Michael Lewis Flash Boys Summary

Investment analysis is said to be psychological in various aspects. The irregularity observed in financial markets in recent times has yet again brought to question the practical application of traditional financial theory and the Efficient Market Hypothesis. There is therefore the need to put this base of accepted finance theory under scrutiny. The foundation of one of the broadly examined problems with traditional financial theory is the effect of psychological influences on individuals’ behavior towards investment. According to Slovic (1972), Daniel, Hirshleifer ,Subrahmanyam (1998) and Hilton (2001), they believe that financial markets are functioning at a rapid and increasingly cut throat environment and have been transformed in several ways, one of which is technological. The growing rate of technology has had an immense effect on trading and investment. Technology has aided in allowing information to be easily accessible to investors, but there has been little focus on the issue of interpreting the information skillfully. It is important to note that the appropriate use of information is a crucial part in making investment decisions.

The years 2008 shined a light on a group of people who were considered high society. When the stock market crashed in September 2008, the world shines a spotlight on the financial corporation. Words such as hedge fund manager and financial instrument such as credit default swaps are not words not known to everyday citizens. The economic downturn forced society to ask question not normally asked.

Many changes have transcribed in the global market since the years of 2008-2009, the years of what could be dubbed as the “Second Great Depression”. The changes made have been of significant impact as the market has had to accommodate or regulate a great quantity of systems that range from the advancement of technological platforms in the compartment of information technology to the increase in demand of less common forms of energy being established by major corporations such as Tesla’s Powerwall home batteries. The increase of applications via phones have even made it easy for investors, even novice investors, to buy shares in stock markets at an international scale with a push of a button, taking great advantage of what the globe offers in

Michael Lewis’s novel, Flash Boys, gives an in depth look at the corruption that has occurred in the U.S financial system since 2008. With a focus on high frequency trading (HFT), Lewis shows how a group can bend and twist regulations, and find loopholes in the market at the cost of the American investor. However, Lewis stresses that this this could not be done without major collusion within the financial system. HFT could not have held such a deep grasp on the market without help from the banks, their dark pools, and the people who are entrusted to run the U.S markets, the exchanges. Flash Boys shows, through the stories of Brad Katsuyama, Sergey Aleynikov, and everyone who helped create IEX, that there are solutions to these criminal acts

This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.

In this chapter, we meet Dan Spivey. Dan is a forty something former trader who stumbled upon the realization that his phone line had as much or more to do with his stock trading as his experience and investment information did. Like most traders, Spivey knew that there were differences in market prices across the various exchanges, particularly those between the Chicago and New York, several times a day with thousands of stocks. If one was fast enough, one could take advantagethe low price of one market before it caught up to the rest of the stock market’s higher price. It was not necessarily illegal, but it was skimming the customer. Ofthat time. He mapped out a possible straight line from Chicago to New York in which fiber optic cables could be run to greatly shorten the signal delay between the two. He caught the interest of investors like the head of Netscape to make the line a reality and after many complications, went on line in 2010. The start up cost to join the line was 10.6 million and only 200 of the 400 brokers in Wall Street would have room on the line.

Barry decided that he had had enough of live spent without his parents. He was going to get them back. But as it may seem impossible for Barry to get his parents back when they are already dead, but it is just a simple job for the hero Flash to do.

‘The Flash’ Season 4: How Will Cisco and Iris Deal With Leading Team Flash? “Barry’s superpower isn’t speed. It’s hope.” —HR Wells Stop! This article contains spoilers for The Flash Season 3 and limited information about the upcoming Season 4.

Financial markets are intertwined into the lives of everybody today. These markets set prices for food, gas, and various other items that people use often. There are even public cable television channels, such as CNBC, that exclusively cover financial markets. The worlds current financial events such as the US debt crisis, and the Federal Reserves’ quantitative easing have caused a rise in the public’s awareness of the financial markets. One of the most feared events in financial markets is a crash. A crash is a very steep drop in price of all securities in that market. Some recent crash events are the financial crisis of 2008, flash crash of May 2010, and August 2011. Flash crashes are a relatively new phenomenon to the markets, and these recent, unprecedented events have brought controversy to one of the newest forms of trading called High Frequency Trading(HFT). HFT is the act of executing millions of dollars worth of trades at sub second speed according to predictive software, or statistical models and algorithms. HFT allows hedge funds, and other types of financial companies the ability to trade in multiple markets faster than ever before. This incredibly broad and super fast ability to trade is one of the main reasons HFT has come under fire as a detrimental form of trading. Some of the controversy that HFT experiences consists of possible involvement in flash crashes and added

The unethical traders are not the only factor to causes the financial crisis. They are playing an important role along with other factors and further encourage the financial crisis to arise. The unethical traders exist in the asymmetric information problems, and their unethical activities cause the asymmetric information problems even worse in the financial market. Once the asymmetric information problems is severe enough in those factors, the financial market collapse. For the 6 main factors of causing the financial crisis are the followings: 1) Asset markets effects on balance sheets; 2) Deterioration in financial institutions’ balance sheets; 3) Banking crisis; 4) Increases in uncertainty; 5) Increases in interest rates; 6) Government fiscal imbalances.

In his book, Capital Ideas: The Improbable Origins of Modern Wall Street, Peter L. Bernstein examines the innovative financial work of various academics that helped shape modern Wall Street. Bernstein sets out to show that Wall Street is in fact a fundamental and useful model to follow, rather than something to be feared. He points out that, “By combining the linkage between risk and reward with the combative nature of the free market, these academics brought new insights into what Wall Street is all about and devised new methods for investors to manage their capital.” (2) These impressive scholars have incorporated scientific measurement to the art of finance, forever

The belief of the ability to make a profit by beating the market is still an economically controversial issue. Some people believe that the market is efficient, so they cannot earn more as all the stocks are at their fair prices. However, others think differently. Efficient Market Hypothesis (EMH) is know as the financial theory first developed by Professor Eugene Fama in 1970. The theory has contributed to the views of not only individual investors but also financial institutions in the capital market about the traded assets’ price relied on relevant information. In fact, this EMH theory has been controversial and disputed.

With the Internet boom, the stock market was not only brought out into the public spotlight, but it was also brought much closer to the

This financial theory was best defined in the 1970s by Eugene Fama in his article ‘Efficient Capital Markets: A Review of Theory and Empirical Work’. In this article Eugene declared that no one could “beat the markets” as a result of all current stock prices being unpredictable since they quickly reflect all information about the stock as it becomes available and the potential prices of stock are also unpredictable as it is dependent on all future information, which is not currently available. Therefore, investors are unable to use technical or fundamental analysis to achieve above-average returns.

It’s an important market for the world economy to make a comprehensive financial relation between investors and people who has savings. An effective financial market is related with developing economy of world and GDP of countries around the world and increases of individual wealth. Financial markets are in every county in the world but the sizes of those are different from each other by the participations of buyers and sellers. The New York Stock Exchange (NYSE) and the Forex markets become the world largest financial markets by trading trillion of dollars on daily basis. There are more financial markets that have heavy trading and demand for securities on some specific periods and historically prices rises by this time on