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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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  1. David Russell

    We went for a meal a couple of months ago and one of the people was a 51 year old financial adviser. He has been in the game all is working life and gets paid well over a 100k a year from some type of commissions even if he does not go to work. He lives in a massive house and also as property abroad. Last year he made over £500k from giving financial advise. The best is that people have paid him to make them money and even if he gets it wrong and lose the lot he still makes money from fee’s. He does loads of work for my friends getting them buy to let mortgages and also some pension stuff and business loans but he charges loads. I stack shelves in a supermarket but I would rather use the internet for any financial information or products and told him but the 51 year old IFA said to me that is why you still stack shelves. lol.:). I should become a IFA then.:)

  2. One of the messages of the film, David, was not to let money get in the way of enjoying the things you like doing. All the characters in the film, though making millions, were a sad and stressed lot. I would keep your job which you obviously enjoy. Rocking on.

  3. David Russell

    My son works in wealth and said the same it is stressful but you cannot say targets anymore but the money is great unlike stacking shelves.:) The people who make the real money have no stress only finding out the best ways to hide it.These am the people win or lose they still make the cash.These am the real market makers of wealth. No investment,No risk only profit. My mates IFA makes a fortune and cares very little about interest rates and the markets because what ever happens he sells them another product. Not watched the film yet Malc but will take a look.Great article as always.Good luck and Rock on. lol.:)

  4. J P Spaghetti

    DR – I fair few years ago I once worked briefly for a financial planner. Not an adviser, but a planner – apparently the latter takes a more holistic approach. I was just a general dogsbody and didn’t learn much about the investing world. However, I was stuck by how many physically attractive females were to be seen with loaded ugly blokes. And not just ugly ones but – following on from Malcolm’s point – miserable ones at that. Despite both the wonga and the attractive females (you’d think they’d hang loose and party). Hardly revelatory, of course, but still quite unedifying when witnessed. And this was many years after the suffragettes got bolshy. Makes me want to take up angling. Actually, I wonder if there’s are any potential profit to be had in purveyors of piscine paraphernalia…

  5. B Sanderson

    In fine details? hardly especially as the film itself although highlighted aspects of how the events occurred they were dumbed down and not truly a reflection of what happened.

    It allowed people who did not undertand how the shorting of the housing marketed happened to get a Hollywood dumb down version of events loosely based on real people. The scenes at for example the investment banks were a joke in itself but I guess that’s what sells.

  6. Drunken Sailor

    Great film, obviously dumbed down in some areas and sensationalised in others to make it entertaining and understandable for the masses. The best bit was the very end with the spoof “the banksters all went to jail” then the truth that they did not: only one person did and he was probably one of the least guilty and then the shocking truth that they are up to exactly the same thing again, but are calling it something different.

    What was also good was seeing how those who spotted the fraud were ignored and vilified by the establishment because there was too much vested interest in ignoring blatant fraud. The lesson is time is what really exposes fraud and like the shorters in the film SP needs to hold its nerve, ignore the pizza boy and Rivington jibes and just carry on protecting those who are prepared to open their minds to reality. The other lesson to learn is shorting is a really tough game. SP was 100% right on QPP, but SGH still did the deal. Time will tell on IternetQ, but tosser fund has already bought it and taken it out of public view. Being right and making money are not synonymous.

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