It posted the screencap of the AP tweet mentioned in this post and I've seen their tweets retweeted quite a bit last week but no information of who's behind the account.

and, totally agree with 2bucksplus there.
posted by fizzix at 11:35 AM on April 23, 2013 [1 favorite]


This was probably caused by algorithmic trading that monitors twitter, right?
posted by Mid at 11:35 AM on April 23, 2013 [1 favorite]


The stock drop I mean, not the hacking.
posted by Mid at 11:36 AM on April 23, 2013


I'm pretty sure they were referring to the news business.

That does make more sense I guess.

Or they had stop-losses on their electronic trading accounts and their shares automatically sold when they hit a certain low price-point.

So don't do that if you don't want it to happen? If it had been real those stop losses would have been brilliant; stock exchanges don't know when the drop is 'real' or 'fake'.
posted by Skorgu at 11:38 AM on April 23, 2013


First, there'd be a few tweets about a loud noise in the White House. Maybe even personal staffers tweeting "what was that," WH correspondents tweeting about some sort of vague event or possible explosion. There'd be RTs and waiting and maybe pictures, then you'd get the AP tweet.
thank you

any other advice
posted by This, of course, alludes to you at 11:42 AM on April 23, 2013


the man of twists and turns: " Note to Anthony Weiner: next time, just claim it was hacked!"

FWIW, he actually did claim that, but the story unraveled.
posted by tonycpsu at 11:43 AM on April 23, 2013 [1 favorite]


any other advice

Nope that's about it.
posted by (Arsenio) Hall and (Warren) Oates at 11:43 AM on April 23, 2013 [1 favorite]


Note that everyone who sold 'first' was paired with a buyer who waited to be 'right' (and likely made some money doing it). And that the prevailing price went back basically immediately.

But since the search for buyers and sellers can't be instantaneous, isn't there already some wiggle-room in the system, involving promises to buy and sell, that take up the slack between intent and action? When there are more sellers than buyers, it was my (possibly flawed) understanding that brokerages temporarily buy while someone who wants it is found, and when buyers don't have a matching seller, they actually sell a promise to sell for the current price of the stock.

It's unclear what a better response could possibly look like.

Well, the current system is such that it is easily spooked. This is because it's evolved in such a way that there is monetary value in jumping the gun. If you can fake the sound of a starter's pistol, so to speak, and are prepared to take advantage of the resulting market twitch, you can profit from that, and that's a problem. Although eventually, when it cost them enough money, the people participating in the market would learn to stop being so twitchy.
posted by JHarris at 11:44 AM on April 23, 2013 [2 favorites]


Serious question - why would you want to sell stocks just because there is a crisis of some kind? They seem to always go back up after some panicked trading.
posted by thelonius at 11:46 AM on April 23, 2013 [2 favorites]


I guess my main question is what happened first? Did some algorithm sweeping Twitter see the tweet, match 'explosion' to 'white house' and start selling, causing an avalanche of other algorithms to buy and sell based on that activity?

Did a human somewhere hit some sort of panic switch, which was then caught on to by algorithms?

On preview, the same question that thelonius just asked: what advantage is there in selling during crisis, and why is that advantaged codified in the rules of a trading algorithm?
posted by codacorolla at 11:48 AM on April 23, 2013


This was probably caused by algorithmic trading that monitors twitter, right?

lol, no.
posted by RustyBrooks at 11:50 AM on April 23, 2013 [4 favorites]


The advantage in selling during a crisis is that if the stock market is going to drop 10% today, and you get out after it dips 1%, you've done pretty well for yourself.

The disadvantage is that if the price is going to jump right back up after it dips 1%, you've done poorly.

Buy low and sell high.
posted by leopard at 11:51 AM on April 23, 2013


Why, if we didn't let the intern with the jailbroken Android phone post unreviewed content at any time of day with their third-party Twitter client written by some developer in Kazakhstan, we would be *ruined*!

(Not to say that this is how the AP operates ... at least I hope not)
posted by RobotVoodooPower at 11:52 AM on April 23, 2013


Why do you say lol no? There are high-frequency trading algorithms that monitor the news and trade on what they see. Here is the first google hit example.
posted by Mid at 11:52 AM on April 23, 2013 [1 favorite]


You should probably actually read that article, for one thing, and realize that it doesn't support the idea of a HFT-bot reading twitter and freaking out, and second realize that the article is mostly horse shit.
posted by RustyBrooks at 11:55 AM on April 23, 2013 [1 favorite]


This was a completely bogus message.

BREAKING: Bloomberg anchor just referred to this as a bogus tweet.
posted by phunniemee at 11:57 AM on April 23, 2013


Put me in the camp of people who don't think it's completely crazy to think that there are algorithms trading based on twitter analysis.
posted by diogenes at 11:59 AM on April 23, 2013 [1 favorite]


Buy low and sell high.

And be wary of using automated stop-losses if you trade electronically.
posted by saulgoodman at 12:00 PM on April 23, 2013


Confession: I am actually a market trading algorithm commenting on MetaFilter slacking at my job.
posted by MCMikeNamara at 12:02 PM on April 23, 2013 [12 favorites]


I work in an asset management firm . . . .

I misread this as "asshat management" and now have an awesome new job description.
posted by The Bellman at 12:04 PM on April 23, 2013 [15 favorites]


Put me in the camp of people who don't think it's completely crazy to think that there are algorithms trading based on twitter analysis.

There's even an acronym for it!

"Social Market Analytics (SMA) quantifies Social Media data for traders, portfolio managers, hedge funds and risk managers. Our data provides predictive indicators of market volatility and sentiment levels to gain an edge for directional movement strategies."
posted by diogenes at 12:10 PM on April 23, 2013 [1 favorite]


The New York Times is reporting that it was malware and being claimed by the Syrian Electronic Army.
posted by Skorgu at 12:13 PM on April 23, 2013 [1 favorite]


I got nothing else. Obviously.

So what's up with this Syrian Electronic Army anyway? They keep trying to confuse and scare people, like clowns.
posted by saulgoodman at 12:15 PM on April 23, 2013


The advantage in selling during a crisis is that if the stock market is going to drop 10% today, and you get out after it dips 1%, you've done pretty well for yourself.

I suppose that makes sense, but isn't it circular? Is the reason that everyone is selling during a crisis is that everyone sells during a crisis? Is there an intrinsic reason that something on the level of the Whitehouse being attacked would make you want to sell stock?
posted by codacorolla at 12:15 PM on April 23, 2013


Thank god it wasn't the Electronic Army of Syrtia. Those folks are right bastards.
posted by edgeways at 12:17 PM on April 23, 2013 [5 favorites]


Figure out who profited and you have a lead as to the source of the false information.
posted by Renoroc at 12:19 PM on April 23, 2013 [1 favorite]


150 points? That's all an "attack" on the White House is "worth," with the President "injured"? The Dow is at 14700. 150 points is barely 1%.
posted by chavenet at 12:20 PM on April 23, 2013


Social Market Analytics (SMA)

I read the link that I provided earlier more carefully, and it doesn't actually demonstrate the kind of analysis that would apply in this kind of situation. I still think it's within the realm of possibility though.
posted by diogenes at 12:22 PM on April 23, 2013


150 points? That's all an "attack" on the White House is "worth," with the President "injured"? The Dow is at 14700. 150 points is barely 1%.

I imagine confirmation would have sent the markets much further.
posted by leotrotsky at 12:25 PM on April 23, 2013 [1 favorite]


150 points in a day isn't notable; 150 points in a few seconds is.
posted by glhaynes at 12:30 PM on April 23, 2013 [1 favorite]


> 150 points? That's all an "attack" on the White House is "worth," with the President "injured"? The Dow is at 14700. 150 points is barely 1%.

That was what happened in the space of two minutes (from 13:08 to 13:10 per the google graph) before the AP corrected and the stock market bounced back.

On preview, what glhaynes said.
posted by Westringia F. at 12:31 PM on April 23, 2013


I would have thought destroying government would have made the market happy. Or are they all a bunch of socialists after all?
posted by srboisvert at 12:33 PM on April 23, 2013 [1 favorite]


Got nothing on the 2010 Flash Crash
posted by chavenet at 12:34 PM on April 23, 2013 [1 favorite]


I also don't immediately make any connection in my mind between "something happened in the White House, possibly an accident" and "I need to dump all my stock." Once we get into the different ouroboros layers of stock trading then it's like "I need to dump my stock because everyone else is going to dump their stock, because they also think everyone else is going to dump their stock" and it's just illusory responses to illusory panic all the way down.
posted by naju at 12:37 PM on April 23, 2013 [2 favorites]


I suppose that makes sense, but isn't it circular? Is the reason that everyone is selling during a crisis is that everyone sells during a crisis? Is there an intrinsic reason that something on the level of the Whitehouse being attacked would make you want to sell stock?

The circularity of the reasoning actually makes it more compelling. If everyone else is going to freak out if the market drops 2% suddenly, then you'd be smart to get out fast after it drops 1%. Which in turns means that you may want to invest in a program that tracks Twitter and scans it for any sign of news that may trigger a drop, just so you can get out first.

Intrinsically speaking, no, there's really no reason to believe that the earnings of S&P 500 companies are particularly dependent on Barack Obama's well-being.
posted by leopard at 12:39 PM on April 23, 2013 [2 favorites]


in the space of two minutes

Could enough people have read the tweet (and the retraction) and reacted quickly enough to cause that action in the market in two minutes? I feel like high frequency trading had to be involved for that kind of response. And if it was involved, what triggered the movement in each direction if not Twitter itself?
posted by diogenes at 12:42 PM on April 23, 2013


Considering shit like this is nearly always a quick dip and recovery, it seems anyone with any actual brains in their head would buy (once things seem to hit bottom), no?
posted by Sys Rq at 12:42 PM on April 23, 2013


The circularity of the reasoning actually makes it more compelling.

Well, it makes it less rational and more chaotic (in the sense of non-linear) anyway. So much for efficient markets.
posted by saulgoodman at 12:43 PM on April 23, 2013


Maybe actual humans make the initial trades that trigger the movement, and then the algos pick up on the movement and accelerate it in either direction?
posted by diogenes at 12:45 PM on April 23, 2013




Maybe actual humans make the initial trades that trigger the movement, and then the algos pick up on the movement and accelerate it in either direction?
I think this is probably on target. I kind of doubt that there are sufficient trading bots that are set up to successfully detect tweets indicating that the President has been injured in an explosion at the White House. However, I don't at all doubt that there are sufficient trading people who look at the AP Twitter feed to set off an algorithmic panic.
posted by Flunkie at 12:51 PM on April 23, 2013


It's nice to know that if there is a huge national crisis, trading firms will respond by making it WAY WAY WORSE by immediately selling everything they have on hand. Good looking out, yo.
posted by ErikaB at 12:54 PM on April 23, 2013 [3 favorites]


Did Reddit identify the bombers yet?
posted by Artw at 12:55 PM on April 23, 2013 [14 favorites]


Considering shit like this is nearly always a quick dip and recovery, it seems anyone with any actual brains in their head would buy (once things seem to hit bottom), no?

Very few people can accurately assess when things hit bottom. Those that can are pretty damn rich.
posted by brain_drain at 12:56 PM on April 23, 2013 [2 favorites]


for some reason, it feels to me like this is exactly the sort of thing that George Carlin meant when he referred to human chaos as exciting and entertaining.
posted by herbplarfegan at 12:58 PM on April 23, 2013 [1 favorite]


That headline.

I used to know a guy named Dow. An omni-talented musican, singer, actor, and entertainer, recently deceased.

Nobody could top Dow as an insult comic and among many other gigs, he used to volunteer to work a dunk tank (in a tuxdeo and tophat) for charities.

When I saw the headline, "Dow tanks", I thought maybe he was finally getting his due online, and now I'm doubly sad that Dow Thomas is gone but Dow Jones is still here to insult us.
 
posted by Herodios at 12:59 PM on April 23, 2013 [1 favorite]


Thank god it wasn't the Electronic Army of Syrtia. Those folks are right bastards.

The elite Armée électronique de la Syrie is not to be joked about.
posted by vidur at 12:59 PM on April 23, 2013 [1 favorite]


Could enough people have read the tweet (and the retraction)

Like I said in a comment above, immediately after it was tweeted it was spoken as breaking news by the squawk financial news dude that broadcasts to my (and I assume many, many other) office's trading floor. No one at my office even knew it was twitter-fueled until after the whole thing happened. Talking news guy in a box said it was news, therefore it became news.
posted by phunniemee at 1:11 PM on April 23, 2013 [1 favorite]


I kind of doubt that there are sufficient trading bots that are set up to successfully detect tweets indicating that the President has been injured in an explosion at the White House.

That does seem unlikely. And if anybody was attempting to make trades based on some kind of social media keyword analysis, they're probably reconsidering that idea now.
posted by diogenes at 1:11 PM on April 23, 2013


Thank god it wasn't the Electronic Army of Syrtia. Those folks are right bastards.

Splitters!
posted by zombieflanders at 1:12 PM on April 23, 2013 [1 favorite]


phunniemee, did anybody on your trading floor actually make any trades based on the bogus tweet?
posted by diogenes at 1:14 PM on April 23, 2013


Imagine what would happen if you could put some fake news out that the market would be guaranteed to react to, and sustain it long enough to get a full array of pre-planned trading plays done before the hoax was uncovered.
posted by vibrotronica at 1:19 PM on April 23, 2013 [1 favorite]


I await your proposal to decouple the ownership of companies from the economy.

I believe that has already been done with the millisecond trading in and out of stocks done by computers.

How much ownership does one really have if the stock is held for under a minute?
posted by rough ashlar at 1:20 PM on April 23, 2013


You should probably actually read that article, for one thing, and realize that it doesn't support the idea of a HFT-bot reading twitter and freaking out, and second realize that the article is mostly horse shit.

I read the article. It says that a hedge fund is using Twitter as one input in a trading model. That is totally consistent with my conjecture that algos using Twitter input had a role in the drop. There are pages of articles on the subject of trading algos using Twitter input. I'm not getting why you think this is impossible. Care to offer anything other than derision?
posted by Mid at 1:21 PM on April 23, 2013


Could enough people have read the tweet (and the retraction) and reacted quickly enough to cause that action in the market in two minutes? I feel like high frequency trading had to be involved for that kind of response. And if it was involved, what triggered the movement in each direction if not Twitter itself?

Kinda makes you want to put on your tinfoil hat, doesn't it.

Why would, and how can, anyone trust this market?
posted by kgasmart at 1:24 PM on April 23, 2013 [1 favorite]


Kind of embarrassing that a grown up country like USA can be affected by something with a kiddie name like tweet.
posted by Cranberry at 1:25 PM on April 23, 2013


But seriously, it really doesn't matter in a lot of cases what a company's stock is worth--unless the company is holding a lot of its own stock and/or its executives are compensated in stock.

Said by someone who does not have a 401k or IRA. People are still smarting over 2007/08 where may lost up to 1/2 of their net worth.

Note: The automatic stops put in place back then did not kick in in this case. I believe the threshold is a 2% move.
posted by Gungho at 1:30 PM on April 23, 2013


Yet again, I feel like I'm living in the wrong science fiction future.
posted by CBrachyrhynchos at 1:30 PM on April 23, 2013 [5 favorites]


who don't think it's completely crazy to think that there are algorithms trading based on twitter analysis.

Short Bieber, go long on Grumpy Cat!
posted by drezdn at 1:33 PM on April 23, 2013 [4 favorites]


This is truly shocking. I would have never thought there were people who still believed anything AP published.
posted by micayetoca at 1:39 PM on April 23, 2013


I'm a little surprised that @CNN didn't retweet everything from the hacked @AP account immediately. Isn't twitter their sole source now?
posted by eyeballkid at 1:42 PM on April 23, 2013 [3 favorites]


FWIW I was reading Twitter when this happened. I don't follow the AP, but someone retweeted it and it ended up in my feed.

I immediately googled something like "white house explosion obama", got nothing, and knew it had to be bogus. (In contrast when the Boston Marathon bombings happened it trickled into my feed from a variety of independent sources almost simultaneously.)

I mean, what is the likelihood that NO OTHER NEWS SOURCE except the AP had access to this information, and there was no chatter about it on informal channels? I don't think news media has worked that way since the 80's.

It wasn't trending in my area until well after the AP posted the retraction -- my assumption is that this hiccup is being talked about far more than the supposed event ever was.

Any twitter-monitoring algorithm that could have caused this in the absence of real human hysteria would have to be set on an absolute hair-trigger.
posted by Sara C. at 1:43 PM on April 23, 2013 [1 favorite]


I also don't immediately make any connection in my mind between "something happened in the White House, possibly an accident" and "I need to dump all my stock."

It doesn't have to be "dump all my stock" for it to move the market. It only has to be some large participants becoming suddenly unsure enough to move the needle a single percentage point. Is it really so impossible to imagine a scenario where even a small chance of some very large event might make you unsure enough that maybe you want to slow down?

Here's a totally bullshit example that I just made up: you're Meatlifter Airlines. You consume something like a billion dollars worth of oil a year. There's some chance that it was a real explosion. There's some chance that it was intentional. There's some chance that it was in some way associated with countries where that oil comes from. Even if the sum of these is small we're still talking millions or tens of millions of dollars and that's assuming you're not maybe a bit risk averse because hey, nobody ever got fired for being too paranoid.

And of course all of the other airlines can do the same math. And so can all the trucking companies that buy oil. And the plastics companies that refine oil. And the manufacturing companies that use those plastics or buy that transportation. And the retailers that have to price in lower demand because of higher gas prices.

That's all one commodity that's easy to think about; I'm sure there are similar stories for whole other chunks of the economy that are more complicated.

And again, note that this only affected people who either intentionally set orders to execute at a specific price or people who essentially said "I want to buy or sell FOO at any price whatsoever" (market orders) during those two minutes.
posted by Skorgu at 1:43 PM on April 23, 2013


Although it's also strange that enough traders think a presidential injury / death would substantially alter any DOW company's profits to actually move the needle, so to speak.

it's not about rational evaluation of profits, it's about sheer nervousness - people are scared these days and not really sure why

it really wouldn't take much to send the stock market into a tailspin right now
posted by pyramid termite at 1:44 PM on April 23, 2013


Even if the sum of these is small we're still talking millions or tens of millions of dollars and that's assuming you're not maybe a bit risk averse because hey, nobody ever got fired for being too paranoid.

Which is why all the airlines hedge against this by buying options on fuel, so that sudden spikes don't cream them. Well, except for cash poor airlines, who can't hedge, they get creamed when oils spikes hard -- most recent example in my mind was TWA.

So, if you're selling MFLA, then, well, either you know that Meatfilter Air doesn't hedge fuel, or you're selling for stupid reason.
posted by eriko at 1:48 PM on April 23, 2013


eriko: I meant MLFA itself would be acting to move the market itself not that people would sell MLFA. It's a simplistic example.
posted by Skorgu at 1:51 PM on April 23, 2013


Meanwhile, the link between Anne Hathaway and Berkshire-Hathaway's stock price remains unconfirmed.
posted by ckape at 1:51 PM on April 23, 2013 [1 favorite]


If we got rid of people who did things for stupid reasons we wouldn't have much of a stock market left.
posted by ckape at 1:52 PM on April 23, 2013 [3 favorites]


phunniemee, did anybody on your trading floor actually make any trades based on the bogus tweet?

No, the reaction in my office was "shit, shit, what's happening, shit, [name of the guy most of the traders expect to magically fix their problems], shit, wait, did they just say there was an explosion at the white house, oh fuck, why isn't this on tv yet, now they're saying they can't confirm, shit the market is going nuts, is the president ok, wtf WAS that!?"
posted by phunniemee at 1:52 PM on April 23, 2013 [2 favorites]




algorithmic trading is not the same thing as high frequency trading.
posted by garlic at 2:08 PM on April 23, 2013


See also another way of looking at the scary charts of this.

Some physics colleagues refer to plots that have the y-axis limits set to the min and max of the data, rather than something reasonable (i.e., 0 and 1 for some normalized set) as stock market plots.
posted by dirigibleman at 2:11 PM on April 23, 2013 [6 favorites]


I misread this as "asshat management" and now have an awesome new job description.

Are you a mod here now?
posted by srboisvert at 2:16 PM on April 23, 2013 [9 favorites]


On second thought, the SEC is probably going to be looking very closely at anyone holding short positions that profited from this. If there is a profit motive in this, someone will go to jail for fraud, among other things.
posted by Freen at 2:37 PM on April 23, 2013


The best part was where you said "the SEC is probably going to be looking very closely."
posted by tonycpsu at 2:39 PM on April 23, 2013 [11 favorites]


Just imagine if people's Social Security checks were tied to these sorts of shenanigans...
posted by Blazecock Pileon at 2:41 PM on April 23, 2013 [3 favorites]


"...it's just illusory responses to illusory panic all the way down." is the best description of our economy that I have ever read.
posted by mr_crash_davis at 2:48 PM on April 23, 2013 [1 favorite]


CBrachyrhynchos: "Yet again, I feel like I'm living in the wrong science fiction future."

This is clearly the Darkest Timeline.
posted by brundlefly at 2:51 PM on April 23, 2013 [3 favorites]


Just imagine if people's Social Security checks were tied to these sorts of shenanigans...

CPI and Chained CPI have nothing to do with stock market indices.

If you can crash the CPI with a tweet I will be impressed.
posted by GuyZero at 2:53 PM on April 23, 2013


GuyZero, I think that comment was in relation to the various Social Security privatization schemes that have been proposed over the years.
posted by ckape at 2:57 PM on April 23, 2013 [2 favorites]


> See also another way of looking at the scary charts of this.

That's a good point about the illusion caused by the y-axis limits -- the link Skorgu posted definitely underscores the fact that that "tanking" was <1% of the volume. Likewise, zooming out of the google graph* to the 1-month or 3-month view shows that even if it "stuck" where it was at its lowest point, the Dow would still have been up from last week's decline and above where it was last month.

At the same time, though, I think what's important is not the magnitude of the change, but rather the slope (which requires zooming to be seen) and its cause. What's striking to me is the combined idea that a crisis of that magnitude can have economic consequences to the tune of 75pts/min, and that the recent small spate of Twitter hackery (not just the AP, but 60 Minutes and NPR) suggests that it could be possible to organize a concerted widespread hack (eg, one that follows a more typical media profile, a la (A)H&(W)O's comment) that has a more sustained effect. The resulting chaos of something like that could be much more significant. Worse, if the resulting volatility caused people to lose faith in the stability of the US stock market, the ramifications could be quite serious (eg, consider the effect of perception on the value of Brazil's currency). What's scary to me isn't the size of the plunge in the charts, but rather the notion that it could be a proof-of-concept demonstration for an effective terrorist cyber attack.

That being said, I'd far prefer fictional violence and illusory panic to the real kind.

* In fact, the google graph is a pretty egregious offender as far as this illusion goes, since it dynamically rescales the y-axis range as you scroll in time.
posted by Westringia F. at 2:57 PM on April 23, 2013 [3 favorites]


This article suggests that in fact it's very likely somebody made a lot of money off this.
posted by wolfdreams01 at 2:58 PM on April 23, 2013


wolfdreams01, that article "suggests" it, but the author really has no idea, definitive title notwithstanding.
posted by leopard at 3:12 PM on April 23, 2013 [1 favorite]


w00t! that was easy! and to think i spent the last 50 years actually working!
posted by quonsar II: smock fishpants and the temple of foon at 3:12 PM on April 23, 2013


I misread this as "asshat management" and now have an awesome new job description.
I just turned around looking for the secret camera.
posted by fullerine at 3:14 PM on April 23, 2013


wolfdreams01: "This article suggests that in fact it's very likely somebody made a lot of money off this."

Maybe it was the AP itself. They've had rocky finances for yonks now.
posted by chavenet at 3:16 PM on April 23, 2013


Watching high-speed trading increase from 2007 to 2012 shows how automated trading has become. Some people with fast connections and infrastructure probably made out like bandits today. Good thing everything's too big to fail.
posted by fifteen schnitzengruben is my limit at 3:36 PM on April 23, 2013


GuyZero, I think that comment was in relation to the various Social Security privatization schemes that have been proposed over the years.

Yeah, sorry I wasn't clearer. These sorts of events always remind me of the This Modern World editorial cartoon with images of Vegas Vic juxtaposed atop Wall Street buildings. The notion that politicians want to put Social Security into the hands of Wall Street gamblers whose computer programs bet on rumors like these is pretty terrifying...
posted by Blazecock Pileon at 3:40 PM on April 23, 2013 [1 favorite]


No, the reaction in my office was "shit, shit, what's happening, shit, [name of the guy most of the traders expect to magically fix their problems], shit, wait, did they just say there was an explosion at the white house, oh fuck, why isn't this on tv yet, now they're saying they can't confirm, shit the market is going nuts, is the president ok, wtf WAS that!?"

That's what I don't get. The reaction you describe seems like it would be pretty typical. But if we rule out computers as triggering the movement, that means that there were lots of people who went from "shit, what's happening" to "sell" in seconds. And then back to "buy" seconds later. That seems hard to believe.

algorithmic trading is not the same thing as high frequency trading.

True, but there probably aren't many high frequency traders doing hand calculations and then making order manually.
posted by diogenes at 4:28 PM on April 23, 2013


I'm shocked to learn that there are speculative investors in the equity markets.
posted by ceribus peribus at 5:09 PM on April 23, 2013


This story couldn't come at a worse time for the LA Times editor just arrested for helping Anonymous gain access to its servers...
posted by Fupped Duck at 9:48 PM on April 23, 2013 [1 favorite]


Yet again, I feel like I'm living in the wrong science fiction future.

This is just what growing old feels like.
posted by aught at 6:04 AM on April 24, 2013 [1 favorite]


Warren Buffett said it all: " Be fearful when other are greedy, and greedy when others are fearful".
Sometimes that fear (sell off) comes from bad information.
posted by AllChildrenMatter at 6:14 AM on April 24, 2013


This was probably caused by algorithmic trading that monitors twitter, right?

This Wall Street Journal article says that's exactly what happened.
posted by ultraviolet catastrophe at 7:17 AM on April 24, 2013 [2 favorites]


Thanks for that article. I'm glad to learn that I'm not going crazy.

Here's the money quote:

Such computer programs "are incredibly sophisticated," said Eric Pritchett, chief executive at Potamus Trading, a brokerage firm that specializes in electronic trading. A program "reading the feed and seeing 'blowing up' can also read the one saying the account was 'hacked,' " he said.
posted by diogenes at 8:35 AM on April 24, 2013




High speed traders are not the same financial companies as those that made CDOs and mortgage backed securities since that's some very different sort of businesses. And high frequency trading companies are very aware they can fail with Knight's issues last August.
posted by garlic at 10:31 AM on April 24, 2013


If you can crash the CPI with a tweet I will be impressed.

@GuyZero Don't you think the #CPI looks tired?
posted by DevilsAdvocate at 12:51 PM on April 24, 2013 [4 favorites]


@DevilsAdvocate I got all my food for free today as well as $1.3M of durable goods! My #costofliving is negative!
posted by GuyZero at 12:55 PM on April 24, 2013 [1 favorite]


Incredibly sophisticated? Poppycock. It's an algorithm, not a magic imp. It has just as much trouble with interpreting human language as any other computer program.
posted by JHarris at 1:13 PM on April 24, 2013 [2 favorites]


Think Watson, not Siri.
posted by DevilsAdvocate at 1:17 PM on April 24, 2013 [1 favorite]


Thats the thing. No one tweet should be terribly influential in pricing. A single signal among thousands. If I had to guess, the real problem had less to do with the algorithm and more to do with the people running them panicking, pulling their money out of the market, and effectively causing the drop they feared.
posted by pwnguin at 6:22 PM on April 24, 2013


But it wasn't just some random tweet, it was a big deal breaking news organization's tweet that was probably RTed by many very quickly. Very plausible that an algo would put weight on something like that.
posted by Mid at 9:05 PM on April 24, 2013


Think Watson, not Siri.

Think Google Translate.
posted by JHarris at 11:36 PM on April 24, 2013


pwnguin: "If I had to guess, the real problem had less to do with the algorithm and more to do with the people running them panicking, pulling their money out of the market, and effectively causing the drop they feared."

This is probably the most plausible speculation I've heard. If the market goes nutty and takes your automated trading algorithm out of the conditions it has been tested under you can lose a lot very quickly, so it seems likely to me that there's always someone sitting around ready to hit the big red button when the market goes wonky.
posted by wierdo at 12:47 PM on April 25, 2013


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