Automated News Crawling Evaporates $1.14B

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.

BEHOLD....

... the power of the GOOG!!

Re:BEHOLD....

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.

Re:BEHOLD....

And, now you know "the rest of the story".

That's Paul Harvey's tagline, not Casey Kasem.

Holy crap.

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.

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.

Holding a single stock is ... unwise ...

It's gambling, it isn't investing.
 

Re:Holy crap.

Who's responsibility though? Should Google have people fact check every news story their bots pick up before putting it up on the aggregator? Should stock companies put fact checkers between the newsfeeds and their stock sale bots? Should online newspapers have fact checkers on every article they put online?

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.

Re:Holy crap.

Should online newspapers have fact checkers on every article they put online?

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.

Re:Holy crap.

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.

Re:Holy crap.

I'm curious about the trading bots. Were the trading bots dumping the stock in 2002? So, if this story were *current* would the bots have simply destroyed UA?

Re:Holy crap.

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.

Re:Holy crap.

"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).

Next time...

...perhaps they'll be more careful about whose luggage they lose.

This is too awesome

I laughed so hard my coworkers made me go outside.

I love Google.

big bad bot battle

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.

"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

After reading TFA, it sounds like google is LEAST to blame out of the many many automated systems involved. First of all, the damn story should have been dated. That's the tribune's fault. Google doesn't seem to have claimed it as today's news, only ranked it high up. No one should have ever reprinted the story without actually CHECKING WITH UNITED AIR FIRST. That's neither google nor the tribune's fault. That's every service that reprinted the story as new without verifying its fault. Google and tribune seem least at fault because neither ever gave any indication it was a new story.

Re:A lot of people's fault, mostly NOT google's

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.

Hello? Is this thing on?

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

I am by no means a lawyer but it sounds like the automated trading software has the majority of the blame since it is the one that actually intiated the trade. So what if google descided to reprint old news...nothing wrong with that.

Re:legal perspective

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.

Maybe if

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.

Re:It's clear. Automated trading programs are moro

Time to stop using you xBox to run your financial empire, kids. Get the grizzled old traders back and fire the children.

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.

Re:What if Google evaporates itself?

No, that wouldn't be awesome at all. It's amazing how ignorant slashdot users can obviously be if you take a second to think about the consequences of what they suggest. This is, in fact, the second time today I've responded to someone calling for the spectacular failure of a major company, in the middle of a major economic downturn. Ignoring the huge impact Google falling would have on our economy, maybe you can imagine something a little more practical, that hits home: What search engine do you use?

Artificial Intelligence vs Natural Stupidity

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.