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Michael Lewis -- Flash boys: a Wall Street Revolt
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This is a good book to read if your goal is to ruin what used to be
your very good relationship with your stockbroker.  After reading
"Flash boys", you will have too many sharp, suspicious, pointed
questions for you stockbroker and how he trades your account.

This is also a book that is reporting injustices in the world of
banking and investment.  If you somehow feel that you do not already
have enough outrage about what the big investment banks have done
before, during, and after the 2008 financial crisis, then "Flash
boys" will certainly help.  And, you'd do well to give yourself a
good dose of Matt Taibbi's writing on the "banksters"
at Rolling Stone magazine.  (See
http://www.rollingstone.com/contributor/matt-taibbi)

"Flash boys" is about HFT (high frequency trading), which many of us
small investors might think that HFT is something that goes on in a
separate area of the financial markets and that it does not affect
us.  Lewis tries to show that's false, and that it affects all stock
market investors.

Here are some of the things that Lewis exposes:

- There is regulatory capture of the Federal financial regulatory
  agency by the those who work in HFT companies.

- Any attempt to regulate the financial industry so as to protect
  individual (small) investors will will likely be blocked.  But,
  any that is put into effect will soon be gamed by the HFT
  industry.

- A significant number of very bright individuals, most of who have
  advanced educational degrees, are at work, not to help individual
  small investors (and possibly make a profit doing so), but rather
  developing ways and systems that take advantage of the
  complexities of the financial markets and the infrastructure they
  run on to profit from an adversarial relationship with investors.

If you are now gnashing your teeth and are tossing and turning at
night over how HFT is taking *your* money, one strategy that you can
use to reduce the damage is to be a very *low* frequency trader.
Since HFT takes a small slice of the transaction each time stocks
are bought or sold, you can reduce your losses by reducing the
number of transactions.  Buy and hold is good protection against
this racket.  If you try to profit from frequent buying and selling
stocks, you'd better be prepared to "play with the big boys".  And,
remember, they have (and can hire and buy) lots of brain power and
equipment and infrastructure that you cannot.

However, ..., it's still worthwhile to ask, how much does it matter?
Say we agree with Lewis that something very morally wrong is being
done, that someone is being cheated, that someone is lying about
what is being done for and to investors.  Still, let's as what is
the cost.  As far as I can tell, that cost is measured in fractions
of a cent per share.  So, when *I* buy 10 shares of any stock,
believe me, my stock broker takes a larger share of that trade cost
than whatever the HFT are cheating me out of.

That does not mean that what Lewis is trying to expose should not be
exposed.  It should be exposed, investigated, and regulated.  If
investors are being fooled about the financial markets and what the
purport to do (e.g. guide excess funds to companies that can make
use of them; enable investors to profit by putting their excess
funds to use), then the investing public is likely to lose faith in
the stock market, and that will matter to all of us, investors and
non-investors, too.

But, one of Lewis's larger points is to rail against the lack of
transparency in the financial markets.  In part, it's the complexity
in the financial markets that help create the opaque nature of the
market, but that's not all.  Lewis claims that the lack of
transparency is hugely valuable to those who are making huge amounts
of money from HFT, the high frequency traders, but also other
institutions that profit from satisfying the needs of the high
frequency traders, such as the stock exchanges.

For me, what that cries out for is not so much "lynch the bastards",
but rather more investigation and more transparency.

Apparently, in this industry it is almost a requirement that you (1)
swear frequently and (2) claim that every one else in the industry
is stupid and does not know what is "really" going on.