Michael Lewis
has done it again. This time with Flash
Boys: A Wall Street Revolt. He’s taken an obscure and poorly understood
story and shed light on it in a humorous and enlightening way. His book Moneyball: The Art of Winning an Unfair Game—and
the film based on it—examined the lengths major league baseball teams will go
to in their search for that big field of dreams. His more recent book, The Big Short: Inside the Doomsday Machine,
clarified financial instruments and transactions that investment wizards and
brokers themselves didn’t understand. One of the enlightening highlights in The Big Short occurred when Greg Lipmann
at Deutsche Bank tells an agent at Morgan Stanley in no uncertain terms that the
Morgan Stanley guy doesn’t have a clue about the value of the CDOs
(collateralized debt obligations) Morgan Stanley has invested in. When the
Morgan Stanley guy tries to limit what he owes Lipman, and to defend his
investment model, Lipmann says, “Dude, fuck your model. . . . give me my one
point two billion dollars.”
Flash Boys returns to a financial world where some
people know what’s going on. And where some people think that there is
something wrong with what’s going on. A thoughtful and honest Canadian called
Brad figures out what’s wrong with what’s going on in the US stock markets.
When he tries to place an order to purchase stocks for a client at the market
price, he discovers that he can’t make the purchase at the price on offer. This
happens repeatedly, and Brad eventually figures out what’s up. Not a man for
small measures, he eventually builds an honest stock exchange known as IEX.
Customers at other exchanges begin to demand that their stock transactions take
place at IEX. There may not be an honest mayor in Toronto, but now there is a
dead honest stock exchange in the United States, managed by a Canadian.
Most reviews of Flash Boys have failed to dwell on some
of the most enjoyable parts of the book. As honest Brad Fukuyama from the dull Royal
Bank of Canada begins building his exchange, he needs to hire experts with
various obscure skills. Lewis has a novelist’s capacity to capture the physical
and psychological essence of a character in a few sharply observed sentences. This
skill is most apparent in his descriptions of hiring people to staff the new
exchange. He interviews Francis Chung who has just won a national
puzzle-solving championship in the United States. Francis may be a great
puzzler, but he’s also a complete puzzle. His answers to Brad’s questions in
the job interview are choked and often incomprehensible:
Brad
finally asked, “All right, just tell me: What do you like to do?”
“I
like to dance,” he said. Then he went completely silent.
At one point, an
Irishman called Ronan who has been hired by Brad recommends that he hire a
Russian with unusual skills. Ronan tells Brad that he needs to hire Zoran
Perkov because he needs “Someone who will be good at running the market—you
need the most paranoid fuck in the world . . . And he’s the most paranoid fuck
in the world.” Brad hires him.
Hiring an employee counterintuitively often works better than hiring by the book. I needed a manager of a project for which I had just received a quarter of a million dollars in start up funding. Someone had heard about the project, and he phoned me and asked if he could take me out for lunch to talk about the new project. Over lunch, he told me that he had just left a job where he had been escorted off the property by six Ontario Provincial Police officers. He said that he would be the best manager for my new project. When he tried to pick up the bill for lunch in the fine restaurant, he discovered that he had forgotten his wallet. I paid for lunch, and figured that I should hire anyone with that much nerve. I hired him, and he was one of the most capable people I ever worked with.
Read more from James Reid at www.jamesedwardreid.ca
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