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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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Flash Crash summary
Liam Vaughan
A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History
18 mins
Brief summary
Flash Crash by Liam Vaughan is a non-fiction book that examines the 2010 stock market flash crash. It delves into the actions of the rogue trader involved, the impact on the market, and the subsequent investigation.
Table of Contents
Flash Crash
Summary of 6 key ideas
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Key idea 1 of 6
Fastest ever drop in global financial market baffles experts.
In 2010, the global economy was not in good health. Following the 2008 crash, the Eurozone was still in trouble, with Greece and Italy struggling in particular. The rest of the world feared contagion – even a little bad news had the potential to cause widespread economic panic.
This was the backdrop to the dramatic events of May 6 – an economic crash that happened so quickly that most people, even experienced market traders, missed it.
The key message here is: Fastest ever drop in global financial market baffles experts.
So, what exactly happened?
At 1:41 p.m. Central Standard Time, the S&P 500 index, which tracks 500 of the biggest US firms, dropped 5 percent in four minutes. The Dow Jones index tumbled along with it, falling more in five minutes than it had in its entire 114-year history. Individual shares plunged, too, creating stock charts that looked like sheer cliff faces. All across the world, from Shanghai to Frankfurt, the financial markets went into panic mode.
Then, the Chicago Mercantile Exchange, a global derivatives marketplace, had its automatic stop-logic function kick in, which stopped all trading for five seconds. When trading resumed, the markets miraculously began to climb again.
But in that 15-minute window, some very strange things had happened. Some shares collapsed to eye-popping levels – iShares Russell 1000 Value Index went from $50 to one ten-thousandth of a cent. On the other hand, shares in the tech giant Apple and the auctioneer Sotheby’s rose to $100,000 per share! The world had been turned upside down for a brief moment.
But these are all just abstract figures. What did this so-called “Flash Crash” actually mean for the people with money at stake? Well, many ordinary people all over the world lost out.
Take Mike McCarthy, an unemployed father of three from South Carolina. He had inherited a small stock portfolio when his mother had died the year before. As he watched the market slump, he panicked, then called up his broker and told her to start selling his holdings. Unfortunately for him, his order was executed just as the market collapsed. This cost him $17,000 – or the equivalent of eight months of his mortgage payment.
How had this sudden crash happened? At that moment, nobody knew.
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What is Flash Crash about?
Flash Crash (2020) tells the story of the “Hound of Hounslow,” Navinder Singh Sarao, a British man accused of triggering the sudden and dramatic stock market crash of 2010. This is a detailed and fast-paced tale of global fraud and quixotic dreams.
Flash Crash Review
Flash Crash (2020) by Liam Vaughan is a captivating account of Navinder Singh Sarao's role in the 2010 stock market crash. Here's why this book is worth reading:
- Through an intense narrative, the book reveals the intricate mechanics of financial markets, making it engaging for both experts and newcomers.
- With its meticulous research and interviews, the book provides a comprehensive understanding of Sarao's actions and their lasting impact on the market.
- By showcasing the human side of Sarao, the book brings a fresh perspective to the story, making it both informative and emotionally compelling.
Who should read Flash Crash?
- Those with an interest in financial fraud and daring swindles
- Fans of gripping investigative journalism
- Anyone who follows global finance
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Flash Crash FAQs
What is the main message of Flash Crash?
The main message of Flash Crash is an exploration of the 2010 stock market crash and the role of algorithmic trading in modern finance.
How long does it take to read Flash Crash?
The reading time for Flash Crash varies, but it typically takes several hours. The Blinkist summary can be read in just 15 minutes.
Is Flash Crash a good book? Is it worth reading?
Flash Crash is a captivating read with its detailed account of a significant event in financial history. It offers valuable insights into the world of algorithmic trading.
Who is the author of Flash Crash?
The author of Flash Crash is Liam Vaughan.
What to read after Flash Crash?
If you're wondering what to read next after Flash Crash, here are some recommendations we suggest:
- What I Learned Losing a Million Dollars by Jim Paul
- The Behavioral Investor by Daniel Crosby
- 12 Rules For Life by Jordan B. Peterson
- Business Adventures by John Brooks
- Super Human by Dave Asprey
- Talking to Strangers by Malcolm Gladwell
- How to Make a Few Billion Dollars by Brad Jacobs
- A Wealth of Common Sense by Ben Carlson
- Rich AF by Vivian Tu
- Don't Overthink It by Anne Bogel