5 ms·

Yes but shorting the entire market isn't difficult at all. And buying and selling a position in a matter of minutes also isn't difficult in modern times. It's

by lutusp 14y ago

Yes but shorting the entire market isn't difficult at all. And buying and selling a position in a matter of minutes also isn't difficult in modern times. It's the modern equities market -- lightning fast, and not to the benefit of market stability or the average investor.

RaSoJo 14y ago
Agree. But was trying to understand if an individual hacker was behind this or an actual big financial organisation. I was of the opinion that an individual hacker would still be classified as an average investor. He/she might not have had the tools to benefit from the end result. not sure A big organisation, on the other hand, would be much better placed to exit a position based on custom algos and deeper integration into the markets to buy and sell positions.
- lutusp 14y ago
  > I was of the opinion that an individual hacker would still be classified as an average investor. Reasonable people may differ, but to me, someone who shorts the market, then hacks AP and plants a false story, is not an average investor. :)
kasey_junk 14y ago
In what possible way did this impact the "average investor" (whoever that is)? It seems to show a pretty stable market to me. Think of it this way, what would have happened before electronic trading if a fabricated wire release had made it into newspapers? It would have taken weeks to sort out and "average investors" would definitely taken a hit.
- lutusp 14y ago
  > In what possible way did this impact the "average investor" (whoever that is)? The average investor, of which there are millions, can't react quickly to market changes. They're in a mutual fund or another similar investment that moves glacially if at all to market changes, and that's generally a good thing (on the premise that buy & hold is a good thing). So there really is an average investor. And he really can't exploit fast market changes. > It seems to show a pretty stable market to me. Yes, but if this scenario is true, it represents an exploitation of a weakness in market information (some people have information that others don't), so it's an undermining of the premise of an efficient market.
  - kasey_junk 14y ago
    Mutual fund and etf investors would have only been impacted by this event if they tried to liquidate at the precise time today that the market had this aberration. That is a vanishingly small % of people. For every other average investor they wouldn't have even noticed this by looking at their portfolio. They shouldn't be paying attention to daily swings in the dow anyway, more or less minute by minute ones. I'm not sure what "scenario" you are talking about but the linked wsj article mentions that people reacted to a public tweet and just as quickly corrected itself after public statements from the white house. No insider information has been proven to be part of that. The rampant and irresponsible speculation about this being some big short sell plot on this forum doesn't mean that the market behaved incorrectly. In fact, in reality it behaved exactly correctly. As soon as the hoax was uncovered the dow returned to it's correct level. Showing stability.
    - lutusp 14y ago
      > The rampant and irresponsible speculation about this being some big short sell plot ... No one said that. I said it could be used that way, not that is was. > doesn't mean that the market behaved incorrectly. Any time someone exploits knowledge that isn't public, it's an exploitation of a market weakness. If someone takes a position in a stock with the intent of bad-mouthing its competitors or releasing false information, he's exploiting a market weakness. Some exploitations of private knowledge are merely bad behavior, and some, like insider trading, are illegal. All of them represent weaknesses in the market because all investors don't have the same chance to benefit. > In fact, in reality it behaved exactly correctly. As soon as the hoax was uncovered the dow returned to it's correct level. By your reasoning, pump & dump proves that the efficient market hypothesis is at work in the market. I don't think so. It only proves that some investors can game other investors. Taken to its extreme, if someone was able to game the market consistently like this, day in and day out, businesses would recognize that they were being cheated and would refuse to raise capital using equities. This is why the SEC is so aggressive about locating and punishing examples of this class of behavior. > Showing stability. By that reasoning, if we have the same number of bank robberies on Wednesday as on Monday, we've proven that things are stable.

by lutusp 14y ago

RaSoJo 14y ago

Agree. But was trying to understand if an individual hacker was behind this or an actual big financial organisation. I was of the opinion that an individual hacker would still be classified as an average investor. He/she might not have had the tools to benefit from the end result. not sure A big organisation, on the other hand, would be much better placed to exit a position based on custom algos and deeper integration into the markets to buy and sell positions.

lutusp 14y ago
> I was of the opinion that an individual hacker would still be classified as an average investor. Reasonable people may differ, but to me, someone who shorts the market, then hacks AP and plants a false story, is not an average investor. :)

kasey_junk 14y ago

In what possible way did this impact the "average investor" (whoever that is)? It seems to show a pretty stable market to me. Think of it this way, what would have happened before electronic trading if a fabricated wire release had made it into newspapers? It would have taken weeks to sort out and "average investors" would definitely taken a hit.

lutusp 14y ago
> In what possible way did this impact the "average investor" (whoever that is)? The average investor, of which there are millions, can't react quickly to market changes. They're in a mutual fund or another similar investment that moves glacially if at all to market changes, and that's generally a good thing (on the premise that buy & hold is a good thing). So there really is an average investor. And he really can't exploit fast market changes. > It seems to show a pretty stable market to me. Yes, but if this scenario is true, it represents an exploitation of a weakness in market information (some people have information that others don't), so it's an undermining of the premise of an efficient market.
- kasey_junk 14y ago
  Mutual fund and etf investors would have only been impacted by this event if they tried to liquidate at the precise time today that the market had this aberration. That is a vanishingly small % of people. For every other average investor they wouldn't have even noticed this by looking at their portfolio. They shouldn't be paying attention to daily swings in the dow anyway, more or less minute by minute ones. I'm not sure what "scenario" you are talking about but the linked wsj article mentions that people reacted to a public tweet and just as quickly corrected itself after public statements from the white house. No insider information has been proven to be part of that. The rampant and irresponsible speculation about this being some big short sell plot on this forum doesn't mean that the market behaved incorrectly. In fact, in reality it behaved exactly correctly. As soon as the hoax was uncovered the dow returned to it's correct level. Showing stability.
  - lutusp 14y ago
    > The rampant and irresponsible speculation about this being some big short sell plot ... No one said that. I said it could be used that way, not that is was. > doesn't mean that the market behaved incorrectly. Any time someone exploits knowledge that isn't public, it's an exploitation of a market weakness. If someone takes a position in a stock with the intent of bad-mouthing its competitors or releasing false information, he's exploiting a market weakness. Some exploitations of private knowledge are merely bad behavior, and some, like insider trading, are illegal. All of them represent weaknesses in the market because all investors don't have the same chance to benefit. > In fact, in reality it behaved exactly correctly. As soon as the hoax was uncovered the dow returned to it's correct level. By your reasoning, pump & dump proves that the efficient market hypothesis is at work in the market. I don't think so. It only proves that some investors can game other investors. Taken to its extreme, if someone was able to game the market consistently like this, day in and day out, businesses would recognize that they were being cheated and would refuse to raise capital using equities. This is why the SEC is so aggressive about locating and punishing examples of this class of behavior. > Showing stability. By that reasoning, if we have the same number of bank robberies on Wednesday as on Monday, we've proven that things are stable.