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General Category => Books => Topic started by: 50centdollars on February 28, 2014, 08:54:57 AM

Title: Flash Boys - Michael Lewis
Post by: 50centdollars on February 28, 2014, 08:54:57 AM
Flash Boys

You can pre-order now on Amazon. Book to be released on March 31.

Cheers
Title: Re: Flash Boys - Michael Lewis
Post by: deepValue on February 28, 2014, 07:11:55 PM
Wow that's an awful title. And an awful subject (assuming it's HFT).
Title: Re: Flash Boys - Michael Lewis
Post by: yadayada on February 28, 2014, 11:35:46 PM
Im curious to read the reviews on this one. I have a feeling he is just trying to cash in here.
Title: Re: Flash Boys - Michael Lewis
Post by: 50centdollars on March 27, 2014, 10:13:06 AM
Former RBC banker is hero of new Michael Lewis book Add to ...
Subscribers Only
NEW YORK — The Globe and Mail

Published Thursday, Mar. 27 2014, 12:40 PM EDT

Last updated Thursday, Mar. 27 2014, 12:40 PM EDT

 A former Royal Bank of Canada banker has a starring role in an upcoming book by Michael Lewis, the foremost chronicler of American finance.

Mr. Lewis – the author of numerous books including Liar’s Poker, Moneyball, and The Big Short – is about to publish a much anticipated account of the way high-speed trading has transformed markets.

Entitled Flash Boys, the book is being released on March 31 but select pages can now be viewed using a feature on Amazon.com.

In the introduction, Mr. Lewis says that a Canadian – Brad Katsuyama – stands at the centre of his narrative. Mr. Katsuyama’s “willingness to throw open a window on the American financial world, and to show people what it has become, still takes my breath away.”

The second chapter of Flash Boys is devoted to Mr. Katsuyama (he is now CEO of IEX Group Inc. in New York, a new stock-trading platform aimed at shielding investors from certain types of high-frequency traders). The book contains both zingers and compliments for Canada’s largest bank.

RBC, Mr. Katsuyama’s former employer, is described as “stable and relatively virtuous” but somewhat clueless as it attempted to push into the big leagues in New York a little over a decade ago. “It was as if the Canadians had summoned up the nerve to audition for the school play, then showed up in a carrot costume,” Mr. Lewis writes.

“The bank’s run by these Canadian guys from Canada,” the book quotes a former RBC director as saying. “They don’t have the slightest idea of the ins and outs of Wall Street.”

In its U.S. hiring, RBC had a “no-asshole” rule and instead looked for people who were “RBC nice,” the book says. It detailed the culture clash that ensued after RBC bought Carlin Financial, an electronic trading firm. The new arrivals rented out a Manhattan nightclub for the firm’s Christmas party, formerly a staid affair, and their chief liked to walk around the office brandishing a baseball bat.

Not all of the chapter’s pages are available for viewing, but what can be seen reads like a mystery story, as Mr. Katsuyama and his colleague Rob Park investigate the inner workings of the U.S. stock market.

Mr. Katsuyama noticed strange things occurring in the execution of trades, the book said, with prices shifting against him after he entered orders but before they were completed. Increasingly, he realized that he was “running a stock trading department unable to trade properly in the U.S. stock market,” Mr. Lewis writes.

The book goes on to describe how Mr. Katsuyama and his colleagues developed a tool called “Thor” to eliminate the advantages enjoyed by high-frequency traders.

Mr. Katsuyama and a spokesperson for RBC weren’t immediately available for comment.
Title: Re: Flash Boys - Michael Lewis
Post by: TorontoRaptorsFan on March 30, 2014, 02:53:33 PM
Heads up!

Tonight's 60 Minutes lead story is an interview with Michael Lewis on this new book (Flash Boys).

Title: Re: Flash Boys - Michael Lewis
Post by: OracleofCarolina on April 08, 2014, 07:33:07 PM
I am really enjoying the book..it's a great read so far for my simple mind :)
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 08, 2014, 08:45:31 PM
I am really enjoying the book..it's a great read so far for my simple mind :)

I'm enjoying it too so far. Now looking back on the media coverage of it, it's pretty obvious that none of the media people had actually an advance copy to read, they just had an intern do a quick search through the book for certain keywords and asked questions based on the paragraph surrounding whatever that was.

Well, they probably always do that...
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 09, 2014, 03:36:11 PM
I thought this anecdote from the book about IEX was pretty funny.

They called their exchange Investors Exchange. They shortened it to IEX because when they registered the website, they realized there was a problem.. See for yourself:

Code: [Select]
www.investorsexchange.com
 ;D
Title: Re: Flash Boys - Michael Lewis
Post by: Grenville on April 09, 2014, 03:46:12 PM
I thought this anecdote from the book about IEX was pretty funny.

They called their exchange Investors Exchange. They shortened it to IEX because when they registered the website, they realized there was a problem.. See for yourself:

Code: [Select]
www.investorsexchange.com
 ;D

That is funny. Looking forward to reading the book.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 09, 2014, 04:13:13 PM
I thought this anecdote from the book about IEX was pretty funny.

They called their exchange Investors Exchange. They shortened it to IEX because when they registered the website, they realized there was a problem.. See for yourself:

Code: [Select]
www.investorsexchange.com
 ;D

That is funny. Looking forward to reading the book.

It is worth it. By about 2/3 through it, it becomes very clear what the problem with HFT is, where they describe the HFT strategies but also how exchanges works behind the scenes, will all kinds of hidden staircases and trapdoors that most people don't know exist (brokers selling their own customers' info to HFT firms so they can be front-run; 150 different order types, some described by 20 pages of inscrutable legalese, with no obvious purpose except to allow a HFTer to not do the trade that he publicly appears to want to do or to get a kickback without providing the liquidity that the kickback is supposed to incentivize? yeah, that's just random luck that all that stuff is there and that the exchanges make most of their profit from HFT..).
Title: Re: Flash Boys - Michael Lewis
Post by: Grenville on April 09, 2014, 04:23:49 PM
It is worth it. By about 2/3 through it, it becomes very clear what the problem with HFT is, where they describe the HFT strategies but also how exchanges works behind the scenes, will all kinds of hidden staircases and trapdoors that most people don't know exist (brokers selling their own customers' info to HFT firms so they can be front-run; 150 different order types, some described by 20 pages of inscrutable legalese, with no obvious purpose except to allow a HFTer to not do the trade that he publicly appears to want to do or to get a kickback without providing the liquidity that the kickback is supposed to incentivize? yeah, that's just random luck that all that stuff is there and that the exchanges make most of their profit from HFT..).

Interesting! Hopefully all that information will lead to real changes at the exchanges or a push by customers to places like IEX.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 09, 2014, 04:55:41 PM
Interesting! Hopefully all that information will lead to real changes at the exchanges or a push by customers to places like IEX.

That's what I'm thinking. This kind of stuff hasn't been around that long (there was a legal change around 2006 that made a lot of this possible), and probably won't be around that long now that there's more of a spotlight on it.

Note that this is different from the legit kind of HFT, which even IEX wants to encourage. You're a market maker or trying to react really fast to information? That's fine for the long term. But exchanges  and banks (dark pools, etc) and HFT working hand-in-hand to create a rigged game, that's probably going to see the pendulum swing in the other direction sooner than later.
Title: Re: Flash Boys - Michael Lewis
Post by: 50centdollars on April 09, 2014, 04:56:27 PM
Flash boys to become movie.

http://www.slashfilm.com/flash-boys-movie-sony-michael-lewis/
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 11, 2014, 07:14:36 PM
http://www.salon.com/2014/04/11/michael_lewis_hits_back_at_critics_this_time_i_punched_wall_street_in_the_balls/
Title: Re: Flash Boys - Michael Lewis
Post by: 50centdollars on April 11, 2014, 08:51:35 PM
People are pist because they know things are going to change. Look at how the president of the BATS exchanged acted last week.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 12, 2014, 08:44:30 AM
People are pist because they know things are going to change. Look at how the president of the BATS exchanged acted last week.

I think people are starting to realize that it doesn't just affect rich people. The narrative is starting to mention more that "big money" is actually regular Joe's pension fund and mutual fund, and that people managing their money are complicit in them getting skimmed and the people supposed to represent them are making a lot of money from it (via their prop trading, dark pools, fees from HFT). That's what creating more outrage on top of the abstract injustice of it.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 20, 2014, 10:11:11 AM
Good post by Glenn:

http://glennchan.wordpress.com/2014/04/20/how-the-sec-should-reform-market-structure/
Title: Re: Flash Boys - Michael Lewis
Post by: OracleofCarolina on April 20, 2014, 12:54:44 PM
http://www.valuewalk.com/2014/04/michael-lewis-malcolm-gladwell/

Interesting conversation between malcolm gladwell and michael lewis.
Title: Re: Flash Boys - Michael Lewis
Post by: ItsAValueTrap on April 20, 2014, 09:16:50 PM
Just finished reading the book.

1- I learned some things about HFT that I had no clue about.  It did not occur to me that HFTs would abuse special order types and that there is publicly-available information about these order types.

2- There are some technical errors in the book.  Lewis confuses taking liquidity with providing liquidity at one point in the book.  He gives an example of a trade happening at $30.0001... he says that the the investor bought at that price when he meant to say that the investor sold at that price.
I suppose that Lewis is trying to simplify a very complicated subject. 

3- Lewis praises IEX as being the solution.  However, IEX seems like it has some holes in it (which they may eventually fix).  The book even gives an example where a HFT arbitrages dark pool pricing versus IEX's midpoint pricing.

The midpoint order seems kinda derpy to me.  In the example given in the book, the client should have placed a limit order instead at the midpoint.  In an ideal world, regulators would allow all investors to price in sub-penny increments.  They would have a solution to "shaving".  Ebay for example has a solution to shaving.  On Ebay, you can bid in penny increments.  However, you need to top the highest bid by a certain amount (e.g. 25 cents or some percentage; I forget the exact number).  If you don't, then the highest bidder will still have the highest bid.  You can't beat a $1000.00 bid with a $1000.01 bid.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 21, 2014, 07:38:53 AM
2- There are some technical errors in the book.  Lewis confuses taking liquidity with providing liquidity at one point in the book.  He gives an example of a trade happening at $30.0001... he says that the the investor bought at that price when he meant to say that the investor sold at that price.
I suppose that Lewis is trying to simplify a very complicated subject. 

He mentioned in an interview that there were some errors that would be fixed in the next edition, but that they didn't detract from the overall point. He said that it's impossible to publish 100,000 words and not have people find some errors.

It's just funny that some people on the financial news media attacked him with the good old subtext of: "Ha! See! There's an error here, hence the whole book is null and void."
Title: Re: Flash Boys - Michael Lewis
Post by: ItsAValueTrap on April 21, 2014, 09:52:39 AM
1- I'm not sure if anybody in the financial media picked up on the errors in his book.

They did pick up on the lie that the CEO of the BATS exchange told though.  To some degree, I actually kind of liked BATS in the past.  They were the underdog trying to take market share from the incumbents.  It used to be that they were aggressive with pricing.  (I haven't checked if that is currently still the case.)

2- What I find bizarre is that some people actually defend HFT, e.g. Kid Dynamite.

3- The HFTs are attacking Lewis because he may destroy their entire livelihood.  If the SEC, exchanges, and brokers stop giving them special trading advantages... their business model will be in a world of trouble.  Then they'd actually have to trade based on skill (which is what Swifttrade, Title Trading, SMB Capital, Bright Trading, etc. do).

Their business model is based on fleecing investors' order flow and paying kickbacks to the brokers and exchanges.  Obviously I think that this business model is stupid and destroys value.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 21, 2014, 10:13:20 AM
1- I'm not sure if anybody in the financial media picked up on the errors in his book.

You're probably right, I was probably thinking of the things I read online.
Title: Re: Flash Boys - Michael Lewis
Post by: SmallCap on October 24, 2014, 11:48:28 AM
Just finally got around to reading this book.

I get the sense both from the pre launch PR and the book itself that he expected that the book would be a shot across the bow of the US market and that it would change behavior and regulation, Basically validate the good guys and bring down the bad guys.

He also seems to be doing a great sales job for the exchange created by the RBC guys.

So since this book has come out besides a bunch of people complaining about being screwed is anyone aware of any changes that have come about as a result of this book? Is the new exchange working as planned and is it being used? any changes in regulations or practices on wall street?
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on October 24, 2014, 12:45:38 PM
So since this book has come out besides a bunch of people complaining about being screwed is anyone aware of any changes that have come about as a result of this book? Is the new exchange working as planned and is it being used? any changes in regulations or practices on wall street?

http://iextrading.com/insight/stats/

Their volume seems to be going up, so that's good.

But for other changes, it could take a while. These things are always very slow, but there are certainly a lot more people aware and thinking of these issues than before (regulators, politicians, voters, investors, etc).
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on March 13, 2015, 08:13:27 PM
1 year after the book, good piece by Michael Lewis:

http://www.vanityfair.com/news/2015/03/michael-lewis-flash-boys-one-year-later
Title: Re: Flash Boys - Michael Lewis
Post by: Jurgis on March 14, 2015, 08:05:05 AM
I find Michael Lewis to be pompous, self important, sensationalist prick. Despite his proclaimed self-righteousness, he fit Salomon very well.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on March 16, 2015, 07:34:20 AM
I find Michael Lewis to be pompous, self important, sensationalist prick. Despite his proclaimed self-righteousness, he fit Salomon very well.

So you work in HFT, eh?
Title: Re: Flash Boys - Michael Lewis
Post by: fareastwarriors on March 16, 2015, 07:54:48 AM
Bloomberg View columnist Barry Ritholtz interviews Brad Katsuyama, President and Chief Executive Officer of IEX Group, formerly the Global Head of Electronic Sales and Trading at RBC Capital Markets. They discuss dark pools. This interview aired on Bloomberg Radio.


http://www.bloomberg.com/podcasts/masters-in-business/ (http://www.bloomberg.com/podcasts/masters-in-business/)
Title: Re: Flash Boys - Michael Lewis
Post by: Jurgis on March 16, 2015, 09:05:48 AM
I find Michael Lewis to be pompous, self important, sensationalist prick. Despite his proclaimed self-righteousness, he fit Salomon very well.

So you work in HFT, eh?

I don't have to answer this, but no.

And my opinion about him was the same before "Flash Boys"
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on March 16, 2015, 09:10:14 AM
I find Michael Lewis to be pompous, self important, sensationalist prick. Despite his proclaimed self-righteousness, he fit Salomon very well.

So you work in HFT, eh?

I don't have to answer this, but no.

And my opinion about him was the same before "Flash Boys"

Opinions are opinions, no worries.

But you have to admit, someone just had to ask, it was too obvious  :D
Title: Re: Flash Boys - Michael Lewis
Post by: Jurgis on March 16, 2015, 09:36:06 AM


So you work in HFT, eh?

But you have to admit, someone just had to ask, it was too obvious  :D

I wish I did, I would not have to hang out on this forum then. Just roll in moolah.  ;D
Title: Re: Flash Boys - Michael Lewis
Post by: original mungerville on March 16, 2015, 01:31:29 PM
I find Michael Lewis to be pompous, self important, sensationalist prick. Despite his proclaimed self-righteousness, he fit Salomon very well.

I happen to like him. He is certainly much more virtuous than the industry he criticizes.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on March 17, 2015, 11:06:06 AM
Bloomberg View columnist Barry Ritholtz interviews Brad Katsuyama, President and Chief Executive Officer of IEX Group, formerly the Global Head of Electronic Sales and Trading at RBC Capital Markets. They discuss dark pools. This interview aired on Bloomberg Radio.


http://www.bloomberg.com/podcasts/masters-in-business/ (http://www.bloomberg.com/podcasts/masters-in-business/)

Listened. Good one.

http://overca.st/CDUXxQs-Q
Title: Re: Flash Boys - Michael Lewis
Post by: racemize on March 21, 2015, 08:33:29 AM
Just finished listening to this one.  I've read three of Lewis' books now, and each time I feel increasingly uneasy with his representations.  I get the impression that he presents a version of the truth, but it is a potentially dangerous, one-sided version.  That said, I have trouble believing HFT is doing a whole lot of good for the world.

Following on to that, has anyone read this counterpoint?

Flash Boys: Not So Fast: An Insider's Perspective on High-Frequency Trading (http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2/ref=tmm_kin_swatch_0?_encoding=UTF8&sr=&qid=)
Title: Re: Flash Boys - Michael Lewis
Post by: Jurgis on March 21, 2015, 10:54:34 AM
I've read three of Lewis' books now, and each time I feel increasingly uneasy with his representations.  I get the impression that he presents a version of the truth, but it is a potentially dangerous, one-sided version.

Exactly my feeling about him.
Title: Re: Flash Boys - Michael Lewis
Post by: peter1234 on March 21, 2015, 12:24:22 PM
He writes entertaining novels.
 ;)
Title: Re: Flash Boys - Michael Lewis
Post by: Jurgis on March 21, 2015, 12:34:33 PM
He writes entertaining novels.
 ;)

He writes entertaining novels.

There. Fixed that for ya.  8)
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on March 21, 2015, 01:02:09 PM
His "novel" is kicking a bunch of parasites in the teeth, so at least there's that  :D
Title: Re: Flash Boys - Michael Lewis
Post by: frugalchief on April 13, 2015, 10:38:32 AM
He writes entertaining novels.
 ;)

He writes entertaining novels.

There. Fixed that for ya.  8)

It was "entertaining" as I've become engrossed in the story and read it rather quickly.  Don't get bored out of my mind.  Didn't particularly enjoy this one that much however.
Title: Re: Flash Boys - Michael Lewis
Post by: NewbieD on April 22, 2015, 11:08:04 AM
Listened. A character-driven view with mostly one side of the story. Could've been without the recurring "so much money stolen" rants. And I would've liked some finance-characters to complete the tech rebels viewpoint. We'll can't get it all...I liked it overall.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on April 22, 2015, 01:18:14 PM
Listened. A character-driven view with mostly one side of the story. Could've been without the recurring "so much money stolen" rants. And I would've liked some finance-characters to complete the tech rebels viewpoint. We'll can't get it all...I liked it overall.

When the book came out and there was a huge media ruckus, we got the other side of the story. Everyone attacked Lewis, and their arguments basically amounted to nothing. Either they tried to act like Lewis was against all electronic, high-speed trading, and he isn't ("the spreads are smaller now!" yeah, but not because of front-runners and people sniffing your orders). Or they talked about liquidity and such, which is BS for the kind of HFT that Lewis went after (they actually mostly provide fake liquidity that disappears when someone needs it).

So sometimes when you don't get the other side, it's because they don't have anything to say that would make them look good. They do it for the money, that's it. The best they can hope for is to confuse the public and muddy the waters and hope that the money tap isn't turned off too soon. There's no hidden positive reason for that specific kind of HFT to exist (or if there is, I haven't found it yet).
Title: Re: Flash Boys - Michael Lewis
Post by: NewbieD on April 24, 2015, 10:31:32 AM
So sometimes when you don't get the other side, it's because they don't have anything to say that would make them look good. They do it for the money, that's it. The best they can hope for is to confuse the public and muddy the waters and hope that the money tap isn't turned off too soon. There's no hidden positive reason for that specific kind of HFT to exist (or if there is, I haven't found it yet).

Agreed, it doesn't add much value. IEX seems to be doing pretty good since the book came out. Record market share a couple of days ago: http://www.iextrading.com/insight/stats/

Btw, this book taught me that microwave communication can be faster than fiber optics. Particularly affects my shares in Effnet.com which does header compression and has some tower manufacturers as customers.
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on July 06, 2015, 01:49:40 PM
http://www.bloomberg.com/news/articles/2015-07-06/-flash-boys-programmer-in-goldman-theft-has-charges-tossed-out-ibrz5tyj

‘Flash Boys’ Programmer in Goldman Case Prevails Second Time
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on August 02, 2015, 10:27:33 AM
Wanted to point out for those who want a broker that doesn't sell your orders to HFT firms and doesn't route you first through their own dark pools even if that's not the best execution for you; Interactive Brokers has a policy of not selling order flow to 'internalizers' and other third parties. They also connect with the IEX exchange (you can use their smart routing algo and let it find the best execution, or you can specify that you want to go to IEX directly).

I know most here are probably not big enough for that to make a big difference, but if on principle you don't want to support brokers who are complicit with the worst kind of HFT practices, going with Interactive Brokers might be a way (along with the low cost benefits).
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on August 18, 2016, 06:18:10 PM
http://www.cnbc.com/2016/08/18/iex-exchange-finally-set-to-launch.html
Title: Re: Flash Boys - Michael Lewis
Post by: stahleyp on August 21, 2016, 05:55:57 AM
The folks at TFS Capital use IEX I believe (Gates was featured in Flash Boys). They have a couple mutual funds too.
Title: Re: Flash Boys - Michael Lewis
Post by: fareastwarriors on October 12, 2016, 08:45:09 AM
Brad Katsuyama Q&A: ‘I Don’t Think We Would Have Survived If It Was Just Hype’

https://www.bloomberg.com/features/2016-brad-katsuyama-interview/ (https://www.bloomberg.com/features/2016-brad-katsuyama-interview/)
Title: Re: Flash Boys - Michael Lewis
Post by: Liberty on October 31, 2017, 10:06:44 AM
Good podcast interview with Brad Katsuyama of IEX:

http://investorfieldguide.com/katsuyama/

IEX market share keeps going up steadily:

(https://i.imgur.com/mO8irEo.png)