Last year, financial expert Michael Lewis caused quite the stir in the world of finance after he made the claim that the stock market is rigged by those who participate in high-frequency trading. The author of “Flash Boys” garnered a lot of critics and supporters.
Well, Lewis has returned by publishing a piece in the April issue of Vanity Fair. Lewis essentially wrote that his suggestion cannot be ignored and dismissed as a simple discrepancy between affluent hedge fund traders and smart tech geniuses.
“It’s not even the case that the little guy trading in underpants in his basement is immune to its costs,” wrote Lewis. “The ‘Flash Boys’ story put in jeopardy billions of dollars of Wall Street profits and a way of financial life.”
The bestselling author even drew the attention of billionaire Warren Buffett. He conceded to CNBC that HFT doesn’t really benefit or create value to the economy, but he insisted that it doesn’t really pose any harm to small-time investors. “They’ve never had it so good and high-frequency trading doesn’t cost them a penny probably.”
Robert Wenzel of Economic Policy Journal wrote in 2013: “Don’t worry about the game being rigged, there’s nothing you can do about that–especially don’t worry about something like HFT which is going to have little impact on your investing. Find the ways to make money and don’t worry about bankster activity that is inconsequential to your trading and is really only a problem for large block traders like institutions and George Soros.”
Nevertheless, Lewis concluded that a small minority of rich people on Wall Street are making a lot of money because the financial system is in disarray, and they are exploiting a system that is screwed up which doesn’t often make the headline news.
“What comes as news is that there is now a minority on Wall Street trying to fix the system,” added Lewis. “Their new stock market is flourishing; their company is profitable; Goldman Sachs remains their biggest single source of volume; they still seem to be on their way to changing the world. All they need is a little help from the silent majority.”
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