If you have stock in Apple, Amazon, Google or Microsoft, you may have woken up to some interesting news. These stocks were all listed at $123.47. Which was a drop for the first three, but a significant gain for Microsoft. But, the drastic jump in stock prices was not accurate. If you woke up and had a mini heart attack today, you can calm down as it was all because of an error. A Nasdaq spokesman told CNBC that the glitch came about after some test results were wrongly distributed by the third party finance sites. “As part of its normal process, the UTP distributed test data and certain third parties improperly propagated the data. Nasdaq is working with third party vendors to resolve the matter,” the spokesman said.
What is interesting is that these stock prices were all the same. Down to the penny. But that alone might not have been enough for some people to know that it was an error. “I’m surprised it doesn’t happen more often,” considering the complexity of today’s financial markets, said James Angel, a finance professor at Georgetown University in Washington. “We want these mistakes to happen when the market is closed on a holiday, rather than when the market is open for business.” I too am extremely surprised that this doesn’t happen more often. As Angel points out, the markets are complex.
According to Bloomberg, “Nasdaq and NYSE Group Inc., each run central data feeds that are the industry standard bearers. The essential information they provide includes price quotes and trades that were executed. Each company also sells more detailed, fast-moving proprietary data feeds that traders can purchase for additional fees.” Further, they go on to state: “there is no technical issue at Nasdaq. Bloomberg and a few other providers improperly disseminated test data.”
Given all this information, was it presumed that there was a crash in the stock market? When it was merely a reporting error, that was perpetuated by the media. And if it was perceived as a crash, did that set off panic in people? In some cases, this could be the difference of a million dollars, or even more. While, the data was reported in error, it makes you wonder how this could have happened. Sure, we can understand how the data was reported, or misreported in this case. But how did it become a sudden stock market crash? With the emergence of fake news, it’s extremely important for people to be able to get correct information from media outlets. But even the media isn’t immune, as some outlets reported the numbers based on other media outlets. Like Bloomberg, which is a credible source for this kind of information.
Because this didn’t actually happen, we can all take a deep breath and continue with our business. But will it make you proceed any differently? Do you think this kind of reporting is funny? Or is it extremely depressing? If we think about what happened in 2008, it makes you wonder how people would react to this kind of news, if it were in fact real. While the circumstances may be different, both would bring about a loss of money. And a loss is a loss. They don’t need to be defined. Does this make you question where you invest your money? How conservative of an investor are you?
For some of the stocks, the drop was catastrophic. While others saw significant gains. Is there some way of knowing when these errors occur, in order not to panic? Or are we merely at the mercy of those reporting the data?