Today, I finished reading the book Flash Boys, by Michael Lewis. It’s one of my favorites!
We all know that our financial system is susceptible to undue influence by “bad actors”. There are many reasons we feel like things are stacked against us. And sometimes, they are.
Michael Lewis identifies a fascinating time in the history of the stock market after computers changed the rules. It used to take actual people a relatively long time to trade stocks by hand.
What if computers could reduce that time? It turns out, they did.
By 2005, stock trades could be placed without human mediation. A buyer could click a button on a website, a trade would be recorded, and money would be transferred.
This led to the emergence of High-Frequency Traders. Suddenly, the speed of transactions mattered.
I’m not going to spoil the story in the book. Instead, I’ll say that some people realized the value of getting a glimpse of the market BEFORE others could react.
And some people made a lot of money at the expense of ordinary investors by having an early look at in-progress trades.
I highly recommend this book.
In fact, I want to make a movie based on it!
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