Tuesday, March 17, 2015

Michael Lewis: Flash Boys, The Money Culture and The Pacific Rift

If you are/were an online trader in equity markets or know about it, then you would appreciate reading ‘Flash Boys’ which decodes High Frequency Trading for the common investors and traders. Few big firms made use of High Frequency and algorithm based trading to take advantage of the information available on the order books of the stock markets and make favorable moves to pocket quick money. It looks unethical to bend the whole system to get to know the information few micro seconds earlier than the broader market and to have customized ordering systems for them to make this kind of trading work but that is how the Wall Street works.

There are few who made killing in the market by mastering the subject or by manipulating the system. And those people are the subjects of interest for Michael Lewis. ‘The Money Culture’ is a collection of essays which show the changing perceptions of investment bankers towards money and other stories from the Wall Street. The last few chapters of this book and the whole book of ‘The Pacific Rift’ are about the trading and investment relations between Japan and USA. Do you know why Japanese products are cheaper outside Japan than in their homeland? Why Japanese pay more than market value for properties in the US? And how is Japan able to manage trade surplus for so long? Why US based or any other foreign firms are not able to make into Japan’s domestic market in a big way? Are they not trying hard enough or is it the system in Japan makes it impenetrable? How a big earthquake in Tokyo can cause a severe damage in US financial markets while Japan comes out of it quickly? Author finds out answers for these through his research, travels and interviews with those high stake holders and the connecting links.

Michael Lewis was an investment banker employed with Solomon Brothers during 1980s but gave up that job to become a full time writer. Now he is a columnist for Bloomberg News and a contributing writer to Vanity Fair. He is one of my favorite authors and I intend to read all of his works. I have read six of his books and others too would be a matter of time.