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A Concise Review of Flash Boys by Michael Lewis

8th April 2014, 10:26 am

Wall Street is rigged more than you thought and at lightning speed.

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3 Comments

  1. Mike:

    I fail to see how it matters unless you are also trying to play that game (trading in and out). If you are, you’ll likely lose.

    If you’re holding investments, it doesn’t seem to make much difference over the longhaul – at worst, you’re losing a few pennies on either end of the trade.

    8 April 2014, 11:19 pm

  2. Scott Kirwin:

    Mike
    There are three arguments against your point:
    1. HFT is a tax on investing that’s directly paid by investors and indirectly by society through the increased cost of capital.
    2. HFT uses tactics that are illegal if a human did them (e.g. front-running) but not if the human uses a computer to do them. This is logically akin to a law for murder when done by one’s hands but not when a gun is employed. In the latter case the person holding the gun is absolved because the gun did the killing.
    3. HFT introduces instability in the system.

    Of the three arguments I believe the strongest is #3 as shown by the flash crashes we’ve witnessed over the past 4 years. Even excluding those crashes, HFT has made markets more volatile today than they were 10 years ago.

    9 April 2014, 12:17 pm

  3. Ymarsakar:

    Any market where the top 10% can dump their stocks based upon inside Congressional rulings and information, leaving the rest of the 90% to redistribute the poorness, is a system that’s going to end up eating itself sooner or later.

    This is an enormous wealth transfer that happens every so often to make more millionaires. The Great Depression, for example, produced a lot of millionaires.

    The system would balance itself out if more people had more funds to invest in a way that doesn’t utilize a swarm hive control method. But taxation takes care of that, the other wealth redistribution. Inflation takes care of what is left.

    18 April 2014, 11:26 am

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