Today, it is safe a safe bet that information technology has shrunk the financial markets and securities exchange into our fingertips. Most of the trading is taking place with the help of computers, and financial information of companies is readily available on the internet at any given time. As a matter of fact, today, we make most of our investing decisions on the information available on the internet.
It is surprising to see how long it takes for a company’s stock price to fluctuate once the information about the company is published on the internet. They all have the same speed to reach investors and same potential to change the investing decisions. On September 8 2008, Bloomberg terminals across the world published a headline declaring the parent company of United Airlines had filed for bankruptcy protection. Within minutes, United Airline’s shares started to collapse in Nasdaq. The airline’s shares fell 76 per cent to $3 by 11 AM after opening at $12.16. In fact, this information was false and published with an error. United Airlines’ bankruptcy information was 6 years old and was interpreted as up to date by the investors. The trading started to take place until Nasdaq Stock Exchange had to halt the trading of United Airline’s shares. United Airlines immediately issued a press release to clarify error and the share price was returning to back to normal.
This is a very good example to show how fast the information is transferred in today’s world with the help of computers. Of course, this is a huge advantage for investors, but not always. It is a good lesson that we can learn as a responsible investor to validate the accuracy of the information before making any financial decisions. According to Robert Fusfeld, a securities investigator in Denver who spent 31 years as a Securities Exchange Commission enforcement, “Trades could only be undone if someone planted false information with the intention of manipulating the market”. As a matter of fact, Nasdaq has reviewed the transactions executed between that short period of time and has determined that all trades are valid. The investors who sold their shares were losing money and were not entitled for any kind of compensation for the false information.
ReportonBusiness. (2008). Old news is bad news for airline's stock. Retrieved Sep. 9, 2008, from http://www.theglobeandmail.com/servlet/story/LAC.20080909.RUAL09/TPStory/Business
1 comment:
I fully agree with. This does not only happened in here but also in China stock market. The stock price of China Citic Bank fall more than 70% only because the false information broadcast by mistakes.Also I want to say that not only the false information disturb us but there was too much information to sharp our mind via Internet. The information system built by google, yahoo and baidu etc totally change our way to view the world. The technique staff spent so many time per day to handle the information which only increase the workload of them.
Post a Comment