
Tesla Stockholders Can't Take a Joke - dsri
http://www.bloombergview.com/articles/2015-04-02/tesla-stockholders-can-t-take-a-joke
======
mch82
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.

~~~
nostromo
> 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.

~~~
cbsmith
> It worries me when even people on HN are talking about banning 'harmful'
> algorithms.

Why? Algorithms can be harmful as much as anything else.

> 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.

The problem is that won't happen. The advantage of trading stupider, but
slightly faster, than the other guy is too huge. Sure, sometimes you lose
money, but most of the time you make money. It's classic game theory: the
stupider but faster algorithm benefits from the slower but smarter
algorithms... unfortunately though, it damages the ecosystem, and if it is
allowed to continue it might actually grow to kill the ecosystem. While in
theory, it is improving the liquidity of the system, the way the game is
rigged, the rewards for the improved liquidity far outweigh the benefits.

> The SEC shouldn't get involved.

I'd argue quite the contrary. Now, the SEC shouldn't be saying, "you can use
this algorithm" and "you can't use that algorithm", but I think there is a
case to be made for imposing trading rules that don't reward a 5% speed
improvement over 100ns equally to a 5% speed improvement over 100s.

~~~
harryh
None of what you said makes any sense. I can trivially implement a trading
algorithm that is faster than anything else by ignoring the outside world and
choosing a price at random.

Algorithmic traders don't benefit by simply being faster, they benefit by
being faster to the correct price.

~~~
Crito
"Correct price" is not boolean. Speed and accuracy both have degrees and they
trade off. High frequency traders use algorithms which are not as accurate as
possible, but are fast. They _knowingly_ use algorithms which have compromised
accuracy for speed.

They therefore deserve zero sympathy when their algorithms fuck up. They knew
what they were getting into, so they should accept the consequences with
grace.

~~~
icebraining
But the context wasn't people saying we shouldn't have sympathy, but that they
should be illegal.

~~~
cmdrfred
My two cents are that for something to be illegal there has to be a victim,
and the victim can't be yourself. Whomever employed the persons responsible
might have a legitimate claim to damages. But as they say in the kitchens I
grew up working in, the traders eat their mistake.

------
startupfounder
This is not only a fun April Fools joke on the surface (Tesla introduces a
Watch), but it is a much better joke when you dig down a little deeper and see
that Tesla and Elon are making fun of the stock market's short attention span.

Elon doesn't want to take SpaceX public because of this very fact, the market
doesn't know how to have a 20 year vision of putting people on Mars let alone
the ability to read under the headline.

All great jokes are rooted firmly in reality.

~~~
Osiris
The fact that the press release was made only 5 minutes before trading closed
might, in fact, support this idea that it was aimed at automated trading as a
human wouldn't have had much time to react to the news so close to the end of
the day.

~~~
a_c_s
On the contrary: if humans take more than 5 minutes to react, then releasing a
joke 5 minutes before trading ends has no risk of harming the stock if people
misinterpret the press release as fact.

~~~
cbsmith
That's what Osiris said...

------
crazypyro
This is funny. I wrote a NLP program in the past (as a hobby project only)
that analyzed articles and press releases to make predictions on stock prices.
I didn't even think about adding April 1st (and the day before, to be honest)
as an exception in the algorithm. Gives me something to do this weekend.

~~~
Symmetry
Now that this has happened once and people noticed it I bet there are going to
be a bunch of bots looking to arbitrage off of other overly-literal bots next
April 1st.

~~~
crazypyro
I was just thinking that. You'd only have to beat out all the overly-literal
bots on a single day, so I'd imagine the complexity of the problem is
dramatically reduced. I think ideally you would train a bot to recognize some
measure of satire/joking, yet you would only want to execute on the press
releases/articles that were just on the very edge of satire, so as to detect
satire that fools as many general purpose bots as possible, as fast as
possible. I doubt there is really that much of this happening, relative to the
size of the market, though.

~~~
wcfields
This satire alone created a $100 million bump. It makes sense now that in Feb
to do a skunkworks satire/parody engine that runs on April 1st and compares
against the other high frequency trading bots that aren't equipped to handle
nuance.

------
purplelobster
My guess is automated trading, looking for announcements like "Tesla
introduces X". April 1st really should be hard coded as an exception in these
algorithms, until they can take a joke that is.

~~~
bradleyjg
It looks like Bloomberg offers this as a service to their subscribers (hence
the *ignore in their version of the press release). Either some traders are
cheaping out in their news inputs or didn't read the documentation.

~~~
borgia
Yeah, it looks as though Tesla did their part to alert traders / algorithms
that this was something to be ignored. If they've handrolled site scrapers to
pull in their news then they've only themselves to blame.

------
TheBeardKing
Looking at the price history, Tesla's stock didn't rise over what it was on
March 31st and April 2nd:
[https://www.google.com/finance?q=NASDAQ%3ATSLA&ei=8sQeVemMKI...](https://www.google.com/finance?q=NASDAQ%3ATSLA&ei=8sQeVemMKIjGsQf7vIDAAg)

------
fullwedgewhale
I think it would be in everyone's interests to require all publicly traded
companies to put out 4 press releases during the year (one per quarter) with
an obviously ludicrous claim. Either the algorithms would get better or they
would go away.

~~~
lallysingh
Or the folks running the algorithms could put April 1st days in their test
corpus?

~~~
lgas
I imagine fullwedgewhale was picturing them as being randomly distributed, not
all on the same day every quarter.

~~~
antsar
And I imagine lallysingh meant that including April 1 headlines in the test
corpus could help train the algorithms to correctly interpret false headlines,
whether those headlines occur on a single day or not.

------
jameshart
So on now reading the second fantastically well-constructed piece of writing
about obscure stock ticker behavior on Bloomberg in 24 hours, had to look up
the author and, indeed - both this and yesterday's Oreo Vomitoxin piece were
both written by Matt Levine. Will be following with interest.

~~~
roganp
What I'm wondering is how many layers of management had to approve a joke
press release? I would bet it went pretty high up the chain.

~~~
cynoclast
It probably came from Musk himself.

He's a huge nerd and the wall at Tesla Motors that was once covered in framed
patents is now covered in a giant picture of CAST from Zero Wing, and the
announcement that they were giving them away was titled, "All Our Patents Are
Belong To You".

He literally announced their sharing of patents with a meme from like 2002.

~~~
omegaham
Pedantic correction: It's "CATS." :)

~~~
a1369209993
Even-more-pedantic correction: It's "It's "CATS".". :)

~~~
omegaham
I was always under the impression that you want to put punctuation inside
quotation marks. The only exception is in programming, as you don't want to
put punctuation inside strings.

Looking into it a little bit more, apparently the British put punctuation
outside quotation marks, and Americans put it inside. Interesting.

------
krick
It's curious that people on this thread are talking mostly of "dem stupid
algorithms", while the part about the "securities fraud" seems much more
interesting to me. It's easy to see that release makers tried as much as they
can to make it obvious that it's a joke. Pretty stupid one, as whole this
"tradition" of 01.04 is. But while Bloomberg guy obviously tries to justify
Tesla, he is citing the definition that, in my opinion, shows that it _is_
securities fraud. Because enough with this "hey, it's a joke" attitude, we
have facts. Statement about "Tesla Model W" is untrue — a fact. Tesla gained
from that — fact. "Reasonable" is very ambiguous word, and it is a shame that
some judge can decide what is reasonable and what isn't, but I would say that
an investor (and it doesn't mater if it's a human, a company or a machine) who
makes money by _investing_ on daily basis can be called reasonable as a matter
of fact. And the likelihood of it altering the price turned to be substantial
indeed, as we can judge by what happened. I think that "jokes" like that can
and should be viewed as fraud, and it should be punished. After all it's not
like serious shit doesn't happen on 1st of April.

~~~
krschultz
Laws are strewn with the "reasonable" standard because there are unreasonable
people that will sue over stupid things. It's not sad that "some judge" will
have to figure out what is reasonable, that's _their job_.

Do you think it is reasonable to make a trade based on a headline without
reading the article? What happens if a company accidentally screws up the
headline, are you going to sue them? Any reasonable investor that read the
article knew it was a joke, especially if you saw the picture.

~~~
krick
You should have added " _I think_ it's not sad", because it's your opinion.
Your opinion isn't that important. I disagree with your opinion.

And you see, that's exactly why it is a problem: we are both humans, both
might be not completely stupid, both have opinions and our opinions don't
match. So if we are both judges it would cost somebody (some human exactly
like us, I would add) something important — it would matter dearly to him if
you or me is a judge this time. And it would be "just our job". Huh. As if we
(they) were gods and not some mortal humans just like himself. A guy he sees
first time in his life: not even a king or a village elder (who at least _did_
earn his respect somehow).

So that's why I argue it is a shame that some judge _can_ decide what is
"reasonable" and what's not, especially when the whole "guilty/not guilty"
thing depends on that single word.

P.S. Ah, and let me comment on that last sentence of yours. I can be blind
investor. From Asia. Maybe too literal or not very bad-humor-sensitive. Just
smart enough to make money by trading — as these algorithms are. So I didn't
see a picture, don't pay much attention to that "April 1'st" thing, and don't
see why Tesla couldn't release a watch. I guess I'm in trouble! And even if
there's no single person like this imaginary me: you have no rights to decide
if he deserves to be protected by "securities fraud law" like everyone else or
not.

~~~
sgift
As an investor you are expected to do "due diligence" before making an
investment decision. If you fall for a very simple April 1st statement (nope,
I don't like that tradition either, but that's not the point) you failed at
due diligence. No one forced you to buy the moment you read the headline and
after reading the post its intention was obvious.

That it was a joke is not even important, anyway. If you misread a post that
Teslas R&D researched a new battery with hundreds of hours capacity, loading
in 5 seconds into "all new Teslas will include a battery that .." and start
buying Tesla stock then it is your problem, too. The information was there.
Whether you use it or not is your own problem.

~~~
krick
It's true: it's investors fault they make bad decision and yes they failed at
due diligence. But it's not the point either: Tesla presented them false
information during the trading time and it resulted in them gaining (and
somebody losing) money. They didn't tell us "it is a bogus post, don't believe
information in it". No, it was official announcement of them making new
product: a watch, that will show us time in any point of the world!

~~~
sgift
> Tesla presented them false information during the trading time

That's where we disagree, so we probably won't come to an concensus: The whole
post (i.e. headline + context) was _not_ false information, because it was
clear to any reasonable reader what was going on. If they had only put out the
headline, then waited till the market closed and _then_ added the post I would
agree with your position. But that didn't happen. All information needed to
understand the topic were presented. You just had to use them.

------
oskarth
At least this points to a profitable (albeit illegal, but what's legal on Wall
Street anyway?) strategy in daytrading:

    
    
        1. Buy stocks in X.
        2. Hack X's blog (Hello Wordpress).
        3. Put out a fake product announcement.
        4. Sell stocks in X to stupid robot.
        5. Profit.
    

I'm not sorry for any ideas I might give people. The stupid robots had it
coming ;)

~~~
drglitch
Dont overcomplicate things:

    
    
      1. Sell short stock in X.
      2. Put out a fake, negative press release.
      3. Buy back shares at a huge profit.
    

For prior example, see:
[http://money.cnn.com/2008/10/03/technology/apple/](http://money.cnn.com/2008/10/03/technology/apple/)

In case you are wondering, this is, in fact, very illegal. (edit: formatting)

~~~
eru
> In case you are wondering, this is, in fact, very illegal. (edit:
> formatting)

Split among multiple people, and choose jurisdiction carefully?

------
chucksmart
A lawyer might recommend branding a watch 'Tesla W 'in the coming month. Make
it ipso facto a true statement.

------
yellowapple
The alternate explanation would be that the algorithms actually do have a
sense of humor and like to buy stocks with companies that make them laugh. My
hypothesis is that those stocks were only subsequently sold again only because
the algorithms found a different press release to be funnier.

------
cloakandswagger
I think the bigger issue is that the joke just wasn't that funny.

~~~
delecti
It certainly wasn't laugh-out-loud, side splitting, rolling on the floor
laughing funny.

But making fun of everybody jumping on the smart watch bandwagon by showing a
stupidly large clock tower strapped to a wrist got a chuckle out of me.

Does an April Fools day joke really need to be that funny? I happen to like
the tradition even when they're especially _un_ funny.

~~~
sliverstorm
I like the obviously ridiculous product launches by big name companies, but I
hate the "literally everything you read on the internet on 4/1 is a lie" part.

~~~
ethanbond
You must have a pretty limited definition of "the Internet."

And in my book, jokes that are clearly jokes are distinct from lies.

~~~
sliverstorm
How about jokes that are _not_ clearly jokes.

------
legohead
Tesla stock is crazy unstable in the first place. I've invested in it purely
because I like Elon so much, and it has been humorous to watch it "progress".

A report of a tesla battery catching fire, and the cause is still unknown?
Stock price drops. Elon writes an amazing article calming any fears about his
batteries? Stock price drops. New SUV Model? Stock price drops. Earnings this
quarter higher than expected? Stock price drops. etc.

------
solve
> the stock jumped about $1.50 or about 0.75 percent

Sounds like the market handled the joke incredibly well if it didn't even
budge 1%.

~~~
exit
_With about five minutes remaining in the trading day, the company posted a
statement on its official website under the headline: “Announcing the Tesla
Model W.”

In the following minute, the stock jumped about $1.50 or about 0.75 percent
from its level the moment before to as high as $188.50.

Nearly 400,000 shares traded in that time, and it was the heaviest one minute
of trading volume in the stock since the opening 60 seconds of trading on Feb
12.

Tesla shares quickly retraced most of that upward move and ended the session
at $187.59, down 0.63 percent from Tuesday’s close._

~~~
ams6110
Doesn't sound like much but a 0.75% swing in 5 minutes is almost 78,000%
annualized gain. Obviously swings like that don't persist for a full year but
huge amounts of money can be made or lost on small swings like that which is
what the algorithms try to take advantage of.

------
encoderer
I somewhat disagree with the consensus. This, like Netflix moving their
earnings date, is a big middle finger to the people who provide liquidity in
the company's stock.

Musk feigns intolerance and disinterest in the games of the market. But more
than any other CEO, he baits and stokes it. Several times in the last year, as
TSLA stock takes a beating, he drops a tweet. He did it on October 1st with
the "Model D" tweet. It creates a boomlet until the announcement, then a crash
back down to reality. It creates a bag-holding moment for retail investors.
It's not unreasonable to think that the CEO should not be meddling with the
public market. I go even further and say: the investors and traders of TSLA
have significantly helped the company succeed. Why does he keep kicking them
in the teeth?

~~~
prodigal_erik
Investors evaluate the company's products for themselves, and buy-and-hold to
route society's resources appropriately. Traders prey on investors, forcing
them to waste effort on behaving less predictably so their transactions aren't
front-run.

~~~
encoderer
> Traders prey on investors, forcing them to waste effort on behaving less
> predictably so their transactions aren't front-run.

It's not your fault, but I think you've just been spun by the Michael Lewis
Flashboys hype machine here. Frontrunning isn't really a problem. Did you know
the majority of orders are price IMPROVED, in part due to the activities of
high frequency traders? Meaning, you place an order to buy at $10 and it's
filled at $9.995 because some HFT wanted your order flow so they improve the
best quote by 1/2 penny to get to fill your order.

Moreover, if you're a buy-and-hold investor, even if you were "front run" you
would never even know nor miss the 1/2 penny per share or whatever.

Respectfully, this is just a subject that's complicated and it to grok it you
need to give it some real thought.

~~~
prodigal_erik
Where did they get them? If it's their fault equities were not available at
$9.995 from anyone else, they haven't provided any liquidity. I don't believe
hold times in milliseconds actually facilitate trades that would not have
happened anyway.

~~~
encoderer
You're so hung-up on frontrunning. I challenge you to find a retail investor
actually harmed by frontrunning. Even in Flashboys the protagonist was a big
trader trying to move 10,000 shares. It simply has no affect on retail
traders.

Let me just walk you through how an order is filled: Your brokerage sends the
order to one or many of the firms that specialize as so-called "liquidity
providers." These companies publish quotes for all securities, both a bid and
ask. These companies make money by knowing what other people are doing --
capturing order flow -- so they try to publish the lowest quote possible in
order to get the order because by law the brokerage must fill the order at the
"national best bid/offer". This results in price improvement for the customer
over half the time. This improvement doesn't get squeezed from another
counter-party as I think you're thinking, and actually both counter-parties
are likely to be price-improved. The improvement comes from smaller bid/ask
spreads.

Here's what I know for certain: With high frequency trading tech comes more
liquidity, with lower commissions, faster trade execution, and a small bid/ask
spread. There are more penny-wide markets than ever before. Look, I'm just a
retail trader. I have no reason to shill for HFT firms. And I even love
Michael Lewis. But flashboys and this whole dark pools, front-running
boogeyman is just so much bs.

------
kasey_junk
I'm curious where the line gets drawn on this. I mean, yes given the context
of April 1st and the nature of the text it was _clearly_ a joke.

But what if you removed either piece of that? What if they'd done this same
announcement on the 3rd wed. of October? What if they'd sent out
announcements, rented a convention center, setup a "One More Thing" reveal?
Then a couple days later admitted it was a joke. Pretty epic prank really. In
many ways, much much more funny. Also pretty clearly illegal.

What if on April 1st they announced something that was so drastic that people
_thought_ it was an April 1st joke but it wasn't?

~~~
jjarmoc
> What if on April 1st they announced something that was so drastic that
> people thought it was an April 1st joke but it wasn't?

I've been surprised lately how few people seem to recall Google's launch of
Gmail on 04/01/2004\. There was a lot of back and forth debate about whether
or not it was a joke. What they promised was pretty incredible for the day.
Adding to this was the tone of the announcement...

[http://googlepress.blogspot.com/2004/04/google-gets-
message-...](http://googlepress.blogspot.com/2004/04/google-gets-message-
launches-gmail.html)

------
mapt
Bonus point: This doesn't _have_ to be a fraudulent press release. If Tesla's
lawyers decide "Oh shit we need to make a watch now or the SEC will come after
us"... it's not exactly hard to make a watch.

~~~
harshreality
That's not how it would work. It was a joke (lie) given the intentions and
plans of Tesla on April 1st. Any human (correction: any human who should be
making investment decisions) looking at the announcement can tell that it's
false. It wouldn't matter if Tesla later decided to introduce a watch named
the Model W to try to "cover up" the lie. (It might matter to someone, but it
wouldn't turn a crime into a non-crime.)

~~~
krick
Your statement is easy to prove wrong: it's enough to find any human that
looking at the announcement can't tell that it's false. And I bet I can find
such human. It scares me, how many of them I can find.

~~~
sib
That's why the "reasonable person" standard exists. Laws generally are not
interpreted binarily.

------
iamcurious
How long, on average, does it take for another source to declare it an April
1st joke? It seems an easy fix to wait 20 minutes or so. Sure, you lose an
edge, but after that you will know everybody is acting stupid but you.

~~~
unfunco
Many of the successful algorithmic trading platforms rely on super quick
transactions, 20 minutes is a lifetime for many companies, especially when
they invest heavily to shave mere microseconds from transaction processing
times.

------
digitalneal
I know US is the center of the world and all but if Aprils fools is culturally
a western only thing, I would think it puts traders on other ends of the world
at a disadvantage. "We" know it was a joke but those from other cultures
trading in our markets would have to take that extra beat to think "is this a
joke or not". Instant disadvantage.

~~~
prodigal_erik
If a company announces a stupid product in all earnestness, it's part of an
investor's job to predict its failure in the market and decline to route more
of society's resources to the company.

------
civilian
This is kind of a strong argument for some kind of "algorithm-proofing"
editorial pass. Even if you aren't publishing an april fool's joke, you want
the algorithms to respond correctly to your "X% bump in earnings and Y%
penetration into new market Z".

Maybe it'd be good to have a machine-readable companion for PR releases?

~~~
eru
Why should the company care about a few minutes of change in the stock price?

------
krschultz
A new Turing Test for the algorithms that trade stocks: can it tell when
something is a joke?

------
rebootthesystem
No, the real issue is that stocks have been turned into hype driven vapoe-
ware. Tesla stock has a P/E of NEGATIVE 250 or thereabouts.

OK, they are building a company and maybe even an industry. I get it.

Yet the problem is one of ridiculous valuations. There's huge risk. It is
nothing less than legalize gambling. This coming from someone who day-traded
full time for over a year. The things I experienced during that time made me
decide that the stock market was nothing more than a form of gambling.

Don't blame the joke or the algorithm. Blame a regulatory system that does not
protect the masses from "going to Vegas" any time they touch the stock market.

~~~
JoeAltmaier
The entire stock market is based on gambling. No, not even that. You're
gambling on the value of the baseball card, not even on the value of the
player. Once a company sells stock, that share value is essentially unrelated
to the company except by tradition and cultural expectation. The share can
vary all over the map, and only gets a reality check if it goes below book
value (none ever do). Even dividends hardly matter; they are factored into the
stock price near dividend time, and drop out the day after the dividend.

SO no they haven't turned into anything; they always were vapor-ware.

~~~
harryh
So you think it's purely a coincidence that AAPL is up 3-4x in the past 5
years while Radio Shack stock has lost 99% of it's value? It has nothing to do
with the fact that Apple is making huge profits while Radio Shack lost money
hand over fist?

~~~
JoeAltmaier
Within the bounds of 'book value', yes. The fact that you are convinced there
is some necessary relationship (and that I am wrong) is the 'cultural' part of
it. You think that somewhere there's a link between those facts, when in fact
there is none. None but other people believing the same thing.

~~~
harryh
There is a link between those facts. The PE of a stock is a number signifying
the rate of return and that rate of return will be compared by the market to
other investment vehicles.

Sure, in the short term things can get crazy. Will TESLA achieve wild success
and own 50% of the auto market, or will they go out of business when Toyota
clones their cars? Reasonable people can disagree on these predictions and
hence the stock will be relatively volatile.

But in the long run we will have the answer to this question and the value of
Tesla will directly relate to it's ability to generate a return on capital
just like it does for every other mature business.

~~~
JoeAltmaier
Again, you like to believe that the P/E is somehow a necessary relationship
between the company and the stock. Its not. Its just a number you calculated.

Take baseball cards, which are almost exactly the same thing as stock
certificates except we believe different things about them. You have all sorts
of stats on the back. But nobody believes they control the value of the card.

That non-sequitur about TESLA predictions and the price of the stock are more
of the same witchcraft. Sure I believe the stock will go up if the company is
successful, but only because other people believe it too. Not because there's
any cause and effect relationship other than belief.

~~~
harryh
P/E is not just a number. It's a measure of return on capital. It's the same
thing as an interest rate on a bond or appreciation on the value of a house.

Sure, the return might not go directly into your bank account the way bank
interest does but it does exist. It's either being reinvested into the
business, or returned to the shareholders in the form of dividends or stock
buybacks.

It is a huge error in thinking to believe that a piece of stock is a baseball
card. It is not. It is, in a very real sense, actual ownership of an actual
business and all that represents.

~~~
JoeAltmaier
Its in a very abstract sense, ownership. Tou don't get to make any decisions
whatsoever regarding said business. You don't get to speak for the business.
You don't get to work there. You don't own anything, in fact, except the stock
share.

No, its a polite fiction that a 'share' is related to the business. Its
related to the right to bet on the business' performance, and a little bit
more. If the business fails, you have certain rights. If its sold, your share
is handled specially.

That the return doesn't go into your bank account is especially damning. The
company money is entirely kept separate from your money, because they are not
legally related.

Dividends are a red herring, used by few companies and factored in/out of the
stock price near the dividend date. Stock buybacks are another anomaly. The
company can decide at any time that you don't own your share, they want it
back!

There have to be special rules put into place to avoid 'abuse' during
buybacks, mergers etc. Because otherwise the non-existant connection between
the share and the company would be exploited to the fullest, by leaving the
shareholders out of the money entirely. SO rules get made to force the company
to pretend the share is meaningful.

~~~
harryh
1) You do have a say in the business (for most companies). Stockholders elect
the board of directors and the board installs the managers of the company.

2) The company's money and you are, in fact, legally related when you buy a
share of their stock. That is a legal contract.

3) Of course the timing of dividends are factored into the stock price around
the time they are being paid. If I know that I own something at 12:00:00PM
I'll get a $1 dividend, but if I don't own it until 12:00:01 I get nothing it
makes perfect sense for the price to change by $1 at exactly that time. This
actually support the argument that stock prices are related the the
profitability of a company (and hence their ability to pay dividends).

4) A company cannot, in fact, decide at any time that you don't own your share
anymore. It can decide to offer you money for that share and you can choose to
sell it or not.

5) Most of the rules around buybacks, mergers, etc have to do with information
disclosure and exist to help prevent company employees from stealing from
shareholders. That's not pretending that there is a relationship it's
protecting the legal rights of the owners of the company.

\----------

I will tell a parable. Scientists have an understanding of gravity. Masses are
attracted to each other and behave in certain ways based on certain
mathematical rules. One could come along and say "That's hooey, it's all just
witchcraft! It's only because we all think that we're attracted to the Earth
that we can't fly."

I wouldn't really know how to respond to that other than to say that there are
logical reasons to accept the laws of gravity and further there are mountains
of evidence to support the hypothesis.

It's the same way with the stock market. A share is, legally speaking,
fractional ownership of a company. It has certain legal and financial rights.
Hence we would expect the value of shares to move in relation to the success
or failure of companies. This is, in fact, what we have witnessed in reality
over and over and over again.

You can keep on believing it's witchcraft all you want and I don't know how to
prove you wrong. But it just means you are ignoring both a logical line of
reasoning and all available evidence.

------
joshdance
Trading firms now add April Fools algorithm, and get smarter. The world moves
on.

------
kyleblarson
Most algos aren't really stockholders for more than a few milliseconds.

~~~
kasey_junk
Can you quantify that? Are you judging by "algos that trade the most" or
"number of algos". Or "trader id attached to the algo", or "at the clearing
house?".

------
pkallberg
Probably automated trading.

------
eldavido
I like how finance is "slower" on the west coast. Less of an
HFT/trading/options emphasis, vs. sales/partnerships/BD/making stuff people
want.

~~~
DannoHung
West coast finance is just deals. Go look at the M&A, Private Equity, or bond
markets on the East coast if that's the speed you're looking for.

Start dealing with something that has similarity to liquid instruments (many
buyers and sellers, equivalence of goods) and the same exact shit'll happen.

Or did you think Uber's pricing surges were due to people sitting down at a
table and hashing out what the best prices for rides were during a given day?

------
BrainInAJar
I laughed at "shareholder algorithms"

------
joshstrange
Yeah, I'm not going to lose a wink of sleep over algorithms screwing up and
making their owners lost a couple hundred thousand dollars (which isn't even a
drop in the bucket). Telsa was not the only publicly traded company that did
an April fools joke so I'm not sure why they are being singled out.

You want to hand over all of our trading to computers to make more money? Fine
(well not 100% fine but this is not the forum to discuss that) but I'm not
going to feel sorry for you when your algorithm bites you in the ass.

~~~
georgeecollins
Humor may be a great way for humans to battle newsbots and computer traders.

~~~
mikeash
This could make for a novel CAPTCHA technique. "Choose the joke in the
following options."

~~~
vuldin
That would be interesting. The use of sarcaasm also seems to be a great way to
foil these algorithms.

~~~
akeck
SarCaptcha:

1) This is a sentence.

2) This captcha is on this page.

3) This captcha is super awesome.

