Flash Boys: A Wall Street Revolt by Michael Lewis
My rating: 5 of 5 stars

Michael Lewis's non-fiction really hits different. I loved the detail and my outrage after watching, then reading, The Big Short. Little did I know that he took on High Frequency Traders as well.

Flash boys spans the first couple of years after the '08 debacle, when high speed trading and the creation of Dark Pools took more than half of all trades off the lit market to be finagled, squeezed, and literally scalped by predatory traders. Put simply, a black curtain was pulled over the entire stock market (still true today) to hide everything about the trades on the backside. This means that brand new middle-men were telling everyone on the outside some hogwash about greater liquidity in the market, while actually lining hedge fund shark's pockets and screwing over average traders who weren't in the know. This quickly led to an average of a billion dollars per year profit with no downsides for these middle men. They didn't have skin in the game. All they did was take an order from the outside, screw up the trade, make sure it gave the trader a worse deal, then let finally letting the trade through, skimming the profit for themselves. (As a single example)

The problem with this is that every big hedge fund or outfit getting into this lucrative business is making a TON of money and have absolutely no incentive to call it quits -- and the profits are so huge that they can literally buy themselves out of anything. And now, a decade and a half later? We're still in the same boat. Dark pools, high-speed trading, and now AIs to do most of the behind-the-curtain work to skim, scalp, and deny everyone else a fair market.

You know, a "fair market" where a direct, one-to-one buy and sell order could go through, giving true price discovery rather than outright, extensive price manipulation.

The fact that this book came out in '14, laying out all these problems that have gotten so much worse since then, should still give it a top billing for anyone who wants to know HOW the market is so fucked up. Its writing is great. It shows some wonderful individuals and their own path to discovery, highlighting all the their challenges to create the IEX, finding out how pernicious the rest of the exchanges were, while attempting to prevent all scalping when any order goes through them.

Of course, at this point, it is still just early days and so much has happened since then, good, bad, and interesting. What I really want now is a follow-up.

Or better yet, actual reform. What did I hear the other day? That approximately 28 trillion dollars goes through all the market -- and most orders are getting scalped through Payment Through Order Flow. Only the big boys are making tons of profit, but that's because they own the casino. Put in perspective, the entire world economy sits at around 90 trillion.

Put simply, THIS is THE current method on how the rich get richer. There's no transparency, so no accountability, and worse, nobody in positions of power are willing or able to sit down and understand this problem -- or if they did, I'm pretty certain that most are getting paid off.

Honestly, this is one of THE biggest problems. It needs a spotlight shining on it. It's definitely not cleaning itself up.


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