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What’s worse for markets: Hackers or knee-jerk investors?

Aug 15, 20113 mins
Data and Information Security

I’m not really worried about stock markets getting hacked. The typical investor has already demonstrated an ability to wipe us all out far more efficiently than any plot a hacker could unleash.

I’m pondering the topic after reading this from one of our sister publications in Asia:

The Hong Kong Stock Exchange suspended trading in several shares on Wednesday following a glitch in its online news service that might be caused by hacking, said the Hong Kong Exhanges and Clearing (HKEx) chief executive Charles Li.

The glitch came on a day when several firms announced earnings, preventing investors from accessing company announcements made during the midday break. HKEx said that in order to give investors time to get the price-sensitive information elsewhere, it decided to adopt a half day (i.e. one trading session) suspension policy for firms announcing results during the lunch publication window on Wednesday.

According to Li at a news conference held Wednesday afternoon, eight companies were affected including HSBC, Cathay Pacific, Dah Sing Bank, China Power, and HKEx, all of which announced interim results during the midday break.

“Our current assessment is that the glitch could be the result of an external attack,” said Li. “HKEx is now investigating the problem and the HKEx news website services will resume as soon as the technical problem is resolved.”

I don’t mean to downplay the threat. Tampering with stock market machinery is one of many things we have to worry about when it comes to attacks on critical infrastructure.

A successful attack on the markets could do some serious damage.

But when I look at the recent behavior of the markets, hackers become the least of my worries.

When the market swings 400-plus points in either direction on multiple days like we saw last week, we see how investors are already plenty dangerous without the external intervention.

True, there is a lot to worry about.

We are collapsing under the weight of the debt and both sides of Pennsylvania Avenue have demonstrated a pathetic inability to do what’s right to fix it.

The economy itself is teetering on the brink of another recession.

The United States lost its AAA credit rating.

But investors seem to have lost all sense of reason. Transactions are now driven by raw emotion and unchecked fear.

The lesson is that our own fear can often be the greatest threat to security and stability — financial or otherwise.

Fear leads to error every time.

Just sayin’.

–Bill Brenner

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