Don't Short The Big Short. This Film Is A Master Class in How Top Traders Work.
By Malcolm Stacey | Saturday 9 April 2016
Hello Share Swishers. Unlike most other share shifters I know, I’ve never seen Wall Street, the Michael Douglas film. Nor the Wolf of Wall Street. The reason is that I usually found films like this are dummed down and thus not as interesting for people who know a bit about investments. But my son dragged me to see The Big Short. And,boy, was I glad he did!.
There are so many lessons to be learned here about how the big dealers and the investment bankers ply their trade. It should also be said that the film is a huge warning on how ordinary people can be exploited by some people in the big city.
The action took place in the Big Apple, but I can imagine it happening here, too. And it made you realise how common are those people that Uncle Tom and his team of investigators turn over all the time.
In The Big Short, the people making the big money, played by Christian Bale, Ryan Gosling and Brad Pitt, are all shorters. And their prey is the sub-prime mortgage purveyors that caused the credit crunch of 2008, If you are anything like me, you will still not have fully recovered from that nightmare year.
The Big Short tells you what happened in fine details. Unlike most stock market dramas, the script does not balk at the minute intricacies of how money is made in Wall Street. It’s very technical stuff - and it cunningly gets is across by having beautiful celebrities tell the audience how the different financial instruments work - in one case from her bubble bath.
Like me, you probably have your heart in my mouth when making a big trade. But this film shows traders making snap decisions involving hundred of millions, if not billions. They hang on, too, when all else seems to be crashing around them .
For example, they short the housing market. And yet when the prime mortgage bubble bursts, housing bonds do not go down in price. They are held at a high level by banksters. So the shorts do not pay - at first.
The shorters are also hit when the banks they bet against face bankruptcy, thereby not paying up on the shorts.
You also see two rather dozy blokes, old enough to be my grandchildren, who turned a small sum into $40 million from a laptop in their garage. So it can be done, gang.
I found this masterpiece educational and uplifting. Uplifting because it showed how investors can beat the system big time. And it demonstrated just how courageously cool we all are by investing in the markets at all. Because if you didn’t believe it was a jungle out there - you will after seeing The Big Short.
Everyone is discussing this marvellous entertainment in the Punter’s Return. God bless.
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