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Flash Boys: A Wall Street Revolt by Michael Lewis | Summary & Analysis
Flash A Wall Street Revolt by Michael Lewis | Summary & Analysis
This is a Summary & Analysis of Flash A Wall Street Revolt by Michael Lewis. Why it is that the only person arrested after the financial crisis of 2008 is a computer programmer ultimately being prosecuted by the same large company that was involved in the financial crisis to begin with?
In our analysis, we explain the changes that occurred in the regulation, technology, and business structure in Wall Street that made the environment ripe for collapse. Lewis also shines a light on HFT in the Flash Boys, the ones truly responsible for the breakdown of the system if any one group of people can be. However, what high frequency traders did was in no way illegal. It was not even frowned upon until someone conceived a way for traders to do so on a very large, very controllable scale. For years there have been urban legend style rumors of programmers able to build a computer program that would “catch the pennies off of pennies”.
Michael Lewis is able to bring to life characters in Flash A Wall Street Revolt that are already living without making the reader feel as if he is reading caricatures of real people. He delivers the facts of the story the same way that they would unravel in real time and takes the time between that unraveling to bring the reader up to speed on what the next development could mean. The result is a roller coaster ride of a thriller all in the confines of a true story event. While he is telling an intelligent story in Flash Boys, he is creating an intelligent reader and at the end he challenges the reader to use their newly gained knowledge to solve another mystery. Will you rise to the challenge?
This is a Summary & Analysis of Flash A Wall Street Revolt by Michael Lewis. Why it is that the only person arrested after the financial crisis of 2008 is a computer programmer ultimately being prosecuted by the same large company that was involved in the financial crisis to begin with?
In our analysis, we explain the changes that occurred in the regulation, technology, and business structure in Wall Street that made the environment ripe for collapse. Lewis also shines a light on HFT in the Flash Boys, the ones truly responsible for the breakdown of the system if any one group of people can be. However, what high frequency traders did was in no way illegal. It was not even frowned upon until someone conceived a way for traders to do so on a very large, very controllable scale. For years there have been urban legend style rumors of programmers able to build a computer program that would “catch the pennies off of pennies”.
Michael Lewis is able to bring to life characters in Flash A Wall Street Revolt that are already living without making the reader feel as if he is reading caricatures of real people. He delivers the facts of the story the same way that they would unravel in real time and takes the time between that unraveling to bring the reader up to speed on what the next development could mean. The result is a roller coaster ride of a thriller all in the confines of a true story event. While he is telling an intelligent story in Flash Boys, he is creating an intelligent reader and at the end he challenges the reader to use their newly gained knowledge to solve another mystery. Will you rise to the challenge?
25 pages, Kindle Edition
First published April 4, 2014
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May 7, 2014
Michael Lewis has a knack for turning seemingly obscure subjects into fodder for every day conversation. Thanks to The Blind Side, I understand the importance of the left tackle to the quarterback in football. The money management of baseball in small markets versus large has been made clear by Moneyball. So, choosing to read Flash Boys to understand the complexity of the stock market seemed like an obvious choice.
As always, Lewis does an excellent job of telling his story by weaving data into personal stories to create a compelling narrative. Flash Boys starts out with a trader at the Royal Bank of Canada trying to figure out why the stock market is not behaving normally. What he discovers, with the help of many others, is entirely disturbing. No laws are being broken, but market parity is nonexistent, even for large institutional investors.
How the market is being subverted is complex, and quite honestly, I'm still not quite sure I understand. The only consolation I have is that people, who do this for a living, are also just as flummoxed as I am. The basic weapon in Flash Boys is speed. By having internet connections that are milli-micro seconds faster than anyone else, flash traders can game the system. If your IRA manager puts in a buy for Coca-Cola, and the current buy price is $78.50, the flash boys intercept the intention, buy Coke in microseconds ahead of you and sell it to you for $78.52. The increments of the transaction are so small as to be meaningless, but when you're talking about large blocks of trades, the profits for the flash traders add up and the losses to every one else take a toll.
There are many aspects of our financial markets today that lack clarity, and Flash Boys does a great job of explaining what some of those areas are and how the obfuscation hurts our overall trust in the markets. Many things in life are not fair, but rigging a system in such a way that only a very few can possibly profit is the height of unfairness. And we are all paying the price.
As always, Lewis does an excellent job of telling his story by weaving data into personal stories to create a compelling narrative. Flash Boys starts out with a trader at the Royal Bank of Canada trying to figure out why the stock market is not behaving normally. What he discovers, with the help of many others, is entirely disturbing. No laws are being broken, but market parity is nonexistent, even for large institutional investors.
How the market is being subverted is complex, and quite honestly, I'm still not quite sure I understand. The only consolation I have is that people, who do this for a living, are also just as flummoxed as I am. The basic weapon in Flash Boys is speed. By having internet connections that are milli-micro seconds faster than anyone else, flash traders can game the system. If your IRA manager puts in a buy for Coca-Cola, and the current buy price is $78.50, the flash boys intercept the intention, buy Coke in microseconds ahead of you and sell it to you for $78.52. The increments of the transaction are so small as to be meaningless, but when you're talking about large blocks of trades, the profits for the flash traders add up and the losses to every one else take a toll.
There are many aspects of our financial markets today that lack clarity, and Flash Boys does a great job of explaining what some of those areas are and how the obfuscation hurts our overall trust in the markets. Many things in life are not fair, but rigging a system in such a way that only a very few can possibly profit is the height of unfairness. And we are all paying the price.
Displaying 1 of 1 review