I broke my habit this week of reading only softcover editions, and read the hardcover version of Michael Lewis’ “Flash Boys: A Wall Street Revolt”. It seemed the least I could do given all the hubbub in the media about this publication.
As I have mentioned before, one of my co-majors in college was English literature, and I certainly applaud Mr. Lewis for his writing style. He is a gifted author, and is able to leave you hanging after most sentences, only too eager to pounce onto the next.
That being said, I found Mr. Lewis’ non-fiction account of high frequency trading more like a novel than the factual account it purports to be. Many times, Mr. Lewis takes the mundane and ordinary but through exhilarating manipulation of language makes it seem illegal. In other circumstances, Mr. Lewis spends pages upon pages attacking something only to insert a single sentence or phrase actually exonerating the practice he just mightily condemned. But the brief sentence or phrase is buried and boring, and not written nearly as excitedly as his other prose.
For example, Mr. Lewis’ novel, I mean study, begins with an account of the secretive acquisition of property by a company known as Spread Networks, and the installation through sometimes impervious rock of a near straight fiber optic cable from Chicago to northern New Jersey. Clearly Mr. Lewis’ colorful description of these efforts is meant to cast aspersion on the purpose of this project, which is to offer high speed traders a quicker way to route their orders between a data center that hosts the Chicago Mercantile Exchange and one next to NASDAQ’s stock exchange in Carteret, NJ. Just read two sentences:
“[The initial investors] named the company “Spread Networks,” though they disguised the construction behind shell companies with dull names like Northeastern ITS and Job 8. [One investor’s] son… came on board – to cut, as quietly as possible the four hundred or so deals they needed to cut with townships and counties in order to be able to tunnel through them.”
However, buying land quietly in small parcels using many dummy companies is not illegal, and in fact is a smart tactic in order not to drive up the price of property unfavorably. Just ask Walt Disney. Disney used many shell companies (many with mysterious names such as M.T. Lott Real Estate Investments, the Latin American Development and Management Corporation and the Reedy Creek Ranch Corporation) to acquire almost 28,000 acres of land near Orlando, Florida that ultimately became home to Disneyworld. Nefarious? Well maybe because of the high price of an admission ticket these days and the very salty popcorn that is served on Main Street USA; but I think most kids and their parents don’t think so.