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My only issue with this article is that it seems to be written backwards. It's not a problem that Tesla published a joke on April Fools' Day, which is pretty mu

by mch82 12y ago

My only issue with this article is that it seems to be written backwards. It's not a problem that Tesla published a joke on April Fools' Day, which is pretty much a trend in the tech industry since Google started doing it years back. The problem is that automated trading algorithms overreact to human behavior and cause human consequences. If anything, additional SEC scrutiny should target the algorithms and their corporate users. When jokes are illegal and harmful algorithms are legal, then culture and humanity are sucked out of life.

floatrock 12y ago
Agreed. This submission is titled "Tesla Stockholders Can't Take a Joke". Although technically true, the misleading part is the stockholders being talked about are algorithms, not people. We should be worrying not that Tesla released a joke PR that moved the price, but that we live in such an apparently unstable financial world where in the quest for milliseconds, HFT algorithms create non-negligable price swings in response to completely de-contextualized information. Five years ago this wouldn't have been a blip on the radar. If the rules have changed, so be it, but we should recognize that it's the system we've built that has changed the rules. We can yell 'securities fraud' at Tesla's PR department, but if so, we should recognize it's fraud because Tesla was releasing information that confused the dominant traders, which are now algorithms. If that's fraud, do we now have a fiduciary duty towards the algorithms? More troubling, if the system we've built is so unstable around just PR releases, what's going to happen next time there's a serious problematic signal?
- cbsmith 12y ago
  > Although technically true, the misleading part is the stockholders being talked about are algorithms, not people. That was on purpose though. The title was meant to be deliberately misleading to highlight the fact that what we think of as "stockholders" is wrong: increasingly, the "stockholder" is an algorithm.
- harryh 12y ago
  The price swing was negligible.
snowwrestler 12y ago
I don't think the SEC should get involved at all. The Tesla thing was obviously a joke to any reasonable human, so that's not a regulatory issue. And if some reasonable humans choose to employ algorithmic trading systems, and then as a result lose some money because the algorithm wasn't properly tuned, that's not a regulatory issue either. People lose money on stocks because of bad decisions all the time. Only possible role I can think of would be if there was some additional evidence (like an email chain or something) that Tesla did this release specifically to cause this stock movement. Seems unlikely.
- seanp2k2 12y ago
  Yeah, I can't say that I have any sympathy for those who have chosen to attempt to automate making money in this fashion.
- darkarmani 12y ago
  > Only possible role I can think of would be if there was some additional evidence (like an email chain or something) that Tesla did this release specifically to cause this stock movement. Seems unlikely. What if Tesla has press releases that aren't human readable but trolls automated trading systems? Like a spam trap but for trading?
nostromo 12y ago
> When jokes are illegal and harmful algorithms are legal It worries me when even people on HN are talking about banning 'harmful' algorithms. The SEC shouldn't get involved. The people whose algorithms ran up the stock and lost a bunch of money over a joke will learn their lesson, or will go out of business, soon enough.
- freehunter 12y ago
  It's the SECs job to regulate securities and exchanges. They regulate people, they can regulate algorithms. It's not like Congress is passing a law that regulates what encryption standards can and cannot be used. It's the SEC regulating trade on the stock market no matter who or what is conducting the trades. Whether they should or should not ban it, it's well within their authority. You're trying to make it into an all-computing type of issue. It's not. There is no slope, and it's certainly not slippery.
  - zorked 12y ago
    The SEC can get involved. The question is whether they should. See, people who write "bad" algorithms already get punished by the market and lose money. They already have an interest in improving. What would a regulation against "bad" algorithms even look like?
    - shasta 12y ago
      They should be forced to give some of those losses back.
      - cbsmith 12y ago
        ? For the most part, they tend to be the ones who lose.. so they've already given them back.
      - CamperBob2 12y ago
        They did, before the end of the session.
matmann2001 12y ago
It would be really interesting to check if other companies who put out April Fool's press releases impacted their stock prices as well.
carapace 12y ago
Yeah, the phrase "shareholder-algorithms" stopped me cold.
cbsmith 12y ago
> My only issue with this article is that it seems to be written backwards. I think you should reread the article. It is pointing out that the problem is the automated trading algorithms (and most importantly, how those algorithms prioritize expediency over intelligence). It points out that what Tesla did wouldn't be a problem except for the fact that we've got computerized traders.
lappa 12y ago
It seems that people lost because they were either speculating blindly or had an algorithm that was working poorly. I don't see reason for these algorithms to be outlawed.

by mch82 12y ago

floatrock 12y ago

Agreed. This submission is titled "Tesla Stockholders Can't Take a Joke". Although technically true, the misleading part is the stockholders being talked about are algorithms, not people. We should be worrying not that Tesla released a joke PR that moved the price, but that we live in such an apparently unstable financial world where in the quest for milliseconds, HFT algorithms create non-negligable price swings in response to completely de-contextualized information. Five years ago this wouldn't have been a blip on the radar. If the rules have changed, so be it, but we should recognize that it's the system we've built that has changed the rules. We can yell 'securities fraud' at Tesla's PR department, but if so, we should recognize it's fraud because Tesla was releasing information that confused the dominant traders, which are now algorithms. If that's fraud, do we now have a fiduciary duty towards the algorithms? More troubling, if the system we've built is so unstable around just PR releases, what's going to happen next time there's a serious problematic signal?

cbsmith 12y ago
> Although technically true, the misleading part is the stockholders being talked about are algorithms, not people. That was on purpose though. The title was meant to be deliberately misleading to highlight the fact that what we think of as "stockholders" is wrong: increasingly, the "stockholder" is an algorithm.
harryh 12y ago
The price swing was negligible.

snowwrestler 12y ago

I don't think the SEC should get involved at all. The Tesla thing was obviously a joke to any reasonable human, so that's not a regulatory issue. And if some reasonable humans choose to employ algorithmic trading systems, and then as a result lose some money because the algorithm wasn't properly tuned, that's not a regulatory issue either. People lose money on stocks because of bad decisions all the time. Only possible role I can think of would be if there was some additional evidence (like an email chain or something) that Tesla did this release specifically to cause this stock movement. Seems unlikely.

seanp2k2 12y ago
Yeah, I can't say that I have any sympathy for those who have chosen to attempt to automate making money in this fashion.
darkarmani 12y ago
> Only possible role I can think of would be if there was some additional evidence (like an email chain or something) that Tesla did this release specifically to cause this stock movement. Seems unlikely. What if Tesla has press releases that aren't human readable but trolls automated trading systems? Like a spam trap but for trading?

nostromo 12y ago

> When jokes are illegal and harmful algorithms are legal It worries me when even people on HN are talking about banning 'harmful' algorithms. The SEC shouldn't get involved. The people whose algorithms ran up the stock and lost a bunch of money over a joke will learn their lesson, or will go out of business, soon enough.

freehunter 12y ago
It's the SECs job to regulate securities and exchanges. They regulate people, they can regulate algorithms. It's not like Congress is passing a law that regulates what encryption standards can and cannot be used. It's the SEC regulating trade on the stock market no matter who or what is conducting the trades. Whether they should or should not ban it, it's well within their authority. You're trying to make it into an all-computing type of issue. It's not. There is no slope, and it's certainly not slippery.
- zorked 12y ago
  The SEC can get involved. The question is whether they should. See, people who write "bad" algorithms already get punished by the market and lose money. They already have an interest in improving. What would a regulation against "bad" algorithms even look like?
  - shasta 12y ago
    They should be forced to give some of those losses back.
    - cbsmith 12y ago
      ? For the most part, they tend to be the ones who lose.. so they've already given them back.
    - CamperBob2 12y ago
      They did, before the end of the session.

matmann2001 12y ago

It would be really interesting to check if other companies who put out April Fool's press releases impacted their stock prices as well.

carapace 12y ago

Yeah, the phrase "shareholder-algorithms" stopped me cold.

cbsmith 12y ago

> My only issue with this article is that it seems to be written backwards. I think you should reread the article. It is pointing out that the problem is the automated trading algorithms (and most importantly, how those algorithms prioritize expediency over intelligence). It points out that what Tesla did wouldn't be a problem except for the fact that we've got computerized traders.

lappa 12y ago

It seems that people lost because they were either speculating blindly or had an algorithm that was working poorly. I don't see reason for these algorithms to be outlawed.