As I’m sure everyone is aware of what has occurred with Knight Industries with more than $400 million wiped out by an algorithm…they do have teeth as I have written here so many times before. In addition you can read in the article clips below that they were running “new software” to work with the NYSE dark pools that just came online. Problem was, the software didn’t work with the new “code” that the NYSE had created. There’s a ton of time that goes into producing software and the average consumer “has no clue” on how complex this is and it is difficult to understand unless you have spent any time writing software yourself. Programmers and developers know it no matter what language they work with.
Back about 3 years years ago I made an “opinion” post asking if “we need a Department of Algorithms”…maybe we are there as there are those algos created for “desired” results and those that generate “accurate” results and the two should be the same, but they are not always. Read this book on how some of this works from Twitter bud Professor Siefe at NYU, as he nails it pretty well. We are well beyond the comprehension levels of those who make our laws as well and you saw what happened yesterday when they don’t get it, they go on break and leave everything unattended not even caring about the Post Office crisis.
I thought I was the only one talking about this but recently was contacted by the National Institute of Statistical Sciences that told me to keep blowing the horn and that someone will eventually listen. It’s all about the math, algorithms, data, and “flawed data” that creates markets sometimes where they don’t belong.
Amazing how some of this works and how profits are derived and again I have said many times that we are to the point to where data selling should have an excise tax as it is part of every day trading business as well as other industries, and you take infamous example of Walgreens in 2010 making just under $800 million on selling data only? There’s a pot of gold out there just waiting to be taxed, but again we don’t have lawmakers with enough technology backgrounds to see this and the further behind we fall. The algorithms live amongst us and here’s another recent post I made (and thanks to the folks at Nielsen for their kudos on this one) which breaks some of this down a little further. Keep in mind here too that I am making an effort to take some pretty complicated issues and bring them to a level to where the layman can get something out of this as well as I don’t anybody else out there doing a lot of this.
Here’s yet another interesting radio interview that offers a lot of good information, simple enough for the layman that again addresses this issue with spun data and marketing, further continuance of “algo duping” the consumer today.
Run no code before it’s time…yes and Nanex yesterday was out there with suggesting better testing of software in the markets but when there’s money to be made, well you get the picture there. Again, this is a dangerous area to where the rush for greed and the ability to not only control a market but also a society is upon us and you can’t see the algorithms, talk to them and as we saw yesterday with flaws they do their thing. A couple weeks ago too someone wrote an interesting article about the real time updating of prices at Amazon that could signal a danger area as well with the potential of a “flash crash” type of incident there and it was good food for thought as again we are talking masses of data and algorithms.
So again until we regain some balance with the markets with more tangibles as those companies create jobs, we are stuck with what we have today, formulas written for “desired” results and those written for “accurate” results and they are not the same as they should be and the expertise of the banks and brokerages to keep the game moving, but there will be a point to where this bottoms out to when the cash is no longer there that has been created with some illusionary programmatic algorithms to sell and market. BD