Facebook's IPO taught us one thing: In the financial war against machines, we don't stand a chance.
Via: awesomer
Friday, May 18th, 11:49 am. For the first time in recent memory, millions of regular people were paying attention to the moment-to-moment fluctuations of a single stock. Most of us had no idea what was really going on — not working in finance, we rarely do — but it didn't seem like Facebook's IPO was going very well. The stock had almost instantly dropped four points from its opening price, and bottomed out at the offering price: $38. Five minutes later, the stock shot back up. It flew around like a stunned bee for the rest of the day, and ended down.
But back to those five minutes. Between 11:49 and 11:54, something extraordinary happened. For about 300 seconds, the computers took over. The stock, which had dropped four points in the five minutes prior, froze in an incredibly narrow five-cent range while two sets of computers put in thousands upon thousands of bids against one another. On one side, the underwriters' computers were offering to buy hundreds of millions of dollars worth of stock to keep it from dipping below the crucial $38 level; on the other, high frequency traders were making veerrryyy slightly higher bids at just above $38 — $38.01, $38.02 — which they would sell, literally seconds later. To get a sense of the staggering volume and speed at which this happened, watch this:
