A reading club with a view to the future

329 Michael Lewis: Flash Boys

“Flash Boys” explores the world of high-frequency trading, exposing the unfair advantages and impact on the stock market.

Duration: 10 hours
15 minutes
Read on Audible
Previous book
Next book
BCS329

Summary

"Flash Boys" reveals the hidden world of high-frequency trading (HFT) and the complex infrastructure that allows certain traders to exploit millisecond advantages. The book highlights the detrimental impact of this secretive practice on the fairness and integrity of the stock market, while also introducing a group of Wall Street outsiders who set out to level the playing field.

About

Title: "Flash Boys"

Author: Michael Lewis

Publishing Year: 2014

Publisher: W. W. Norton & Company

Length in Hours: 10 hours and 15 minutes

5 main ideas

  1. High-frequency trading involves using advanced technology and algorithms to execute trades at lightning-fast speeds, gaining an unfair advantage over traditional investors.
  2. HFT exploits latency arbitrage, where faster traders front-run slower investors, making profits at their expense.
  3. Dark pools, private exchanges where trades occur away from public scrutiny, contribute to the opacity of the market and favor HFT firms.
  4. The creation of the IEX (Investors Exchange) disrupts the status quo by implementing safeguards against predatory HFT practices, prioritizing fair trading for all market participants.
  5. "Flash Boys" brings attention to the need for transparency, market reforms, and regulatory changes to address the imbalances caused by high-frequency trading.

5 funny quotes

  1. "The world of high-frequency trading is a nerdy arms race, fought not with missiles or bombs but with algorithms and microwave towers."
  2. "The best way to level the playing field might be to get rid of the field altogether and let everyone play whack-a-mole."
  3. "Trying to make money trading stocks on your own is a bit like trying to beat Roger Federer at tennis with a pair of gardening shears."
  4. "The IEX trading platform was like the ugly, awkward kid in high school who blossoms into a confident and charismatic adult."
  5. "They weren't the smartest kids in the class, but they were the ones who wanted to change the world."

5 thought-provoking quotes​

  1. "The stock market is rigged, and I knew it was rigged."
  2. "The market is so fast, and there's so much information, that humans can't even see what the computers are doing."
  3. "The business of Wall Street is to take advantage of any arbitrage opportunity."
  4. "I think the way the stock market is organized today, it isn't just rigged; it's worse than rigged."
  5. "It's as if, armed with an AK-47, you were trying to kill a mosquito."

5 dilemmas

  1. Balancing the need for speed and efficiency in trading with the risk of exacerbating market inequalities and distorting prices.
  2. Addressing the ethical dilemma of front-running and whether HFT practices violate the principles of fair and transparent markets.
  3. Deciding on the appropriate regulatory measures to curb predatory HFT practices without stifling innovation and liquidity in the market.
  4. Evaluating the role of dark pools and their impact on market transparency, investor confidence, and the overall integrity of the stock market.
  5. Navigating the tension between the interests of individual investors and the profitability-driven motives of financial institutions engaged in high-frequency trading

5 examples

  1. Goldman Sachs, one of the largest investment banks on Wall Street, features prominently in the book's exploration of high-frequency trading practices.
  2. IEX (Investors Exchange), the stock exchange founded by Brad Katsuyama and his team, seeks to provide a fairer trading environment.
  3. Virtu Financial, a high-frequency trading firm, is highlighted as one of the major players in the HFT industry.
  4. BATS Global Markets, an electronic exchange, is discussed in relation to its involvement in the proliferation of high-frequency trading.
  5. Royal Bank of Canada (RBC) plays a role in the book, as they were one of the investors who supported the establishment of IEX.

 

Referenced books

  1. "Reminiscences of a Stock Operator" by Edwin Lefèvre
  2. "A Random Walk Down Wall Street" by Burton G. Malkiel
  3. "The Alchemists: Three Central Bankers and a World on Fire" by Neil Irwin
  4. "Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market" by Scott Patterson
  5. "Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio" by Sal L. Arnuk and Joseph C. Saluzzi

Share a quote

"Trying to make money trading stocks on your own is a bit like trying to beat Roger Federer at tennis with a pair of gardening shears.

Curated audiobooks for your lifelong learning and inspiration.

Become a NextBook Insider

Join our community to access exclusive content, comment on stories, participate in giveaways, and more.

Close