Meet Robo Trader

"I'm sorry, Dave. I'm afraid I can't do that." ~ HAL9000

My wife and I often listen to National Public Radio news as we sip our morning coffee in bed (one of the more lovely benefits of retirement). Often during the broadcast, punctuated in between the news stories, the reporters usually toss out a brief update about how the Stock Market is doing. The Dow is up x points, or the NASDAQ down by y. I often wonder, what is the point of telling me this information? In a matter of minutes those markets can completely reverse.

Worse yet is when the news then attempts to explain WHY the Stock Market took a particular rise or fall. Recently the market apparently fell on worries about the nuclear plant disaster in Japan. Oh really - how do they KNOW that was the cause? A few years back I heard a reporter attribute the market closing lower because President George Bush was having his colonoscopy. What the... ?!

The truth is that I don’t think anyone has the remotest clue why the Stock Market trends as it does. The media obviously pulls some current story out of the blue and attempts to attribute cause-and-effect to these fluctuations where there is none. Humans naturally expect reasons for why things happen, therefor, a causal effect is simply manufactured that has absolutely nothing to do with reality.

I became even more dubious about Stock Market trends after discovering that a huge majority of the trades executed daily are no longer done by human traders but by computers. The number of human traders on the floor of the stock exchanges has actually dropped by a large percentage.

As it turns out, a significant number of the buy/sell trade decisions are not being made by human traders - To a significant degree computers have taken over the buying and selling of stocks. I recently watched this story on the TV news show, “60-Minutes”. Companies have now invested millions in computer hardware and algorithms which can spot and act on trends within microseconds. Traders on the floor of the Stock Exchange is now old school.

Excerpt: It may surprise you to learn that most of the stock trades in the U.S. are no longer being made by human beings, but by robot computers capable of buying and selling thousands of different securities in the time it takes you to blink an eye.

Today [the floor of the New York Stock Exchange] is still the public façade of Wall Street, and a television backdrop for reporters relaying financial news. But less than 30 percent of the trading is conducted there now, and the specialists and the noise of the floor are being replaced by the speed and quiet efficiency of computers and the action has moved elsewhere. ^1.

For me this has significant bearing on the entire purpose of the Stock Market. Companies used to offer investment in the form of stocks to raise capital in order to expand, grow and become profitable; thereby sharing the benefit through dividends to their investors. However in recent years I have been puzzled why it seemed the stock in one company would fall even when they reported profitable years; equally puzzling were the rises in stock prices of companies obviously languishing.

Now I understand why – the decisions regarding the sale and purchase of a company’s stock have no bearing whatsoever on the viability, market potential or management of that company. Those buy/sell decisions are made within fractions of a second by automated traders who may likely hold a company stock it just purchased for only three minutes before it sells it.

The people behind this trend say this should have no negative effect on the small investors who like to play the stock market using their best analytical considerations about the viability of the companies they choose invest in. But if the prices are actually driven by the mindless millisecond musings of a super computer, how can you be sure the small investor is safe?

This one thing I do know, as NPR tells me the Stock Market is up or down so many points, by the time I finish my morning coffee, that information is old news.

~~~

1. How Speed Traders Are Changing Wall Street, “60-Minutes”, October 10, 2010

More Adventures in Tech Support

Prior to retiring, I was a Supervising Computer Network Technician for the State of Oregon. One particular day we had just received a shipment of four HP laptop computers, one of which was defective having arrived completely dead.

In order to replace the defective computer I needed to contact HP technical support to obtain an RMA (Return merchandise authorization). This was supposed to be accomplished through their tech support “chat” page. As a “computer professional” I had access to tech support with other vendors, such as Dell and Microsoft, where I could bypass the usual “consumer” customer tech support operators and speak directly with a fellow technician; much like two physicians might consult with each other regarding an ill patient.

However we didn't have this tech-to-tech system in place with HP, so I had to contact them through their regular customer support process; specifically, a chat window. This is roughly how I recall the conversation went:

HP: Welcome to HP technical support. My name is {lots of consonants}, how may I help you?

Me: Hi, I am a network technician for the State of Oregon, we received four notebook PCs one of which is dead on arrival, no power whatsoever even when connected to line current using the power cord. I need to obtain an RMA to replace it. It is a model {model} serial number {serial number}.

HP: Where did you purchase the computer?

Me: I don’t know where it was purchased; the State of Oregon purchased a few hundred of these through Equipment Procurement; four were distributed to my office.

HP: You don’t know where you bought the computer?

Me: I didn’t buy the computer; the State of Oregon bought them.

HP: Do you have the receipt from where you purchased the computer?

Me: Equipment Procurement would have the PURCHASE ORDER used to purchase the computer, I don’t have it. I just have a dead computer that you need to repair or replace under warranty.

HP: Have you tried charging the battery?

Me: I am a professionally trained computer service technician; the battery won’t charge because the computer won’t run from line current.

HP: Have you tried plugging it in to the wall using the power cord?

Me: {by now I have typed the following phrase into Notepad and am copying and PASTING it into the chat window with every response} I am a professional trained computer service technician, I have put this computer through the trouble-shooting procedure; there is no power to the computer.

HP: What does it say on the screen when you start the computer?

Me: Nothing, it doesn’t start. It’s dead (now I am picturing the Monty Python “Parrot sketch). It doesn’t boot, it doesn’t beep, it is cold stone DEAD! {paste my computer professional statement into the chat window}

At this point, at everything he suggests, I am pasting this same response into the chat window over and over. After about three of these, he begins to suspect that I am going to give the same answer to every question.

HP: Ok we can have you send the computer to us for servicing. Do you have a credit card?

Me: Why would I need a credit card? Just give me an RMA and I will send the computer back to you and you send me a new one.

HP: We have to get a credit card number so we can charge you if the computer is not returned to us.

Me: I’m not floating a loan to the entire State of Oregon using my personal credit card!!

HP: We are required to get a credit card number, sir, or we can’t do the exchange.

Me: How about this; I contact Equipment Procurement and have them CANCEL the order for THOUSANDS OF DOLLARS order for HP computers and recommend we give that business to DELL instead? {...not that I had any authority do that, of course}

HP: {long pause; no typing…} You will receive a shipment from us in a few days, use the box provided to you to return the computer. Your RMA number is…

Several days later I received an EMPTY box with which to return the dead computer. About a month later the SAME computer is returned to me. It worked.

The Latest Buzz

For a significant part of my working career I was a tech support field technician for the State of Oregon. Essentially I was the Maytag Repairman for the computers, routers, switches and everything wired into them for my region of the state. A decent job overall; I worked pretty much without direct supervision and got to be out and about at different offices to do my work.

Often people called me directly when they had a computer problem, but mostly my work orders were routed to me from the Help Desk, a central bank of technicians staffing phone lines taking service requests from users. The Help Desk would try to resolve the problem over the phone; and if they couldn’t, they would dispatch a tech (like me) to make an on site repair call.

One day I received a work order from the Help Desk; a user reported that their computer was making a buzzing sound. The Help Desk operator said they could even hear the buzzing over the phone when they were talking to the user. They couldn’t resolve it so I was dispatched to the location.

When I arrived I did my “detective” thing and started to interrogate the user; the usual questions like when did you first notice the problem and what have you tried yourself. As I was talking with the user, the computer buzzed for a few seconds and stopped. I heard it! I started looking at the screen and running a few diagnostics; about two minutes later, it buzzed again, but only for a few seconds and not long enough for me to clearly determine the source of the buzz.

As I sat there puzzled the user quipped “Yes, it even buzzes like that when the computer is turned OFF”. My eyebrows raised significantly.

There, it buzzed again. I began to time it with my watch. At regularly every two minutes (120 seconds precisely) it buzzed for 5 seconds. The computer’s CPU was placed on the floor under the desk so I got down on my hands an knees and put my ear to the side of the computer… looking at my watch, the buzz came right as expected. However the sound now appeared to be coming from over my head rather than from the computer.

I crawled out from under the desk and sat in the user’s desk chair; opening the desk drawer – there in the drawer was a pager. I watched as at precisely two minutes, the pager vibrated and danced around the wooden bottom of the drawer.

The moral of the story is that not all technical problems require a technical solution.

True story - The actual work order can be seen here.