Press Release Trading Scheme
Share
A story about hackers who made millions by accessing company press releases before they were publicly released.
"There was a real world version of this where a hacking group got access to the press release system. They had access to the next day's press releases that companies put out for major announcements, earnings results, etc. They could place bets in the market overnight or the next morning.
The challenge was they had 60,000 press releases to sort through. What they figured out was they needed to focus on merger announcements, which would cause the highest volatility for companies being acquired - since they're usually acquired at a 50% premium to the trading price.
They realized they needed to discard 98% of the news as noise and focus on the real signal. Even though they were only right about 70-something percent of the time, it was enough for them to make hundreds of millions of dollars very quickly before they got caught and went to jail.
The key insight was figuring out what was actually signal versus noise - most people can't do that and overestimate their ability to distinguish between the two."
Shaan Puri
Host of MFM
Shaan Puri is the Chairman and Co-Founder of The Milk Road. He previously worked at Twitch as a Senior Director of Product, Mobile Gaming, and Emerging Markets. He also attended Duke University.