Flash Boys: A Wall Street Revolt
Michael Lewis, 2014
W.W. Norton & Co.
288 pp.
ISBN-13: 9780393244663
Summary
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. (From the publisher.)
Author Bio
• Birth—October 15, 1960
• Where—New Orleans, Louisiana, USA
• Education—B.A., Princeton; M.B.A., London School of Economics
• Currently—Currently—lives in Berkeley, California
Michael Lewis is an American contemporary non-fiction author and financial journalist. His bestselling books include Flash Boys: A Wall Street Revolt (2014); The Big Short: Inside the Doomsday Machine (2010); The Blind Side: Evolution of a Game (2006); Moneyball: The Art of Winning an Unfair Game (2003); and Liar's Poker (1989).
Background
Lewis was born in New Orleans to corporate lawyer J. Thomas Lewis and community activist Diana Monroe Lewis. He attended the private, nondenominational, co-educational college preparatory Isidore Newman School in New Orleans. Later, he attended Princeton University where he received a BA in art history in 1982 and was a member of the Ivy Club.
After graduating from Princeton, he went on to work with New York art dealer Daniel Wildenstein. Despite his degree in art history, he nonetheless wanted to break into Wall Street to make money. After leaving Princeton, he tried to find a finance job, only to be roundly rejected by every firm to which he applied. He then enrolled in the London School of Economics to pursue a Master's degree in economics.
While still in England, Lewis was invited to a banquet hosted by the Queen Mother at St. James's Palace. His cousin, Baroness Linda Monroe von Stauffenberg, one of the organizers of the banquet, purposely seated him next to the wife of the London Managing Partner of Salomon Brothers. The hope was that Lewis, just having obtained his master's degree, might impress her enough for her to suggest to her husband that Lewis be given a job with Salomon Bros.—which had previously turned him down. The strategy worked: Lewis was granted an interview and landed a job.
As a result of the job offer, Lewis moved to New York City for Salomon's training program. There, he was appalled at the sheer bravado of most of his fellow trainees and indoctrinated into the money culture of Salomon and Wall Street in general.
After New York, Lewis was shipped to the London office of Salomon Brothers as a bond salesman. Despite his lack of knowledge, he was soon handling millions of dollars in investment accounts. In 1987, he witnessed a near-hostile takeover of Salomon Brothers but survived with his job. However, growing disillusioned with his work, he eventually quit to write Liar's Poker and become a financial journalist.
Writing
Lewis described his experiences at Salomon and the evolution of the mortgage-backed bond in Liar's Poker (1989). In The New New Thing (1999), he investigated the then-booming Silicon Valley and discussed obsession with innovation.
Four years later, Lewis wrote Moneyball (2003), in which he investigated the success of Billy Beane and the Oakland A's. In August 2007, he wrote an article about catastrophe bonds entitled "In Nature's Casino" that appeared in the New York Times Magazine.
The Big Short, about a handful of scrappy investors who foresaw the 2007-08 subprime mortgage debacle, came out in 2010. Flash Boys, detailing high-speed trading in stock and other markets, was published in 2014. Like both The Big Short and Moneyball, the book features an underdog type who is ahead of the pack in understanding his industry.
Lewis has worked for The Spectator, New York Times Magazine, as a columnist for Bloomberg, as a senior editor and campaign correspondent to The New Republic, and a visiting fellow at the University of California, Berkeley. He wrote the "Dad Again" column for Slate. Lewis worked for Conde Nast Portfolio but in February 2009 left to join Vanity Fair, where he became a contributing editor.
Film
The film version of Moneyball, starring Brad Pitt, was successfully released in 2011. The Big Short, with its all-star cast—Christian Bale, Steve Carell, Ryan Gossling, and Brad Pitt—came out in 2015 to top reviews.
Personal life
Lewis married Diane de Cordova Lewis, his girlfriend prior to his Salomon days. After several years, he was briefly married to former CNBC correspondent Kate Bohner, before marrying the former MTV reporter Tabitha Soren in 1997. Lewis lives with Tabitha, two daughters, and one son (Quinn, Dixie, and Walker) in Berkeley, California. (Adapted from Wikipedia. Retrieved 1/11/2016.)
Book Reviews
[D]azzling… Because Mr. Lewis is at the helm finding clear, simple metaphors for even the most impenetrable financial minutiae, this tawdry tale should make sense to anyone. And so should its shock value. Flash Boys is guaranteed to make blood boil.
Janet Maslin - New York Times
When it comes to narrative skill, a reporter’s curiosity, and an uncanny instinct for the pulse of the zeitgeist, Lewis is a triple threat as he’s demonstrated in best-selling books like The Big Short and Moneyball. But those formidable talents are only intermittently on display in this ultimately unsatisfying probe of high-frequency traders, who may (or may not) be ripping off investors and destabilizing the global financial system.... Lewis might have pondered how frustrating it is for readers...to be told a story in which the villains aren’t named.
James B. Stewart - New York Times Book Review
Important to public debate about Wall Street… in exposing what one of his central characters calls the "Pandora's box of ridiculousness" that financial exchanges have become.
Philip Delves Broughton - Wall Street Journal
Michael Lewis is a genius, and his book will give high-frequency trading a much-needed turn under the microscope.
Kevin Roose - New York Magazine
A beautiful narrative, so well-written. You’ve got to get this.
Jon Stewart - Daily Show
Remarkable… Michael Lewis has a spellbinding talent for finding emotional dramas in complex, highly technical subjects.
Financial Times
Who knew high-frequency trading was such a sexy subject?
Bloomberg Business Week
Michael Lewis is one of the premier chroniclers of our age.
Huffington Post
Score one for the humans! Critics of high speed, computer-driven trading have a new champion.
CNN Money
If you own stock, you need to read Flash Boys… and then call your broker.
Entertainment Weekly
In 24 hours, I plowed through Michael Lewis' new blockbuster Flash Boys: A Wall Street Revolt, a book about the huge changes that have occurred in financial markets in the last three decades. It's compelling reading.
John Aziz - The Week
Flash Boys richly deserves to be the first chapter in a new discussion of market rules and abuses… Lewis raises troubling and necessary questions.
American Conservative
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.... The result is an engrossing true-life morality play that unmasks the devil in the details of high finance.
Publishers Weekly
Kirkus Reviews
In trademark Lewis fashion, a data-rich but all-too-human tale of “heuristic data bullshit and other mumbo jumbo” in the service of gaming the financial system, courtesy of—yes, Goldman Sachs and company.... A riveting, maddening yarn that is causing quite a stir already, including calls for regulatory reform.
Discussion Questions
1. Does Michael Lewis do a good job of explaining the arcane practices of Wall Street high frequency trading? If you are not involved in the financial industry, do his explanations make sense to you.
2. Follow-up to Question 1: What are dark pools? Can you explain their role in this high stakes game?
3. Talk about the Wall Street personality "type" as experienced by Brad katsuyama, a Canadian. Do you believe it's a fair assessment...or an overly generalized one?
4. Talk about the skill set of the team that Katsuyama put together. Brad himself admits he was no computer wizard, and Ronan Ryan at one point had no idea what a millisecond was...and, when hired by Katsuyama, had no idea what he was to do. How was Katsuyama's group able to accomplish all they did?
5. What damage is caused by high-frequency trading? Or is it, perhaps, not as damaging as Lewis indicates? Defenders of the practice say it provides market liquidity and efficiency. And, mostly likely, the average investor hardly notices a few pennies here and there. What do you think? How does Lewis respond to defenders of the high-frequency trading?
6. Are there villains in this story? If so, who are they? Katsuyama doesn't want to name names. Why not? What about Goldman Sachs—what is its role?
7. What, if anything, should be done to halt the practice of high-frequency trades? Do you think anything will be done?
(Questions by LitLovers. Please feel free to use them, online or off, with attribution. Thanks.)