Six companies, including owners of Sam Adams, traded today at $0.00 per share | Hacker News Reader

Six companies, including owners of Sam Adams, traded today at $0.00 per share

blogs.wsj.com

59 pointsgoodside40 comments

Traded at $0.00 a share? Or the consumer-level database that this guy is looking at says "zero"?

(Sadly, I work in currency trading, so I don't have any better data about this. But I know when I see a 0 in the database, I take that to mean "computer error", not "someone bought a billion euros for zero dollars". Because even buggy computer programs aren't that stupid.)

From the article "Exelon was just one of a number of stocks that produced bizarre, and presumably garbled, market quotes during the “Flash Crash” of the afternoon."

(Emphasis mine)

This just looks like someone found an exploit that could crash prices faster than naked shorts and bounce them back again once the necessary shares had been acquired. It would be very interesting to see who acquired shares at the zero and low prices and what they were doing before that - I doubt they left too many clues though. Perhaps if we look at who bought a country today that might help.

Perhaps if we look at who bought a country today that might help.

Meaning what exactly?

Meaning that the perp is now exceedingly rich having been able to purchase $40 shares at near $0 direct cost and been able to perform all sorts of meta transactions on the back of it.

The (relatively) gradual rebound in price suggests the trades actually happened. It's not a removable discontinuity, so to speak.

And, frankly, if you were coding an automated trading system, it wouldn't be that unreasonable to write a "sell at any price" algorithm that doesn't cover the eventuality that a stock with a market cap as large as these might have literally no bids higher than $0.00. (My highly speculative amateur theory is that this is what actually happened: The NYSE froze trading on these stocks for an extremely brief period, as it did with many stocks today, and a handful of automated trading systems scrambled to electronic exchanges, where volumes were low enough that a $0.00 bid issued by some cleverly well-prepared hedge fund was the best around.)

some of the articles go into detail on specific trades (with the number of shares) that actually happened at $0.01 (or $0.000001 or whatever the number is that is meant to represent $0).

so it ultimately looks like a factor of events caused some people's simplistic trading programs to give away their shares for free, and the people smart enough to buy them up at near-zero did.

that's my best guess at this point, anyway. looking forward to hearing what actually happened :)

Hey! I see that Accenture finally got a rational valuation and price!

No, I'm not a big fan, having experienced them as long ago as "Anderson Consulting" days.

Andersen.

Yeah, I worked there. For about 11 months.

Yup, some of Andersen's reps back during that time was responsible for disbanding my alma mater's chapter of ACM. We invited them to have a talk to CS students about IT careers and they were offended by how our chapter advertised the talk. (I felt partly responsible, I normally copywrote signage for the club, but due to class pressures somebody else took over just before this incident.) The reps complained, and we had to write a letter of apology and disband because of some words on a sign. (The wording wasn't even offensive or in slang, they just were uptight about how their organisation was presented.)

There was a real melt-down. For a while Yahoo! Finance and Bloomberg were both unavailable. Google's finance page continued to function during that time. A friend was able to trade on Schwab and Fidelity, but E-Trade wasn't able to return trade confirmations, and eventually told my friend their market maker was down.

Sothey’s[sic]:

While the other companies on this list hit zero briefly, Sotheby’s went in the other direction. After opening at $34.61, its shares briefly touched $100,000 before closing at $33.

What is that about?

For an overvaluation this high, I can only presume their stock was mistakenly priced with an algorithm meant for their paintings.

Christies' auctioning off of the most expensive painting ever.

The only conclusion I could draw is that they must have been highly inversely correlated to a company that tanked. A trading algorithm would potentially have a pair trade going where the tanked company's shorted while being long Sotheby's.

That, or the whole system broke down in a very weird way.

Bit over/underflow?

Or Sotheby's was expected to reap a huge windfall due to all the traders and shareholders losing their shirts on $0/share stocks and having to auction off their estates?

Seriously, whatever happened to sanity checks on input?

High-Frequency Trading. When your margins depend on squeezing every last millisecond of performance to beat the speed of the market itself, you don't have time for an extra conditional branch instruction.

An exaggeration, but not a very large one. The stock market is a high-speed game, and a lot of players are willing to cut safety features for raw performance.

I guess somebody forgot to put a check in the software that says that if a share trades at 0 there is no use selling it.

If you're closing out a short, 0 is a perfect time to sell.

Except that to close out a short, you are the buyer, not the seller.

Well we are talking about Accenture here...

I have wonder whether any of that software crashed from divide by zero errors. :-)

But the big players do the safety checks at compile time, so at runtime, it's simply not possible to make one of these mistakes. Theorem proving might not be necessary for your "hello world" rails app, but it is something that the finance industry likely applies.

(Disclaimer: I do not work with any algorithmic trading systems. Humans do a pretty good job of trading, too.)

I can't tell if you're joking.

There is certainly a culture of micro-optimized C++ in the finance world, but it's not all like that. (It's easier to do easy things than it is to do hard things, and so there is going to be more easy-to-write software in existence than hard-to-write software. Hence why you see so much bad C++ -- it's really easy to write bad C++.)

Jane Street Capital is a good example of a company that advertises their interest in writing good software: http://www.janestcapital.com/technology/ocaml.php

The OCaml type system is a really weak form of theorem proving-- the fanciest usable thing you can do is phantom types.

When algorithmic trading software gets written in Agda then your comment might make more sense.

You can run theorem provers on top of these languages, though.

My guess is that the algorithms do well within say one standard deviation range but beyond that the computers step away. Once the computer volume drops, markets get thin and "Market Orders" produce the results you see. You see bad fills quite a bit in penny stocks but never in these large volume stocks.

hahahahahahahaha sanity checks on input at compile time hahahahahahahaha

Stupidity and high speed, just as with cars, is a terrible combination.

After a few years in banking, I have learned the following phrase applies well here: Mistakes were made.

Do you ever feel like this whole system is a house of cards?

No, not quite.

I'm getting a 404.

By the way, the WSJ has already disappeared this article, so you know it is something important. And no it is not on google cache.

I found from the google summary that the boston beer company, maker of sam adams, hit started out at 50, crashed down to 0 and then immediately climbed back up to 50. Google finance has it crashing down to 14 only, probably because their graphs are not very granular.

This is really concerning. Not because it crashed (companies fail all the time), but because it went up and down so quickly without there being any changes to the actual business prospects of the company whatsoever. It really shows something is wrong.

It's right here: http://blogs.wsj.com/deals/2010/05/06/four-mega-drops-of-the...

Please don't invent shadowy conspiracy theories where they don't exist.

The link was dead when I checked it. Also the link provided by the google crawler was just as dead, so it could not have been a mistyped link.

So I was correct that the link was dead when I said it was. It is possible that that blog post was so popular that a WSJ server holding it crashed while the rest of the site remained online. Or it is possible that that the WSJ saw my post and said "damn, he is onto us, bring it back up!" Anyways, I am keeping my mind open :)

And regarding "inventing shadowy conspiracy theories where they don't exist", well they do exist now, since I invented them!

What exactly are you trying to get at? Yes, there is something really wrong. But chalk it up as an human or computer error. In a few days when they unravel it, it'll probably be some wacky algorithmic problem, or some day-trader decided to sell a couple billion shares instead of million. The later most likely.

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