28 May

EPIQ Book Reports

Reading for pleasure is an important endeavor that keeps the mind absorbent, informed, and imaginative. The topics and titles we choose might not be the first, second, or third choice for others, but that is the beauty of books. There are so many of them, and they can take you to so many places.

We recently finished a couple of reads that are worth sharing:

     • Flash Boys by Michael Lewis
     • The Nature of Investing by Katherine Collins



Flash Boys is a widely marketed book that we purchased at an airport bookstore on a recent business trip. It tells how a group of ethical traders (not an oxymoron) risked their careers and reputations to build an electronic stock market exchange that was ... well ... fair.

The national media—and the book's marketing campaign—appealed effectively to the inherent mistrust main-street investors have about "the markets." What stood out to us was the race for speed among the high-frequency trading operations and the front-of-the-line access they were granted to public and private (dark pools) exchanges. Additionally, none of what occurred was (or is) illegal.

The chasm between legal and ethical gets particularly blurred when the speed is measured in nanoseconds. High-frequency traders have made their own rules that are, not surprisingly, one-sided. Any time riskless profit can be made—even if it is only a fraction of a penny—folks will line up to get their free money. We do think that regulations and/or legislation will come forward to curb the most egregious advantages, but high-frequency trading will not disappear. The players are smart, have the right tools, and do provide liquidity to a trading environment that demands it.

At EPIQ we focus on investing – not trading. This brings us to the next book: The Nature of Investing.

On the other end of the spectrum, Katherine Collins takes us through her journey as a professional analyst, portfolio manager, and director of U.S. equity research at industry behemoth Fidelity Management & Research. During her career, she became increasingly concerned about the direction of the "mainstream" within the industry. Notably, she was uncomfortable with its reliance on increasingly complex investment structures and the use of algorithms and mathematical modeling to extract short-term returns at the expense of enduring business models.

To change her lens on life, Collins returned to school and earned a degree from Harvard Divinity School. Using biomimicry, the study of how nature designs and innovates, she takes readers through examples of life forms that successfully evolved over billions of years. In essence, biomimicry examines how nature successfully transforms itself by making the best choices.

Collins shows us how and why it is important to measure portfolio performance using different markers. If people use the principles of biomimicry to identify solid management and long-term stability in businesses, they are likely to find superior, longer-term performances that extend well beyond the financial statements and to society as a whole.

Collins will speak at the EPIQ Clambake on August 21. If you would like an invitation, please let us know at This email address is being protected from spambots. You need JavaScript enabled to view it. .


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