Feature

Book of the week: Flash Boys: A Wall Street Revolt by Michael Lewis

Michael Lewis's description of how high-frequency traders use lightning-fast computers to their advantage is “guaranteed to make blood boil.”

(Norton, $28)

Wall Street has always attracted thieves, and a new class of bandits has just been flushed out of the shadows, said Janet Maslin in The New York Times. In his “dazzling, troublemaking” new book, the best-selling writer Michael Lewis describes how high-frequency traders are using lightning-fast computer servers to jump between sellers and buyers on millions of electronic trades each day, adding a toll on trading that raises costs for everyone else. The author of Moneyball and The Big Short has a talent for finding “clear, simple metaphors for even the most impenetrable financial minutiae,” so any reader will be shocked by the discoveries he’s made about how the market is rigged against ordinary investors. Flash Boys is “guaranteed to make blood boil.”

Juicy as the story is, it actually has little relevance to most of us, said Kevin Roose in NYMag.com. High-frequency traders make their money by adding a fraction of a cent to every $100 traded, but so what? “Retirees in Kansas don’t trade stocks often enough for all those penny fractions to add up to much.” For once, in fact, it’s the players at the big financial institutions that feel the pain, and many were outraged to learn from Lewis that their profits were being trimmed. The author is right that we all have a stake in the integrity of the market, said Felix Salmon in Reuters.com. But he ignores the fact that high-frequency trading has actually driven down the per-trade cost of buying and selling stocks, which is good for you and me. Speed trading can be dangerous to the economy—“and I’d like to see less of it.” But Lewis downplays the real hazards in favor of “pushing a false narrative that it’s bad for the little guy.”

“It is not hard to imagine a different book by Michael Lewis,” one that flipped the frame on the very story he tells, said Philip Delves Broughton in The Wall Street Journal. In that alternative history, the high-frequency traders would be the -underdogs—“a cadre of innovative engineers and computer scientists rising from the rubble of 2008 and making fools of a plodding financial system.” If nothing else, Flash Boys confronts readers of every persuasion with an invaluable, uncomfortable truth, said Matt Phillips in Qz.com. Six years after the financial crisis, no one has a clue how the market truly operates. “It’s not just the general public that doesn’t understand how things work”; it’s also “the biggest names in finance.”

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