Penny-stock shares jumped in value by more than 25,000 percent based on twitter

Cynk is an apparently non-existent social media company whose penny-stock shares jumped in value by more than 25,000 percent—a better return, as Business Insider notes, than someone who bought Apple stock in 1980 would see if they were still holding those shares. During the heyday of 1990s internet stock speculation, curmudgeons could rest assured that human-powered greed was fueling runs on IPOs for companies that had never made a cent. But today, with the rise of high-frequency trading, it’s understandable to wonder whether Cynk was just some kind of algorithmic hiccup. Maybe Wall Street’s computers are just punking us.

“As we all know from both social media and the stock market, however, humans are stubbornly prone to cognitive biases and emotion-driven rationalizations that lead to bad choices, like buying shares of Cynk. The advantage of using computers as an aid to decision-making is their ability not to hear any of that noise—noise that introducing social media and other unstructured data as new variables into, say, high-frequency trading systems could cause to increase. Paradoxically, the more Wall Street’s machines become like humans, the more prone they may be to making the same kinds of mistakes humans do. The next tech bubble might not be driven by human stupidity or greed; it might be created by the tech itself.”

(source accessed 13.07.2014)