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So.... I'm guessing if the AI messes up spectacularly, or if some reddit group manages to trick it to overinflate some penny stock, the stock markets will undo

So.... I'm guessing if the AI messes up spectacularly, or if some reddit group manages to trick it to overinflate some penny stock, the stock markets will undo all the trades, so that billionaires don't lose a few million?

HWR_14 3y ago
I think the major mistake in your statement is that the billionaires would lose more than a few million. But yes, they have reversed trades when people take advantage of flaws in automated market-marking scripts.
- slymon99 3y ago
  When were trades reversed when a market maker had a bad algo? If you are doing market manipulation, sure, your trades might get reversed, but if someone wants to puke money across the tape it's absolutely legal to take it.
  - HWR_14 3y ago
    I'm not able to find the story now, but there was a European (UK?) youngish person (teen?) who took advantage of bad market maker code to make hundreds of thousands. Those trades were reversed. The trades were under US jurisdiction.
roganartu 3y ago
Unlikely. The trades that caused KCG to collapse [1] were not reversed (~$400m in losses). Any firm worth their salt has risk systems in place to prevent runaway trading too, and those aren’t black boxes like AI/ML. They’re limits set for specific strategies or teams etc, and typically require approval from firm partners to increase past certain levels. Collapses of firms are far more often caused by lapses in proper risk management than bugs in code. The KCG collapse looks like a bug on the surface but was ultimately a misuse of accounts that sidestepped these risk systems, so they couldn’t stop the runaway caused by the bug. [1] https://en.m.wikipedia.org/wiki/Knight_Capital_Group https://en.m.wikipedia.org/wiki/Knight_Capital_Group
moonchrome 3y ago
AI hype is driving investment, not making the investments (according to the article)
- noduerme 3y ago
  What about all the AI-generated articles hyping AI? Maybe some AGI is already driving the hype that's driving the investments in itself...
williamcotton 3y ago
If you read the article you would know that this is about stock valuations for AI and AI adjacent companies, not about algorithmic trading.
- akira2501 3y ago
  The connection between this mistake and the valuations themselves seem to be related.
- meghan_rain 3y ago
  That's a big IF for HN tbh lmao

HWR_14 3y ago

I think the major mistake in your statement is that the billionaires would lose more than a few million. But yes, they have reversed trades when people take advantage of flaws in automated market-marking scripts.

slymon99 3y ago
When were trades reversed when a market maker had a bad algo? If you are doing market manipulation, sure, your trades might get reversed, but if someone wants to puke money across the tape it's absolutely legal to take it.
- HWR_14 3y ago
  I'm not able to find the story now, but there was a European (UK?) youngish person (teen?) who took advantage of bad market maker code to make hundreds of thousands. Those trades were reversed. The trades were under US jurisdiction.

roganartu 3y ago

Unlikely. The trades that caused KCG to collapse [1] were not reversed (~$400m in losses). Any firm worth their salt has risk systems in place to prevent runaway trading too, and those aren’t black boxes like AI/ML. They’re limits set for specific strategies or teams etc, and typically require approval from firm partners to increase past certain levels. Collapses of firms are far more often caused by lapses in proper risk management than bugs in code. The KCG collapse looks like a bug on the surface but was ultimately a misuse of accounts that sidestepped these risk systems, so they couldn’t stop the runaway caused by the bug. [1] https://en.m.wikipedia.org/wiki/Knight_Capital_Group https://en.m.wikipedia.org/wiki/Knight_Capital_Group

moonchrome 3y ago

AI hype is driving investment, not making the investments (according to the article)

noduerme 3y ago
What about all the AI-generated articles hyping AI? Maybe some AGI is already driving the hype that's driving the investments in itself...

williamcotton 3y ago

If you read the article you would know that this is about stock valuations for AI and AI adjacent companies, not about algorithmic trading.

akira2501 3y ago
The connection between this mistake and the valuations themselves seem to be related.
meghan_rain 3y ago
That's a big IF for HN tbh lmao