Flash Boys, by Michael Lewis, is the story of “a Wall Street revolt”.
And if you’re looking to get the inside scoop on high frequency trading (HFT), then Flash Boys is a finance book you won’t want to miss.
And as you probably know…
Michael Lewis is a very well-regarded financial journalist and novelist; with previous hits, such as Moneyball, Liar’s Poker and The Big Short. I really enjoyed Lewis’ earlier books so I was enthusiastic to review Flash Boys on StockIdeas.org.
This Flash Boys Book Review will give a basic overview and summary of Flash Boys. Plus, I’ll share what I liked most about the book and where Flash Boys came up short. That way, when you’re done reading, you should have a good idea of whether Flash Boys is the right book for you. Sound good?
Why Flash Boys Is Worth Reading:
Flash Boys was a much-anticipated book that finally brought light to the insidious world of HFT. While I previously blogged about how individual investors can beat HFT, Flash Boys does a much better job going into depth about what HFT is, why it matters to you and what’s being done to prevent it.
Flash Boys starts off with some interesting anecdotes about how much money HFTs invest in their technology. Flash Boys makes the escalation of HFT technology feel like an arms race. It’s incredibly eye-opening.
From there, Flash Boys picks up a narrative that follows the careers of a few unsuspecting bankers and technologists at the heart of the HFT puzzle. The book does an exemplary job using anecdotes and personal stories to explain the complex world of HFT. Without this personal focus I think the topics would have been much more difficult to understand.
Next, the book continues to follow these character as they strive to solve the HFT riddle and build their own stock exchange to try and overcome the challenge HFT algorithms present. It’s a fast-moving story that gives you an inside look at the ever-changing world of Wall Street.
Without giving away too much of the story, I can tell you Flash Boys is an encouraging tale. And for anyone who wants to learn about current day market structure (and the underlying incentives and conflicts of interest) Flash Boys will be an educational yet enjoyable read.
What I Liked Most About Flash Boys:
Flash Boys is a really entertaining book. And that was one of the things I liked most about it. Just like in his book, The Big Short, Michael Lewis does a very impressive job of taking a confusing financial topic and breaking it down with stories and anecdotes.
Flash Boys does a great job of following the people (and yes, they’re all boys) involved in the world of HFT. I really liked this focus on character because not only does it make the story of HFT more relatable, but it shows that there are still good and noble people on Wall Street (and even at Goldman Sachs).
It’s easy to paint broad strokes about the evils of Wall Street. But Flash Boys reminds you there is still some good in the world. And even more importantly, that huge successes can be had when you do the right thing. Unfortunately I’d be naive to say Flash Boys addresses all the problems with Wall Street.
And that’s my main gripe with Flash Boys…
Where Flash Boys Came Up Short:
Flash Boys was a well-written and entertaining read. And while Michael Lewis should be congratulated for exposing the world of HFT to a wider audience, the book leaves some things unsaid. To some degree this is necessary to keep the book short and engaging.
But as an example:
While the world of HFT is far from honourable, and definitely costs investors billions each year, it’s probably not the biggest problem facing global markets. Compared to the effects of quantitative easing and 5+ years of ZIRP I think HFT is basically just a drop in the bucket. So…
I found it a little bit misleading that HFT is framed as the biggest demon facing investors and markets; especially when, compared to some of the other problems facing the market HFT is a drop in the bucket. I appreciate that Michael Lewis has a book to market so wants to make the problem seem big. But it would have been nice for him to tie it back to the bigger picture a little more.
Flash Boys – The Final Word:
Flash Boys was a really great book. Plain and simple. And even though it didn’t point out some of the other big red flags with the financial system, it did a great job bringing the mysterious world of HFT to life. I was especially impressed with how easy to understand Flash Boys makes these very complex problems.
So if you’re looking for a book to read this summer that’s a good combination of fun and educational, I encourage you to buy Flash Boys on Amazon,you won’t regret it! If you’re still looking for a little more information on Flash Boys I encourage you to check out the video book review below.