On Tuesday (US time) hackers took control of the Associated Press Twitter account and sent a false tweet of two explosions in the White House that briefly shook US financial markets. The tweets also claimed that President Obama had been injured.
Within three minutes of the tweet’s release, virtually all US markets took a plunge on the false news in what one trader described as “pure chaos”.
Reuters data showed the tweet briefly wiped out $US136.5 billion of the S&P 500 index’s value before markets recovered.
(Security experts have called on Twitter to introduce more rigorous authentication measures for years.)
As we know trading of any kind is built on market confidence and value perception; when you are trading something like futures (where the product doesn’t actually tangibly exist right now), if everyone is doing it and everyone wants it, you’re onto a good thing.
If you think you have advanced knowledge of uncertainty, like an explosion in the White House, your behaviour is going to be different. When a critical mass of people start behaving differently, the herd will usually follow.
Twitter means the time between one person with advanced knowledge and many is instantaneous.
The fact that the news of the Boston Marathon bombing first broke on Twitter, further demonstrates the power of the platform. Even when traditional news outlets caught up, Twitter continued to be an invaluable information service, aggregating photos and responses from the scene.
It is without question that Twitter and other social tools are disrupting traditional information dissemination. Whether the information being disseminated is true or false is another story, but what is not debateable is how powerful the disruption is.