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4.03 AVERAGE
4.03 AVERAGE
informative
medium-paced
informative
reflective
fast-paced
There's a reason more than one of Lewis' non-fiction books have been turned to big movies, against all odds. He has an uncanny ability to turn technical topics filled with intricate details into narratives, and Flash Boys is no exception. It's likely some objectivity and accuracy is sacrificed in the process but I don't think this book can be called "a work of fiction" as someone apparently did.
3 stars purely because Michael Lewis' writing is addicting and the fact that Laurier is mentioned in the book. Seriously, am I supposed to root for the main characters? The book claims to be about a group of guys that discover the rigged nature of the stock market and set out to reform it. However, their idea of "reform" is to tap into the problem, slightly alter it, and then sell it back to the big banks who were cited as the beneficiaries of the problem in the first place, some of them even created their own dark pool after criticizing others for doing the same thing. How is that reform? A big chunk of the blame has been shifted to small-sized HFT firms commenced by and composed of immigrants. This portion of the book reeks of elitism, is that the issue here, that they're Russian? That they're Indian? That they're Chinese? Seems to me that they are doing using the same tactics as the big banks, so why are they the focal point of the criticism in this book?
The answer is because they are non-Americans. The best part of the book was this phrase describing Wall Street, "It's a whole industry of bullshit."
The answer is because they are non-Americans. The best part of the book was this phrase describing Wall Street, "It's a whole industry of bullshit."
My reaction is similar to Tyler Cowen's (http://marginalrevolution.com/marginalrevolution/2014/04/flash-boys-the-new-michael-lewis-book.html). The book is very one-sided. In particular, Lewis has an unfortunate habit of taking Wall Street traders' complaints about HFT shops at face value. (Protip: Don't do that.) But Lewis, as always, spins a good yarn. So whatever the book's analytical faults -- and there are a lot of them -- as long as you remain skeptical, it's a good read.
Food for thought: The author spends a lot of time bashing RegNMS. But if IEX, which is the culmination of the book's central narrative, succeeds, would that prove RegNMS actually was a good idea the whole time?
Food for thought: The author spends a lot of time bashing RegNMS. But if IEX, which is the culmination of the book's central narrative, succeeds, would that prove RegNMS actually was a good idea the whole time?
Flash Boys is two books at once. First, it’s a fascinating tale about a few different innovators working in the financial markets. These men spotted an opportunity to create a better wall street, to fix a problem that the market would, hopefully, reward them for. Second, it’s another reminder that the primary motivator on Wall Street is for the people who work on Wall Street to make money, and that the money invested there by the rest of us is just a prop they use to do so. In case you didn’t learn that lesson from The Big Short.
A brief precis: Lewis tells the story of High Frequency Trading (HFT) through a few stories about people fighting to undermine it. Essentially, HFT is a market trading style that uses the inherent latency in the space between the different stock exchanges to make money. Here’s an example of the most basic way this happens: Say you want to buy 100,000 shares of Apple. Your broker goes to the first exchange and finds 10,000 shares on offer, including 100 shares being sold by a HFT. After you buy up the 10,000 shares there, your broker’s pokey computer sends a request to the rest of the stock exchanges looking for the other 90,000 shares. In the 1/3 – 1/2 of a second it takes for your order to move through the market, HFT computers have rushed ahead and bought up all the shares, and are now selling them for a tiny fraction more (say, 1 penny per share). You buy the shares from them, and they’ve just made money off their speed advantage in the market, without adding any value to the exchange. Now multiply that by every trade made on every stock market in the US, and you can see how they’re making billions of dollars, basically by cutting in line where most people don’t know there’s a line to cut in.
A few thoughts:
- The first lesson Lewis teaches us in the story of this burgeoning force fighting against High-Frequency Traders is that regulation usually only solved the problem it’s meant to. But it almost always creates new loopholes through which different ways to cheat can be exploited. And since the incentives on Wall Street are so massive, someone will always exploit said loopholes.
- The second lesson is a reminder that banks are there to make money, not to serve the good of the market or even of their own clients. The level to which the banks and the exchanges have altered how they do things to make it easier for the HFTs is appalling.
- The book has some hope, though, unlike The Big Short, which just feels depressing. The new exchange being created throughout the book (which opened this year) seems like it has the potential to change things as the clients, the investors who’re paying a speed tax to HFTs, notice what’s going on.
Once again, Lewis does a fantastic job telling a complex tale in a gripping way. Dylan Baker’s performance is quite strong, and adds great nuance to the tale. Highly recommended read.
A brief precis: Lewis tells the story of High Frequency Trading (HFT) through a few stories about people fighting to undermine it. Essentially, HFT is a market trading style that uses the inherent latency in the space between the different stock exchanges to make money. Here’s an example of the most basic way this happens: Say you want to buy 100,000 shares of Apple. Your broker goes to the first exchange and finds 10,000 shares on offer, including 100 shares being sold by a HFT. After you buy up the 10,000 shares there, your broker’s pokey computer sends a request to the rest of the stock exchanges looking for the other 90,000 shares. In the 1/3 – 1/2 of a second it takes for your order to move through the market, HFT computers have rushed ahead and bought up all the shares, and are now selling them for a tiny fraction more (say, 1 penny per share). You buy the shares from them, and they’ve just made money off their speed advantage in the market, without adding any value to the exchange. Now multiply that by every trade made on every stock market in the US, and you can see how they’re making billions of dollars, basically by cutting in line where most people don’t know there’s a line to cut in.
A few thoughts:
- The first lesson Lewis teaches us in the story of this burgeoning force fighting against High-Frequency Traders is that regulation usually only solved the problem it’s meant to. But it almost always creates new loopholes through which different ways to cheat can be exploited. And since the incentives on Wall Street are so massive, someone will always exploit said loopholes.
- The second lesson is a reminder that banks are there to make money, not to serve the good of the market or even of their own clients. The level to which the banks and the exchanges have altered how they do things to make it easier for the HFTs is appalling.
- The book has some hope, though, unlike The Big Short, which just feels depressing. The new exchange being created throughout the book (which opened this year) seems like it has the potential to change things as the clients, the investors who’re paying a speed tax to HFTs, notice what’s going on.
Once again, Lewis does a fantastic job telling a complex tale in a gripping way. Dylan Baker’s performance is quite strong, and adds great nuance to the tale. Highly recommended read.
informative
reflective
medium-paced
funny
informative
lighthearted
fast-paced