In recent days there has been a range of false reports that managed to gain great purchase across the globe while the truth is still logging on.
Early in the month, Apple stock fell as much as 5 percent after a CNN-sponsored citizen-journalism site, ireport.com, published a false item from a user reporting that Steve Jobs, the company's chief executive whose health has been a public preoccupation, had been rushed to the emergency room. The poster is still a mystery, though the Securities and Exchange Committee is investigating and CNN is cooperating.
In September, United Airlines lost more than $1 billion in market capitalization when traders treated a six-year-old announcement of a bankruptcy as a new development.
And in politics, it is common for rumors to be floated on sites like Drudge Report, forcing hurried denials and gaining life in the court of public opinion.
While not involving the stock market, an example from the Drudge Report is instructive about how false news -- in effect, reputational short-selling -- spreads. On Friday, Sept. 5, Drudge Report hailed an exclusive about the newly nominated Republican vice-presidential candidate: "Oprah Balks at Hosting Sarah Palin; Staff Divided."
Oprah Winfrey later that day released a statement denying the report. But it was in the news enough for Tom Brokaw, of NBC's "Meet the Press," to introduce the subject to the Democratic vice-presidential nominee, Joe Biden: "Do you think that some people will see that as an elitist position, that in some ways Democrats may be afraid of her, Sarah Palin?"
With its oodles of information, the Internet is laden with falsehoods, but, in fact, these recent cases show how critical are amplifying sites like Drudge or Google News or Digg to getting reports from the backwoods before the public.