This is a wonderfully entertaining book, which reads like a novel, an incomprehensible techy textbook and a polemic against the US stock market. Parts were beyond my understanding. For example-
“Round-trip travel time from Chicago to New Jersey has been cut to 13 milliseconds.” (p22)
The point being? High-frequency traders get to the Stock Market first and manipulate the market. How? Knowing a large order is on the way gives them an opportunity to buy stock, force the price up, and sell it to the company who has already put their order in at a higher price. So far so techy. Why is this entertaining?
Lewis frames his book around a series of potted biographies. Brad Katsuyama is an example of someone that the reader learns to love. Brad is a Canadian who moved to New York to open up the Royal Bank of Canada’s Wall Street office. He was completely alienated by the attitude to debt and profligacy. “… even the homeless were profligate.” (p24) This is familiar Lewis territory. Ronan Ryan, John Schwall, Sergey Aleynikov and Zoran Perkov march through the text. They are in the vanguard of a group who attacked the (very) shady practices of the major Wall Street bankers.
Lewis ends with the good guys winning- sort of. Lewis remarks about high-frequency traders that literally never hold shares from one day to the next. “They traded in the market the way card counters in a casino played blackjack: They played only when they had an edge. That’s why they were able to trade for five years without losing money on a single day.” (pp263-4)
Amazing geeky people doing very, very clever things has its fascination- I was fascinated.
Why you should read this book: It’s an alternative world, just like a novel, and stands or falls on the quality of the writing: which is excellent.
Why you shouldn’t read this book: It’s really quite geeky and you have to take a lot on trust.