Book Review: Flash Boys by Michael Lewis

Yesterday, the NYSE went down for a couple of hours, and the fascinating thing was while it was out, stocks rallied… as soon as it came back, it plunged. Well, I guess “fascinating” is a word I can use because I’m not invested in the American market in any meaningful way, but for those involved, this kind of weird stock market behaviour makes for wondering as to what on earth is going on in the American market.

Which is where Flash Boys by Michael Lewis comes in. It’s pure non-fiction – Lewis (of Liar’s Poker fame) returns once more to the world of Wall Street to find out just what is going on, to find out how the market has changed in the last 10 years, and how we can get events like the above, or the “flash crash” in 2010 which saw billions, nominally, wiped off the collective value of companies, only to reappear not much later. Lewis takes his investigative eye to weaving a story of the people behind the scenes that make the markets tick now.

The story he tells starts with the construction of an optic fibre cable between Chicago and New York – something which appears to have no ostensible connection to the stock market – and he goes on to slowly fill in the definition and detail in the picture, weaving a story magnificently of how High Frequency Trading has changed the market since 2005, the impacts, and the people working to make things better. It does attempt to build some people into plucky heroes, and doesn’t directly involve the villains in telling the tale, but the message is loud as it is clear, and stuff like the NYSE system crash yesterday just jumps out at me now like “that was probably caused by HFT, damn!”

At certain points, it feels almost like a thriller – I just wanted to keep turning the pages and reading on. The book resonates with me particularly because of where I work in technology and finance, though I’ve never been directly involved with the specific processes at hand – but I’ve definitely seen the changes in the last 10 years as an “insider”, and so much rings true that there’s little doubt Lewis has the right end of the stick.

A magnificent quote that put into words what I’d been feeling about technology in financial markets is towards the latter stage of the book –

The markets were now run by technology, but technologists were still treated like tools. Nobody bothered to explain the business to them, but they were forced to adapt to its demands and exposed to its failures – which was, perhaps, why there had been so many more conspicuous failures.

Technologists being treated like tools – or more accurately, “cost centres” that are  money pits – when banks couldn’t operate in 2015 without technology is one of the most frustrating parts of my working life. Capital investment is a given in many industries, but technology is not viewed that way for far too many organisations.  That’s not even the primary message, but it’s an important one, and one I hope gets some momentum or at least recognition with people that are in important roles.

Book Review: Cryptonomicon by Neal Stephenson

If there’s ever a book that you can say is pure geek indulgence, it’s Cryptonomicon. No other book I’ve seen takes the abstract concepts of topics as varied as UNIX, cryptography and normalising preferences between siblings for Grandma’s inheritance through a distribution on a cartesian plane formed in a parking lot. You can tell this isn’t your daddy’s war novel.

Stephenson weaves together two stories, interlinked through blood – in the 1930s, Lawrence Waterhouse, a borderline-Autistic mathematician encounters Alan Turing shortly before World War II is due to break out; Bobby Shaftoe is a U.S. Marine stationed in Asia, retreating from Shanghai ahead of the march of the Japanese through China, while Goto Dengo is Bobby’s counterpart of sorts on the Japanese side, a soldier who dares to think of self-preservation ahead of the Emperor’s wishes.

In the late 90s, Randy Waterhouse is being dragged into a business venture by his friend and former business partner Avi; he ends up working with Amy and her father Douglas Macarthur Shaftoe, son of Bobby. They employ the services of one Goto Engineering, which, yes, is presided over by Goto Dengo himself. All this has the backdrop of the mysterious Societas Eroditorum in the background, with a seemingly ageless preacher by the unlikely name of Enoch Root playing a part in both timelines.

This is all not even mentioning the central push of this novel, which is so loaded with technical details it’ll make your head spin: the Cryptonomicon is all about cryptography, encoding messages for secure transmission. It has actual technical details, an algorithm and even an actual Perl script for encoding and decoding a method of encryption specifically invented for this book. There’s even an appendix dedicated to explaining the method for the audience that didn’t catch on through the novel. I mean, damn!

Although some of the technical aspects can be a bit overbearing in the middle of a novel, and the different voices of the narrators are occasionally jarring – albeit pleasingly distinct – this stands on its own as a thriller without the technical background.

The technical details are more easily understood if you come from a software background, but nevertheless I would suspect this would add greatly to the realism, at least for all those that know precious little about both the code-breaking efforts in WWII and the workings of today’s technology.

Rarely does Stephenson use these elements gratuitously. His writing is dense and yet spare, descriptive without being prescriptive – you can easily imagine these people in your head, but the descriptions aren’t overly specific or belaboured.  In some ways, perhaps that does truly identify it as a geek novel: it says enough to get the salient points across, but without being needlessly wordy about it.

Cryptonomicon suffers a little from the same issue many a novel that uses historical characters in its narrative, namely that had the fictional characters actually be interacting with the non-fictional ones in the ways described, the non-fictional novel should be equally if more significant than the ones the actual characters deliver.

Ripping and engaging yarn, hard to put down. ★★★★