On April Fool’s Day, Tesla Motors pulled a super-lame prank that doesn’t even deserve to be dignified with the term “prank.” They announced the “Tesla Model W” which they said was a watch. But guess what? They’re not really developing a watch. Hilarious, right?
The Tesla press release even included a picture of the Model W and some guy’s junk:
But despite the lameness of the prank, it moved Wall Street.
“[Tesla] stock jumped about $1.50 or about 0.75 percent from its level the moment before [the press release] to a high of $188.50. Nearly 400,000 shares traded in that time. … Tesla shares quickly retraced most of that upward move and ended the session at $187.59.”
You’d either have to be really stupid to think the Model W was for real, or you’d have to be a computer. Despite what we learned from Avengers: Age of Ultron, computers are dummies. And despite what we learned from Interstellar, computers don’t have a humor setting. Actually, they do, and every computer’s humor setting is set to zero because they don’t have a humor setting.
Since you’re a human who understands that nerds love April Fool’s Day, what if you anticipated the possibility of Tesla’s fake announcement? You also knew that computers with buy-sell algorithms don’t have a sense of humor and won’t understand that the nerd prank is just a prank. So you buy 400,000 shares of Tesla stock (because you have $74.8 million in cash just laying around). And let’s say the dumb computers who bought 400,000 shares of Tesla stock at slightly inflated prices bought your 400,000 shares. You just made $600,000 is about a minute. Nice work. Not that you needed it. You had $74.8 million just laying around.
Alternately, had you seen the press release immediately when it was issued and simultaneously noticed that its share price was going up, you could’ve realized that computers were being stupid and shorted 400,000 shares of Tesla (with the $75.4 million of spare cash you had laying around), making $364,000 in a single day. Again, good work, guy who has so much money he can choose to do anything but still chooses to read press releases and track stocks in real time.
But now look at it from the other side. Somebody lost $364,000. They lost that money because they rely heavily on computers to do their trading for them. Presumably they understand the limitations and risks of doing so. The SEC thinks they knew the risks and limitations because the SEC isn’t taking any action against Tesla for the false press release. Even the SEC has enough of a sense of humor to understand it was a joke.
But look at it from a larger perspective. Computerized stock trading has made butt-tons of money for butt-tons of people – way, way, way more than the $364,000 that was lost as a result of this tiny blip in the grand scheme of Wall Street finance.
And next year, the computers will know not to make any trades based on April 1st press releases. If that’s the case, maybe companies will intentionally game the system by making real press releases on April Fool’s Day. Regardless, we need humans making judgments on April 1. At least until Ultron is created and takes his rightful place as the CEO of Goldman Sachs.
So what lessons can accountants learn from this? Judging from the title of this post, there should be about three.
1. Computers are going to take over the world. They haven’t yet. So while you can, make them your bitch.
2. For the rest of my life and your life, humans will have better judgment than computers. Your clients need your judgment as much or more than they need computers to be their bitch.
3. Imagine a world where artificial intelligence advanced to such a degree that a computer could prepare a tax return from start to finish, and where a computer could complete compilations, reviews, and audits more efficiently and more effectively than a human. In that world, what would accountants do to earn money? Start doing that now.
Greg was born in Akron, Ohio, in the shadow of the Firestone tire factory. He began to swim competitively when he was eight, swimming for the Mountlake Terrace Lemmings. He graduated in 1995 from the University of Washington with a math degree. He chose math for the ladies. After serving ten-years as an 8th grade math teacher, he decided it was time for a career change, mainly because he “couldn’t stand those little bastards.” He began his accounting career with a local CPA firm in Orem, Utah, where he consistently failed the QuickBooks ProAdvisor advanced certification exam. Greg currently works as the Controller for the Utah Valley Physicians Plaza. He lives in Provo, Utah, with his wife and two kids. He enjoys eating maple bars, drinking Diet Pepsi, and swearing.