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Automated News Crawling Evaporates $1.14B
Posted by
kdawson
on Wed Sep 10, 2008 03:10 PM
from the who-shall-watch-the-watchers dept.
from the who-shall-watch-the-watchers dept.
cmd writes "The Wall Street Journal reports that Google News crawled an obscure reprint of an article from 2002 when United Airlines was on the brink of bankruptcy. United Airlines has since recovered but due to a missing dateline, Google News ran the story as today's news. The story was then picked up by other news aggregators and eventually headlined as a news flash on Bloomberg. This triggered automated trading programs to dump UAL, cratering the stock from $12 to $3 and evaporating 1.14 billion dollars (nearly United's total market cap today) in shareholder wealth. The stock recovered within the day to $10 and is now trading at $9.62, a market cap of $300M less than before Google ran the story." The article makes clear that Google's news bot only noticed the old story because it has been voted up in popularity on the site of the South Florida Sun-Sentinel newspaper. The original thought was that stock manipulation may have been behind the incident, but this suspicion seems to be fading.
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BEHOLD.... (Score:5, Funny)
... the power of the GOOG!!
Re:BEHOLD.... (Score:5, Funny)
The story begins in the summer of 1995 when a Standford graduate student finds himself -- without a suitcase -- pacing back in forth in front of an empty United baggage carousel at 4 AM. ....
That graduate student's name: Sergey Brin.
And, now you know "the rest of the story".
With apologies to Casey Kasem.
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Re:BEHOLD.... (Score:5, Informative)
And, now you know "the rest of the story".
That's Paul Harvey's tagline, not Casey Kasem.
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Re:BEHOLD.... (Score:5)
Well, that's just moderator revenge after I posted the followup.
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Re:BEHOLD.... (Score:5, Informative)
I think you mean Paul Harvey [wikipedia.org].
No big deal. It's not like you reported a six-year-old story as if it were a current event.
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Re:BEHOLD.... (Score:5, Funny)
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Re:BEHOLD.... (Score:5, Funny)
The article makes clear that Google's news bot only noticed the old story because it has been voted up in popularity on the site of the South Florida Sun-Sentinel newspaper.
Hmmm... Quick! Everybody click this link! [forbes.com]
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Re:BEHOLD.... (Score:5, Informative)
On all ends it was a failure of new technology, but what really caused all of the $$ to fly was human error: no one at Tribune put a date on the initial article, no one (or at least quickly enough) from Google put a date on the crawled article, and the stock investors didn't look carefully at their applications.
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Human error (Score:5, Insightful)
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Re:BEHOLD.... (Score:5, Insightful)
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Re:BEHOLD.... (Score:5, Insightful)
Automatic trading applications take their inputs from Beta software?
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Holy crap. (Score:5, Insightful)
When you're talking about numbers like that then there is definitely a responsibility somewhere to try to prevent it happening again.
Re:Holy crap. (Score:5, Insightful)
If the interactions were truly due to automation and not active stock manipulations, then I think the responsibility lies in the investor who was stupid enough to use automation and "triggers" to place their trades. That said, I am sure anyone who day traded today made a bundle of money if they hit the swings right. The market has become emotional, and often lacks reason. A lot of it comes from things like "lack of research" and making the market a pure number / target / trigger driven game that the hedge fund can sell you in their little black box.
Wild. That's all I have to say.
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Holding a single stock is ... unwise ... (Score:5, Insightful)
It's gambling, it isn't investing.
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Re:Holy crap. (Score:5, Insightful)
If you're in it on a "timely" basis, you're doing it wrong.
The playing the margins crap only works if that's your job. Otherwise you need to diversify, pick decent stocks, and stick to time windows of at least a week.
And I'll tell you this for free. People who are wealthy aren't playing the stocks minute by minute. They're wealthy because they play the long game. Right now they're picking up bargains whenever the market drops, and they're holding on to them for when the market evens back out. It's the scrubs who are panicking and losing their shorts selling stocks based on rumor.
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Re:Holy crap. (Score:5, Interesting)
This does show just how fragile a system can be when there is a strong disincentive to going second or third on tasks that one would normally think you should have human interaction.
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Re:Holy crap. (Score:5, Insightful)
Abso-fracking-lutely.
Along with the right to a free press comes the responsibility to be right. Most newspapers ignore the responsibility while hiding behind the right.
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Re:Holy crap. (Score:5, Funny)
An automated submission editor would notice that the same story had been posted previously, so it would take about two days before someone realized the bots were running the show.
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Re:Holy crap. (Score:5, Insightful)
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Re:Holy crap. (Score:5, Insightful)
Yes, but I don't think the main responsibility is with Google. Google can make mistakes. It's all the other news organizations and stock selling software should be blindly following Google's news bot.
A lot of dumb people probably lost a lot of money, while a lot of smart people probably made a lot of money over this.
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Re:Holy crap. (Score:5, Interesting)
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Re:Holy crap. (Score:5, Insightful)
Why is outlawing them even remotely necessary? It is the responsibility of the investor to make sure their tools are functioning properly, and noone elses.
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Mod parent up! (Score:5, Insightful)
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Re:Holy crap. (Score:5, Insightful)
"Program trading" only sometimes refers to anything automated. The name doesn't imply "computer program", merely a set of rules to be followed upon certain events. Computer automation adds little to the problem - people reacting to the news flash with orders to trade on such news will screw up just as badly, and almost as fast.
Being the first to react to news has *always* been a way to make money in the stock market, and in todays world where news speads at internet speed, staying ahead of the public spread of fresh news requires acting before there's time to use any sort of judgement.
If your not comfortable with this sort of crazy BS, investing in individual stocks is not for you. IMO, investing in individual stocks is a mistake for anyone tht doesn't do tht full time, and most who do (to judge by the track records of most indivdual money managers, hedge funds, and even mutual funds).
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Re:Holy crap. (Score:5, Insightful)
That's not investing, that's gambling (aka speculation).
-JS
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Re:Holy crap. (Score:5, Insightful)
Investing SHORT TERM in individual stocks is a bad idea. Buying a reasonable stock and holding onto it long term isn't so dangerous.
I do wish I'd heard about this sooner though. What a great opportunity to triple an investment.
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Re:Holy crap. (Score:5, Informative)
Oh, I disagree; you can invest in individual stocks without the crazy BS, as long as you don't attempt to day-trade (that is, to make short-term profits by timing the market).
Even a huge price fluctuation like this barely registers with me, because I only look at my stocks' performance about once a quarter. (If that.)
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Re:Holy crap. (Score:5, Insightful)
How about letting stupid people lose money? Sounds like a better solution to me.
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Re:Holy crap. (Score:5, Insightful)
And what? Require traders to fill out a captcha every time? Or would you protect people from themselves by -- penalizing them/putting them in jail/making them pay large fines -- for using trade automation? How could enforce such a law anyway? It's not like Ebay can even stop all the automated third-party sniping tools that are being used on its site?
Besides, everyone can blame the evils of trade automation, but hysteria can still happen without trade automation. And may be it did in this case. I certainly know a relative or two who would make immediate trades based on unverified little blurbs they might have happened to catch on TV. Trade automation only makes hysteria more efficient. Outlawing it wouldn't solve the root of the problem. And may be, this decision should just be left to the individual investor/trader who decides to take the risk to use it -- or not.
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Re:Holy crap. (Score:5, Insightful)
Seriously, this is a case of a lot of stupid people making stupid mistakes. If you have a system that dumps all stock based upon a bad headline, then that's how you choose to play the stock market. Nobody can honestly say that it isn't risky to trade in stocks.
If they need something, perhaps going after those companies for artificially deflating the stock's value would be the best course. It's not like this couldn't have happened with humans.
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Re:Holy crap. (Score:5, Insightful)
That's right -- the source of the story should be liable.
So, which source? The original journalist, for reporting on an event at the time in 2002? How about the original paper, which listed it as a popular story? Google, which added the story to their news aggregation feed? Other news outlets, for reporting it as new news when it was seen on an automatic feed?
I don't think it would be right to prosecute any of these. Information is not illegal. It's how you act on it that creates a liability. Or am I way off base, here?
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Next time... (Score:5, Funny)
This is too awesome (Score:5, Funny)
I love Google.
big bad bot battle (Score:5, Funny)
So the NewsBots trick the TradeBots, and we humans are left on the sidelines, hoping that we don't get squished in the process.
Sounds like a sad Transformers sequel.
that'll teach you. (Score:5, Funny)
"I'm sorry, Mr. Schmidt. Your flight has been delayed by two hours."
"Son of a... do you people know who I am? Dammit, get Brin on the phone."
A lot of people's fault, mostly NOT google's (Score:5, Insightful)
Re:A lot of people's fault, mostly NOT google's (Score:5, Insightful)
From the article:
"the UAL story began circulating widely via a posting by research firm Income Securities Advisors Inc. that was made available to users of Bloomberg L.P., the financial-news service widely watched on Wall Street."
Some analyst at a research firm made a big deal about the outdated article, after seeing it on Google news. THAT PERSON is the point of failure.
If you blame Google for this, you might as well blame Google for anyone posting any erroneous information they found after doing an internet search.
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Hello? Is this thing on? (Score:5, Interesting)
Google News crawled an obscure reprint...
The story was then picked up by other news aggregators...
This triggered automated trading programs...
Is there even a live person at the wheel anymore? Or is SkyNet just fucking with us now?
legal perspective (Score:5, Insightful)
Re:legal perspective (Score:5, Informative)
I agree. I worked a lot with stock trading management software, but I didn't know about automated ones that would buy/dump stocks over news items. (The one I worked on would simply analyze a set of rule and then dumped a recommendation, with all of its reasoning and justifications, that a human then reviews, check/unchecked their modification, and then ran -that- through automated trading systems).
Doing it 100% automatically just sounds crazy to me. Especially if its based on uncontroled, automated -news- for christ sake.
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Maybe if (Score:5, Insightful)
Maybe if the industry you were in wasn't on the brink of an economic disaster for the past 7 years an old story being dug up by Google News wouldn't have had such a drastic impact.
I can see the GNews developer in his cubicle... (Score:5, Funny)
Forbes has a better writeup (Score:5, Insightful)
This smells like a case of the Frankenstein complex to me. Although Google News may have linked the article in its recent results because of the fresh link on the Sun Sentinel home page, both the WSJ article and the Forbes investigation [forbes.com] make it very clear that the problem was a human editor who misinterpreted the original article and posted it as new information (with a freshly written headline) in a by-subscription-only investor information service that is carried on Bloomberg trading terminals.
A human saw the story, failed to check the date (there was no date line at the top of the article), refreshed it with a new headline, and republished it on a trading service that was believed to be a source of credible journalism by its readers.
Still sounds like manipulation to me (Score:5, Interesting)
So are you telling me that I could set up a "click-bot" to vote up old-news and make myself rich in the ensuing mayhem?
Evaporated wealth? (Score:5, Funny)
First of all, this is fucking hilarious. Anyone with "computers that robotically [sic] troll the Web for news stories and execute stock trades automatically" deserves to reap the consequences of turning their destiny over to a computer.
Second, I doubt that any capitol was destroyed by this. Wealth didn't "evaporate," it merely moved from stupid people to smarter people.
I only wish I were one of the smarter people, who bought some stock worth $12 for $3. I should write a program to watch for that sort of thing happening, and then automatically buy-- oh wait.
Missing Dateline (Score:5, Interesting)
Another point that no one seems to be picking up on is the problem of a lot of news sites neglecting to include a dateline on their stories. I've run in to this a number of times, and it makes it difficult to determine the relevance of a given story. It's a very simple thing to include the date the story was published, but a lot of sites don't seem to bother.
Joke Economy (Score:5, Interesting)
When a blip at a local Florida newspaper can combine with a trivial bug to destroy a major American airline in a morning, the economy and the "reporting" that the economy depends on is revealed to be a giant joke.
This episode was remarkable because it was huge, fast, and concentrated in a single high profile corporation. But how much of this broken system's smaller problems go "unnoticed"? Unnoticed as problems, at least, but showing up in all kinds of market valuations and economic decisions based on them that are all built on a landscape of errors, omissions and misunderestimations?
How can you trust an economy that makes mistakes like that? Anyone smart would find any alternative that's less crazy and put their money into it.
Re:It's clear. Automated trading programs are moro (Score:5, Insightful)
Never happen.
Every brokerage house in the country is increasing their presence in "Automated Trading". The majority of these companies income is now made on small percentage point fluctuations brokered very fast. With the automated systems pulling in that much more money than the traditional ones, and with more algorithms being designed (and held as proprietary info), what would YOU do?
Ridiculous? Yes. Not going away? Also Yes.
Might as well vote to bring back the horse drawn carriage since the price of gas has risen so much lately.
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Re:What if Google evaporates itself? (Score:5, Insightful)
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Artificial Intelligence vs Natural Stupidity (Score:5, Insightful)
I wonder who gets sued for this. Obviously Google's Crawler was at fault, somewhat
How do you figure that? It's doing what it's supposed to. The problem wasn't the crawler, it's the people who thought the crawler was some kind of magic AI that could find relevant stories for them.
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