The History Book Club discussion

This is a buddy read thread for the following book:

Flash Boys: A Wall Street Revolt by Michael Lewis

by Michael Lewis

Remember we use spoiler html on a single thread discussion. This discussion can begin on February 16th if folks are ready. We place a beginning and end date on the discussion but both dates are always open ended and you can read the book as you like with a group of like minded members.

Thanks and Enjoy. Bentley will be leading the buddy read and Teri will be the backup.

Remember the following:

Everyone is welcome but make sure to use the goodreads spoiler function.

If you come to the discussion after folks have finished reading it, please feel free to post your comments as we will always come back to the thread to discuss the book.

The rules

You must follow the rules of the History Book Club and also:

First rule of Buddy Read:
Respect other people's opinions, no matter how controversial you think they may be.

Second rule of Buddy Read:
Always, always Chapter/page mark and spoiler alert your posts if you are discussing parts of the book.

To do these spoilers, follows these easy steps:

Step 1. enclose the word spoiler in forward and back arrows; < >

Step 2. write your spoiler comments in

Step 3. enclose the word /spoiler in arrows as above, BUT NOTE the forward slash in front of the word. You must put that forward slash in.

Your spoiler should appear like this:
(view spoiler)

And please mark your spoiler clearly like this:

State a Chapter and page if you can.
EG: Chapter 24, page 154

Or say Up to Chapter *___ (*insert chapter number) if your comment is more broad and not from a single chapter.

Chapter 1, p. 23
(view spoiler)[I know everything now about chapter one and I am going to post it here - oops I better place this in a spoiler alert so I do not ruin the book for others (hide spoiler)]

If you are raising a question/issue for the group about the book, you don't need to put that in a spoiler, but if you are citing something specific, it might be good to use a spoiler.

By using spoilers, you don't ruin the experience of someone who is reading slower or started later.

Thanks.

You can copy and paste below to get your spoiler right:

<spoiler>Put Text Here</spoiler>

For those who like a schedule, you can follow this one below. You are welcome to read faster or slower, since this discussion will remain open after April 19th.

Week One:
Introduction -(Windows on the World) and Chapter 1 (Hidden in Plain Sight)
(February 16, 2015 - February 22, 2015) (pages 1 - 22)

Week Two:
Chapters 2 (Brad's Problem) (February 23. 2015 - March 1, 2015)
(pages 23 - 55)

Week Three:
Chapters 3 (Roan's Problem) (March 2, 2015 - March 8th, 2015)
(pages 56 - 88)

Week Four:
Chapters 4 (Tracking the Predator) (March 9th, 2015 - March 15th, 2015)
(pages 89 - 127)

Week Five:
Chapters 5 (Putting a Face on HFT) (March 16th, 2015 - March 22nd, 2015)
(pages 128 - 150)

Week Six:
Chapters 6 (How to Take Billions from Wall Street) March 23rd, 2015 - March 29th, 2015)
(pages 151 - 192)

Week Seven:
Chapters 7 - (An Army of One) (March 30th, 2015 - April 5th, 2015)
(pages 193 - 243

Week Eight:
Chapters 8 and Epilogue (The Spider and the Fly) and (Riding the Wall Street Trail) (April 6th, 2015 - April 12th, 2015) (pages 244 - the end of the Epilogue)

Book as a Whole and Final Thoughts:
(April 13th, 2015 - April 19th, 2015

We have some holidays in between like Easter so we all understand if things are little slower during that week. No worries about any of this.

Synopsis:

Flash Boys

Four years after his #1 bestseller The Big Short, Michael Lewis returns to Wall Street to report on a high-tech predator stalking the equity markets.

Flash Boys is about a small group of Wall Street guys who figure out that the U.S. stock market has been rigged for the benefit of insiders and that, post-financial crisis, the markets have become not more free but less, and more controlled by the big Wall Street banks. Working at different firms, they come to this realization separately; but after they discover one another, the flash boys band together and set out to reform the financial markets. This they do by creating an exchange in which high-frequency trading—source of the most intractable problems—will have no advantage whatsoever.

The characters in Flash Boys are fabulous, each completely different from what you think of when you think “Wall Street guy.” Several have walked away from jobs in the financial sector that paid them millions of dollars a year. From their new vantage point they investigate the big banks, the world’s stock exchanges, and high-frequency trading firms as they have never been investigated, and expose the many strange new ways that Wall Street generates profits.

The light that Lewis shines into the darkest corners of the financial world may not be good for your blood pressure, because if you have any contact with the market, even a retirement account, this story is happening to you. But in the end, Flash Boys is an uplifting read. Here are people who have somehow preserved a moral sense in an environment where you don’t get paid for that; they have perceived an institutionalized injustice and are willing to go to war to fix it.

Michael Lewis website: http://michaellewiswrites.com/index.h...

Remember everyone we do not begin the discussion until February 16, 2015.

We hope you join us.

I don't understand. What are we gonna discuss, and how do I do it?

Message 1 tells you what book this buddy read is about. Message 4 gives you the reading schedule. This is a book discussion on Flash Boys which will start on February 16, 2015.

by Michael Lewis

Get the book, check the syllabus in message 4, and read the assigned reading each week. Come back on February 16th.

Hello Folks, buddy reads are much less formal and are quick discussions. We ask you to use the spoiler html and we will kick off this discussion on February 16th. You can sign up here if you are going to join us. And then we will kick it off on February 16th.

Remember everyone we do not begin the discussion until February 16th, 2015.

We hope you join us.

Interesting, as I have already read the whole book.

Stanley, then why are you asking me how to participate or what we are going to discuss? You can discuss it with us if you so choose but we begin discussion on February 16th. See you then. Maybe you might want to participate on a discussion where you have not read the book as yet. We have quite a few discussions that you can participate in.

Here is an article that you might want to read in advance of our discussion:

Too Fast to Fail: Is High-Speed Trading the Next Wall Street Disaster?
Computer algorithms swap thousands of stocks each instant—and could set off a financial meltdown.
—By Nick Baumann | January/February 2013 Issue



http://www.motherjones.com/politics/2...

Source: Mother Jones

The Flash Boys Bull:

You can sign up here for the Flash Boys discussion - we do not send out event notifications for Buddy Reads. It begins February 16th.

OK let us begin. Let us introduce ourselves. Those of you who are going to read Flash Boys. Use the spoiler html because this is a single thread discussion.

1. Read message two and that message shows you the rules for the buddy read discussion and how to do the spoiler html.

2. Message 3 actually shows you the spoiler html code. Use it on this thread.

3. Where is the reading syllabus? - It is in Message 4.

Hello I am Bentley and I want to welcome you to the Flash Boys discussion. The discussion will go from February 16th through April 19th.

Here is the Opposing View which you can come back to and we can all discuss:

http://www.futuresindustry.org/ptg/do...

All, we do not have to do citations regarding the book or the author being discussed during the book discussion on these discussion threads - nor do we have to cite any personage in the book being discussed while on the discussion threads related to this book.

However if we discuss folks outside the scope of the book or another book is cited which is not the book and author discussed then we do have to do that citation according to our citation rules. That makes it easier to not disrupt the discussion.

High-speed Trading Feeling the Pinch

Video:

http://www.nytimes.com/video/business...

It might be nice to know whether those involved with the buddy read have a background in or know about equity market structures or high speed frequency trading before reading the book.

And if you are just learning about this subject area - which more than likely is the bulk of most readers on the buddy read - let us know that too.

We are happy to have both discuss this subject matter.

I have posted about four videos on this subject matter as background.

We begin:

Introduction - page 1

(view spoiler)[Michael Lewis begins Flash Boys with the story of Sergey Aleynikov, who was a former computer programmer of Goldman Sachs.

Sergey had been arrested in 2009 for stealing Goldman Sachs computer code. “

Topic for Discussion:

Did anybody think that this was a little bizarre that Sergey was sued by Goldman Sachs for a few lines of code which probably showed what Goldman was doing themselves? Why such a stringent sentence and why the little guy the only one who was charged with any sort of a crime during the financial crisis when Goldman was one of the players when folks lost so much?

What is more bizarre is that this code manipulates the market in unfair ways - why should Goldman be trusted with this code either and why the double standard on Wall Street?

Also, the ruling has been overturned but the programmer's life is ruined. Was Lewis right in thinking that this double standard for Wall Street is not right?

Here is the Bloomberg Report:

http://www.bloomberg.com/news/article... (hide spoiler)]

I have started reading this book. The subject matter is new to me and I find it quite interesting. Looking forward to the discussions and learning a lot about high speed frequency trading.

Welcome Helga - we should learn a lot more than most folks know about - make sure to check out the videos that I have added as well and the articles above.

And be sure to post and discuss the topic discussions - just use the spoiler html and put at the top what you section of the book you are discussing with the page number if possible.

Hi, I'm Kressel, and my knowledge of the stock market is pretty limited. I'm loving the book so far, though! It's made me wonder if all that digging for hydraulic fracturing in Pennsylvania recently wasn't for something even more sinister.

Who knows Kressel - welcome - please check message 4 for our schedule.

This is the schedule for this week:

Week One:
Introduction -(Windows on the World) and Chapter 1 (Hidden in Plain Sight)
(February 16, 2015 - February 22, 2015) (pages 1 - 22)

Does anybody want to tackle and discuss the topics for discussion in message 22?

Just make sure to use the spoiler html.

And just set up your responses the way that I am doing in message 22.

Hello all. Glad to join in on this one. I had been seeing the book discounted on Kindle and had caught a program on NPR about the High speed direct line, so this seemed like perfect timing. I have no particular knowledge of High Speed trading, other than what I've read in the news, and am armed with only a basic knowledge of the market.

Intro & Chapter 1
(view spoiler)[I was unaware that a Russian programmer named Sergey Aleynikov had stolen and been arrested for stealing computer code for Goldman Sachs in 2009. How very interesting that it was deemed sensitive enough to be able to manipulate markets to an unfair advantage, and even more interesting that Sachs at this time was willing to admit to having such code. It's kind of like reporting to the police that something you'd obtained that was illegal had been stolen from you. I'm going to have to learn more about this.

This story also brings up something that's been on my mind for awhile about hiring globally in U.S. business' IT departments. So many business advantages can walk right out the door to the home country and be used in competition against us. I've always thought it a large risk.

I've been interested in the direct high speed fiber line for quite some time since I caught the middle of a piece about it on NPR. I have ties in the telecom industry and this perked up my ears. I was astounded when I read how much they are selling this service for, and also astounded that it is legal, for it seems to give unfair advantage to those with deep pockets. I'll be interested in reading and investigating this more. (hide spoiler)]

Response to Maureen - Introduction and Chapter 1

(view spoiler)[Maureen a great example - you have illegal contraband in your house and you call the police and tell them it has been stolen (yikes) and then you get the police to do an illegal search.

That is true too but businesses do not seem to care and they should.

I agree - did not realize the extent of what was going on. (hide spoiler)]

Hey all. I too picked this book up on Kindle and enjoyed the Intro and first chapter. I know next to nothing about the stock market so this is new territory for me. I'll try and participate as much as I am able.

Great to have you Justin. Check out the schedule in message 4.

Hi All. I'm Teri and will be backing up Bentley on this Buddy Read. I am excited to read this book. I work in IT in the financial sector and am currently teaching a college course in Cyber Criminology, so this is a timely read for me.

Response to Maureen

(view spoiler)[You bring up an interesting point on hiring/training personnel out of the country when there is the possibility of them leaving to go back to their own country to be a competitor. That was part of the problem during the dot.com collapse. It did happen, but for a lot of people, they have really good benefits with some of the larger companies and now, they don't want to leave. Many large corporations are global and have centers in "cost effective" areas including India, Greece, Romania, etc. They have office buildings to go to, but many are telecommuters that can work from home. So, from my perspective, I don't see that they're leaving the US to go back to their homes to compete, as many are able to stay in their home location and work for the US based companies. They get better pay than if they worked for their local company, they get their own country's holidays and often US holidays off.

You definitely have a valid concern and I think that it was a problem 10-15 years ago, but I think we've become much more globalized so that the issue is more of personnel leaving for other global jobs/positions, not to necessarily go back tot their home country. (hide spoiler)]

@Teri - on the point you raised:

(view spoiler)[I think that if a corporation wants to be an American company with American benefits and compensation and protection - then it should hire Americans - I am tired of seeing large corporations pull up stakes and then reallocate them in other countries where they are just hiring "cheap labor" without a care for their country of origin. Look at IBM for example and what they have done. Not a good legacy or practice and you see these companies eventually reaping what they sow in many instances. If someone is sitting in India (just an example) and being a customer or technical support person for the US and US folks get them on the telephone and it sounds like they are reading a script and you cannot understand them - it is not good for the company, the consumer or the poor individual who is trying to do this job from a foreign country. - Just an aside. Yes it happens and it is happening more - once they get the training - they have no loyalty to the company or the country that gave them that training - they go back to that country and send money back home - in the case of the American companies training folks abroad who live abroad - there is a whole set of issues with that and their loyalty is even less than the others (hide spoiler)]

Bentley

(view spoiler)[I wholeheartedly agree with you. I know at one time American corporations got financial kickbacks for going overseas (I don't keep up with part of politics to know if that is still the case). Sadly, I've seen many American friends let go in widespread layoffs, or American headcount lost due to attrition and back-filled in other countries. What ends up happening is that more work is taken on by the American workers to handle the US timezone work, leading to stress and physical/mental exhaustion. People will endure this because the issue is widespread and there is more fear of what kind of situation you end up in over what you know. It's a sad trap for many people.

Then there are the issues with the American consumer who is frustrated with the overseas personnel who they can't understand. On top of that, there often seems to be a "I don't care" attitude when you try to explain that you are having trouble understanding. You are right, it's not good for the company, but I am afraid that culture is not going to change unless we start giving some incentives to companies for hiring in the US. (hide spoiler)]

I agree Teri with all of the above.

My initial comments:

(view spoiler)[My thoughts on the discussion question...I am not surprised that Goldman Sachs sued Sergey. There was (still is?) a concern about major electronic thefts at the time. To help put this in perspective, in 2000 Jonathon James was the first juvenile (16 years old) to be convicted for computer hacking. In a separate case, in 2005 there was an attempt to steal over $400 million from a bank in London. This would have been the largest electronic theft in history had it not been caught. In 2007, Albert Gonzales and a gang of friends hacked into major retailers, namely TJX, BJ’s Wholesale Club, Boston Market, Barnes & Noble, Sports Authority, Forever 21, DSW OfficeMax, and a Dave & Buster’s restaurant. He was friends with James and James was caught up in the scandal, although he did not participate. The FBI went after him. He ultimately committed suicide because of the pressure being put on him for a crime he didn't commit. In 2008/2009, the same year that Sergey was arrested, Ehud Tenenbaum an Israeli hacker was arrested in Canada for stealing $10 million from American banks.

I think the government and financial institutions knew that there were potentials for widespread large dollar electronic thefts and they were really not equipped to handle things, i.e. stop them from happening, investigate/prosecute. We still are not. I think that with Sergey, Goldman Sachs found that he had released these few lines of code outside of the company (and yes, it is a double edge sword that they had that coding to begin with) and they had no idea what his potential could be, so they went after him.

Financial institutions and namely, trading companies have a very specific culture and concern for any bit of information to be released from their control or inkling of fraud to be mentioned. Some of these institutions have been known for firing people for even mentioning of a football pool outside of the office within company email (employee gambling is the cause that they will state, even if it's during personal time away from the office, it was still mentioned in company email). I think that it is more of them wanting to make sure that they do not violate anything with the FTC and any hint of an employees wrong doing is immediate cause for termination and I am not surprised if they sue to cover their own butts.

One other comment I want to make is about the concern to improve speeds down to the nanosecond. That is very, very true. Speed is so scrutinized in the financial sector that work can come to a halt to find any reason that speed slows down. Trillions are traded daily with some of these trading companies and any halt or slowing can be a major loss in revenue. A few milliseconds may not seem like much, but that could equate to millions of dollars lost.

See:

Jonathan James and Albert Gonzales:http://www.wired.com/2009/07/hacker-3/

Ehud Tenenbaum: http://www.wired.com/2012/07/tenenbau...

More Source information:

by Chuck Easttom (hide spoiler)]

Excellent post and sources Teri.

Responses to Teri & Bentley on Corporate Globalization and Foreign Workers

(view spoiler)[ Teri - you make very good points. I was thinking of a much larger scale though - some kind of coordinated effort by a government or a large foreign corporation that sent people to do a stint in the US in their industry and then take the knowledge back and pool resources to compete. Something along the lines of industrial espionage I suppose.

Bentley - as an IT professional, I've watched a lot of jobs go overseas, especially development jobs, and it's been a cause for concern, but I work hard to stay current and I'm still hanging in there. I will say that things are changing so fast and corporations have to move so fast to stay competitive, that there is no shortage of work, despite the ebb and flow of cutbacks and ramp-ups. India has made a great business of providing highly skilled technical workers, and their culture is a good fit.

I agree with Teri on the timezone issues and have been caught in that trap, but that has truly been relieved by workers in different time zones. It's a great solution to have workers in different time zones take over those shifts and relieve the burdens from the U.S. workers. My industry is 24x7.
(hide spoiler)]

This book is way too interesting. I won't be able to read as slowly as the schedule. I'll probably finish up this weekend. It's a very interesting read!

Well Maureen - make sure to post your comments here as we go through the book and I enjoyed your comments on corporate globalization.

I am glad that you are enjoying the read - I have about seven books going at once so I am fine with the schedule (smile).

Maureen wrote: "This book is way too interesting. I won't be able to read as slowly as the schedule. I'll probably finish up this weekend. It's a very interesting read!"

Me, too!

Glad to hear you both are enjoying the book, Maureen and Kressel. I've not gone beyond chapter 1 but will dig in more this weekend. Any initial thoughts, Kressel?

Hi, I'm Marc, I will join, just gotta buy the book first! I'll likely be able to restrain myself to reading a chapter a week (I hope), juggling way too many books and articles plus work...

We would love to have you join us Marc. I'm juggling several books as well so you're in good company.

Jump on into the conversation when you get the book. We're on to chapter 2 this week.

Are we allowed to talk about Brad yet? 'Coz his wife is an active member of Goodreads. I'm thinking of friending her and telling her about our buddy read. What do you folks say?

We are allowed to talk about chapter 2 now. I'm almost done with this chapter myself. I'll let Bentley make the call on Brad's wife, but I suspect it would be fine. Let Bentley chime in first before asking her.

Yes you can talk about Brad - I have no idea if Brad's wife is on goodreads - that is up to you Kressel. Marc welcome - many of us are juggling 6 or 7 books so we like being able to read another one at the same time in a way that we can discuss it. Hope this helps. And just place your comments in spoilers if you go ahead.

We are on:

Week Two:
Chapters 2 (Brad's Problem) (February 23. 2015 - March 1, 2015)
(pages 23 - 55)

When talking about any Chapter - just place the chapter or page number at the top in bold and the remainder in the spoiler html - so that folks who are up to that section can read it or those who are not can wait. More instructions are on message 2 and 3 if you need them. This is a one thread discussion and that is why.

Like this:

Chapter One
(view spoiler)[This is a spoiler (hide spoiler)]

Chapter Two:

(view spoiler)[Well, as I mentioned last week, I knew that those microseconds in response time on a financial company's system are important but this chapter enlightened me even more. It seems like it could be so easy for any rogue employee who handles code at a financial institution to be able to manipulate things. I'm very curious to see where this goes. (hide spoiler)]

It does seem like a real big problem - for sure Teri.

I'm anxious to listen to that. Thanks, Kressel

Kressel I am not sure why you did the citation for Flash Boys that way - first you could simply have typed it and bolded the title and that would have been fine because on a group book discussion thread - you do not have to cite the book you are discussing. Or if you wanted to do it anyway you should have added the book cover, the author's photo and author's link which is the proper way here at the HBC - but remember no link is necessary because this is the book being discussed.

So I removed your post and reposted it - don't use the link that way here - not even necessary for the book we are discussing. But if it were another book that is not the way we do citations here.

Kressel said:

The newest Planet Money episode is relevant to this book. It's all about how the spreadsheet revolutionized finance. It starts way back in 1984, but like Flash Boys, it's about how computers have taken over EVERYTHING.

Link: http://www.npr.org/blogs/money/2015/0...