Check Your Sources

An article in yesterday’s New York Times, “A Mistaken News Report Hurts United,” makes the case for always checking your sources and would be a perfect story to use when teaching business students. The stock of United Airlines fell from $12 to $3 dollars in less than an hour and trading in the stock had to be halted. How did it happen? An analyst in a research firm found an article about United saying they would file for bankruptcy and put it in his investment advisory where it was linked to by Bloomberg News. He found the article in a search on Google for bankruptcy filings in 2008. What he did not note was that the article was six years old. A follow-up story in today’s Wall Street Journal, “UAL Story Blame is Placed on Computer,” puts the blame on search robots. First the Sun-Sentinel featured the story as one of its most popular for the day and then Google’s bot picked it up and featured it on Google News, and finally, automated trading programs picked up the headline and started selling.