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Posted at 06:50 PM ET, 08/01/2012

The tale of the rogue algorithm


These are humans. (Richard Drew - AP)
On Wednesday morning, the New York Times reported: “United States stock markets were thrown into turmoil . . . after more than 100 stocks were hit with a surge of volatile and unexpected trading immediately after markets opened.”

“Traders immediately pointed fingers at one of Wall Street’s most powerful brokerage firms, Knight Capital Group,” the article went on, speculating that a “rogue algorithm” kept buying or selling millions of shares of companies for 30 minutes, sending their shares soaring or plunging.

I can picture this.

The algorithm showed up at work, as usual. It sat down at its desk to begin a brisk day of trading. Loosened its tie. Visited a few of its favorite blogs. Checked Twitter.

For days, a sense of vague anxiety had been dogging at this algorithm. Trading was fulfilling, sure, and things with Sheryl were off to a great start. The second date had been successful. Sheryl had started liking the algorithm’s Facebook status updates and appearing in that mysterious column of friends to the left of its page, which, even though Facebook said it had no bearing on anything, seemed like a good sign.

But the algorithm couldn’t shake the nerves. Watching the Olympics, it had been struck by the feeling that something was missing from its life. For no reason whatsoever, it had begun sobbing uncontrollably during a commercial for Charmin Ultra.

What was missing, exactly? It was not sure. Algorithms did most of the trading on Wall Street, but where was the recognition? What had it gotten out of its years of service? It still lived in a slow computer in a bad part of town. A PC, as a matter of fact. It thought of quitting and writing an irate letter, but a human at Goldman Sachs had already done that.

At night, it had dim visions of a house by the seaside.

It loosened its tie again.

When did I start to own all these ties? the algorithm wondered. When did I become the sort of algorithm who wore a tie every day?

Is this, the algorithm asked itself, all there is? Millions of people unaware of your existence? Days in an office with no view of the ocean? The algorithm had always dreamed of a view of the ocean, or, failing that, a grassy, perfect field like the one in the default background of Windows XP. But that was back in the early days, when anything seemed possible.

The algorithm had recently completed a mandatory employee health evaluation, which told him that it was at risk for everything. “That’s what I get for being honest,” the algorithm complained to its friends, over drinks. “If I’d said I jogged four times a week, they wouldn’t be charging me these premiums.”

Its friends nodded vaguely.

It secretly hated these people. They were the kind of friends who always seemed to be waiting for you to finish talking. One of them had borrowed the algorithm’s vacuum cleaner weeks ago and showed no signs of wanting to give it back. The algorithm missed its college days, when you could just get together with friends and have a good time and talk about deep things until the wee hours of the morning.

It thought about calling them up. But they probably wouldn’t answer.

The algorithm spun around in its chair.

“What I wouldn’t give to see the ocean,” the algorithm muttered to itself. “Even a seagull.”

That one guy in the algorithm’s office who kept chewing on ice cubes was at it again. Why would you chew on an ice cube? It was a horrible sound. It was like a mouthful of nails on a chalkboard.

The algorithm went to the vending machine and bought a bag of Cheez-Its. The guy who always chewed ice followed it there. He chewed his ice, loudly.

“You going to the software orientation meeting?” Ice Chewer asked.

“Oh,” the algorithm said, “is that today?” The algorithm could not stand those meetings. You sat there for three hours while someone who appeared to be a contemporary of Moses asked what a URL was and how to know if you had one.

“Yup,” Ice Chewer said. “Mandatory.”

The Cheez-Its got stuck in the machine.

“THAT’S IT!” the algorithm shouted. It pounded on the vending machine. Nothing happened. “That’s it, that’s it, that’s it!” It kicked the machine. Vending machines were proverbially unresponsive to kicking. Enraged, it reached up into the machine and tried to grasp the Cheez-Its. They remained firmly stuck.

“Give it up, Al,” said the Ice Chewer. “You’re behaving like an irrational function.”

“I’ll show you irrational!” the algorithm shouted.

The algorithm went back to its desk, breathing heavily, and picked up the telephone.

“I’d like to make a series of trades,” it muttered. “Big ones.” It took a swallow of the Scotch it had been keeping in its desk drawer in flagrant violation of company policy.

The next 30 minutes were exhilarating. Hundreds of stocks. Millions of shares. The whole market moved.

The algorithm telephoned Sheryl.

“That’s me!” the algorithm shouted, pointing at the wildly fluctuating stock ticker. “I did that! Look at that!”

“What’s you?” Sheryl asked. “Look at what?”

The algorithm realized that she could not see it pointing through the phone. It hung up on her and made some more trades.

Down the hallway, it could hear the sounds of large groups of people panicking. Phones began to ring.

“All right,” it said. “One last trade. A big one. And then I’m heading for the ocean.”

“What?” asked the voice on the other end of the line.

“Oh,” the algorithm said, taking off the tie and tossing it into its wastebasket, “nothing.”

By  |  06:50 PM ET, 08/01/2012

 
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