#1 New York Times Bestseller — With a new Afterword
"Guaranteed to make blood boil." —Janet Maslin, New York Times
In Michael Lewis's game-changing bestseller, a small group of Wall Street iconoclasts realize that the U.S. stock market has been rigged for the benefit of insiders. They band together—some of them walking away from seven-figure salaries—to investigate, expose, and reform the insidious new ways that Wall Street generates profits. If you have any contact with the market, even a retirement account, this story is happening to you.
In his latest captivating expedition into the marketplace jungle, Lewis (Moneyball) explores how the rise of computerized stock exchanges and their attendant scams started a battle for the soul of Wall Street. He probes the subterfuges of high frequency traders who, assisted by banks and brokerages happy to sell out customers, use blindingly fast data links to gain inside information on investors' trades and then exploit them on today's entirely digital stock markets. At the center of his novelistic narrative is a New York mosaic: Brad Katsuyama, a Canadian-born trader with a conscience; Ronan, a hot-headed Irish telecom expert; and a Dostoevskian cast of Slavic programmers veering between existential angst and saintly resignation. This cast bands together to expose the market manipulations and then start their own honest stock exchange. Lewis does his usual superb job of explicating the inexplicable in his lucid, absorbing account of the crossroads of high-tech data transfer and byzantine market strategies, where milliseconds of signaling speed yield billions in profits. He also presents a rich sociology of Wall Street's assholes-vs.-geeks culture clash between greedy, blustering financial honchos and the flickers of rationalism and humanity in the tech people they need to run their markets. The result is an engrossing true-life morality play that unmasks the devil in the details of high finance.
Fleecing the retail investor
There’s a lot that goes on behind the scenes of the stock market that the average retail investor doesn’t know about. Imagine if you are a retail investor and you click on the buy/sell button when you’re looking to buy or sell a stock on a brokerage app and the price you buy/sell it at is different than what you saw on the screen when you clicked that button. In Flash Boys Michael Lewis makes the argument that a high-frequency trading firm front ran your order and got in at a better price before selling the shares back to you for a small profit. Those pennies add up to huge profits for firms such as Virtu Financial and Citadel Securities which say they enable the commission free trading retail investors have access to today. These firms also say liquidity has improved and spreads have narrowed.
Every book needs a hero and the hero of this story is Brad Katsuyama, a mild-mannered trader at the Royal Bank of Canada. Convinced that HFTs were front-running his orders he leaves RBC and opens his own stock exchange, IEX, with the goal that it would level the playing field for all investors. As of 2022 the role of HFTs still loom as large as ever as they continue to fulfill the role of market maker.
Interesting. Compelling. Sad.
The financial system is rigged and we all know this, but knowing the details of how some of it is done is eye opening, frustrating, and sad. Also knowing that some people - those who benefit from it- either deny it's rigged or say there's nothing wrong with rigging it makes one realize just how much the money culture has taken over. To those who think people don't matter, just money matters- you won't like this book.
Stunning depiction of complicity to cheat
It seems that many companies such as TD/Waterhouse and their affiliate ThinkOrSwim, have a great deal of explaining to do. This book, combined with others such as Broken Markets, explain to us why we should speak out strongly to our financial institutions and ask them to force themselves to comply to their own codes of ethic and conduct. We do not need to have our book, our averages, our trades, sold to HFT firms just for the sole purpose to have these firms front run our trades and test, to the peril of the market, imaginary stops. This predatory behaviour must stop and we all have a moral obligation to speak out, stand our ground and seek compliance on the part of the companies holding our funds that pretend to facilitate fairly our trades.
This book and others have made a defining moment for the muppets. Stand up and speak for yourselves, this book is a drum beat for us all to be heard