Think your browsing activity doesnt matter? Try $150MM

Monday was a dismal day for United Airlines (UAL) as their stock slid 75% into the depths of despair. The sky was falling, as news was released they are going bankrupt (again!)...

Its not surprising, with oil prices, our economy, and this looming (will it ever really be one) recession. Too bad it was a mistake.

wait wait, what was that? no really, it was all just a mistake. Google's crawler picked up a news story from a Tribune news site, and posted it to their headlines. This spread through the internet, and then spilled over to Wall Street where their stock took a dive. The Wall Street Journal lays out the events in this article, its worth a read: http://online.wsj.com/article/SB122109238502221651.html

NASDAQ eventually stopped trading and all was thwarted. Unfortunately, their stock is still off about 9% from where they were the Friday before. A single click on an old article cost the company (and its shareholders) nearly $150MM.

How can this happen? Much of the market is now driven based on automated trading, and things called ALGOS (algorithm's) which constantly scan the web, news, and other information and make automated decisions to buy or sell based on market news; so presumably you can get an edge on the other guy. In a tumble like this however, with such a big company, it was cavalcade of failure as all of these ALGOS started to sell, then more sold because the other ALGOS sold, and so on. A good explanation of it is here: http://www.reuters.com/article/reutersEdge/idUSN1039166420080910?pageNumber=2&virtualBrandChannel=0

This will become even more prevalent in the future as we automate our market to search articles like this, which could be disastrous for some people. The SEC is investigating the whole deal to see what can be done to prevent slides like this in the future. ALGOS are great to have but could end up biting us even more, not sure if I have an opinion yet on where we need to take this but I may end up re-posting with more later. Something to chew on for the day...