Who watched the Big Short?

[fareastwarriors]

A friend of mine watched the movie.He remarked that the finance is heavily dumbed down in the movie and it strays to far from the story on the book

 

If the finance wasn't heavily dumbed down the movie would have been seen by like 1,000 people. I thought they did a great job of explaining very complicated matters in simplistic terms. The point of the movie was to inform the general public of some things they probably weren't familiar with surrounding the financial collapse in a fun and approachable way, not make a 100% accurate movie that bores the general public to death.

 

 

I watched it yesterday with the gf. She didn't get most of the movie...even as I was trying to explain it to her during the movie. Personally I thought the movie was a bit hard to follow even though I read the book and in general understood the terms they are using and the situation at the time. I also thought it was kind of slow and the characters lacked development. But hey I'm no movie critic.

[OracleofCarolina]

Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming - New York Magazine

https://apple.news/ArENjxdxMSpKlbCPp0EE-mg

[doughishere]

Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming - New York Magazine

https://apple.news/ArENjxdxMSpKlbCPp0EE-mg

 

"Instead, we doubled down on blaming others, and this is long-term tragic. "

 

So much of this...I call people who do this the "participation trophy generation".....you never hear this out of a WW2 guy or such.

[Jurgis]

I posted this on SI, reposting it here too. just some thoughts.  ::)

 

I disagree with him about some things. He might be right that another crisis will happen. If it does, it's likely to be very different from the last one though. Who knows if he'll negotiate the next one well. OTOH, if I had the amount of money he has, I'd hold 50% in cash across 3/4 currencies. Like Buffett says, at that level it's about the preservation of the capital rather than about outperforming. So I'm not sure his investment thoughts are very interesting at this point. Agri business has been doing crappily, water businesses have been doing crappily. If he bought physical farms, he might have done well, but probably worse than SP500. I've looked at food/water plays in the past and so far it hasn't been very attractive. But what do I know... he's a billionaire and I'm a schmuck. ;)

[doughishere]

"The enablers for this crisis were varied, and it starts not with the bank but with decisions by individuals to borrow to finance a better life, and that is one very loaded decision"

 

 

No one talks about the personal responsibility. No one. Think the stripper in the movie.

[wknecht]

Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming - New York Magazine

https://apple.news/ArENjxdxMSpKlbCPp0EE-mg

A really great read. Thanks for posting.

 

I know it's only one small point he makes in the Q&A, so I don't mean to detract from it, but it annoys me when people think we should feel sorry for folks retiring now. I find most people think this way, and I don't currently understand it. If I'm wrong, hopefully someone here can set me straight.

 

[/begin slightly off topic rant]

Didn't the people retiring now live through the golden age of savers in the US? Someone that is 70 now was 25 when the 10Y treasury was 7.3%, 36 when it was over 15%, and 45 when it was 8.8% - a huge time period to sock away money at very high rates with no risk of principal loss. Then you have the massive tailwind of the 10Y falling to 2.25% today (accelerating future earnings via capital gains) - at which point you begin to dissave. And with the quite reasonable prospects that rates will stay low for a very long time while you continue to dissave (i.e., sell at high multiples to interest/earnings).

 

Meanwhile younger folks (who contributed how much to the financial crisis with resulting bailout via low rates?) are saving at very low interest rates, with correspondent low expected returns. Maybe rates will revert to some "mean", but maybe they'll stay here for two decades ala Japan.

 

So while others feel sorry for retirees, I see a huge wealth transfer to retirees. What am I missing? I suppose there are people who started saving late (or speculatively, and lost money), and understandably expect (sarcasm) a bailout given the Fed bailed out the economy and people that should've gone to jail didn't.

[/end slightly off topic rant]

 

[Guest 50centdollars]

Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming - New York Magazine

https://apple.news/ArENjxdxMSpKlbCPp0EE-mg

A really great read. Thanks for posting.

 

I know it's only one small point he makes in the Q&A, so I don't mean to detract from it, but it annoys me when people think we should feel sorry for folks retiring now. I find most people think this way, and I don't currently understand it. If I'm wrong, hopefully someone here can set me straight.

 

[/begin slightly off topic rant]

Didn't the people retiring now live through the golden age of savers in the US? Someone that is 70 now was 25 when the 10Y treasury was 7.3%, 36 when it was over 15%, and 45 when it was 8.8% - a huge time period to sock away money at very high rates with no risk of principal loss. Then you have the massive tailwind of the 10Y falling to 2.25% today (accelerating future earnings via capital gains) - at which point you begin to dissave. And with the quite reasonable prospects that rates will stay low for a very long time while you continue to dissave (i.e., sell at high multiples to interest/earnings).

 

Meanwhile younger folks (who contributed how much to the financial crisis with resulting bailout via low rates?) are saving at very low interest rates, with correspondent low expected returns. Maybe rates will revert to some "mean", but maybe they'll stay here for two decades ala Japan.

 

So while others feel sorry for retirees, I see a huge wealth transfer to retirees. What am I missing? I suppose there are people who started saving late (or speculatively, and lost money), and understandably expect (sarcasm) a bailout given the Fed bailed out the economy and people that should've gone to jail didn't.

[/end slightly off topic rant]

 

 

I agree with Burry on this. People don't take responsibility anymore. They just blame others for their problems when in fact they are the problem.

 

As for retirees, I agree with you, I don't feel sorry for these people because to put it bluntly, they are idiots. Take this retired couple from Canada for example, http://www.cbc.ca/news/business/seniors-going-bankrupt-in-soaring-numbers-1.3129176. The the thrust of the article is that a lot of Canadian retirees are declaring bankruptcy and running out of money. So much for the Socialist State!

 

What is infuriating about the article is that all the things that happened to the spotlighted couple were chalked up to "a run of bad luck" but are actually events that are quite predictable, particularly for older people. The couple, nearing retirement age decided to start their own business.  Most small businesses fail, and starting a business is a very risky venture.  The wife quit her job to work on the business. You can guess what happened.  Things went down the toilet in a hurry.  They sold off their Condo to pay debts, trying to plug leaks in their rowboat by chopping off their fingers.  Always a bad plan.

 

But the most infuriating part of the article was this quote:

"Then, the unthinkable: Vic was diagnosed with dementia and could no longer work."

UNTHINKABLE?  At age 67?  Getting old and sick and dying is some sort of UNTHINKABLE consequence in life?

 

I guess Canadians think we have some sort of fountain of youth up here and we all live forever.

 

These are not UNTHINKABLE events, but PREDICTABLE OUTCOMES for people who live to be over 60.  Yea sure the oldest person in the world is like 114.  Whoops, they died.  Who's the new one - this week?  By the time you reach age 60, your life is mostly over.  You may have 20-26 years or so left, on average.  You should know what to expect. YOU WILL GET SICK AND DIE!

 

Yes it is sad these people are having a shitty end-of-life experience.  But on the other hand, this is not due to a "a run of bad luck" more than it is due to "a run of horrific retirement planning" or actually utter lack of retirement planning.  Their hope, I guess, was that the business would someday make money and everything would turn out OK.  I don't think that is a good plan, for that age.  By age 60, you should be able to retire.  Hell, you should be able to retire by age 55 - because you likely will be tossed out on your ass by then.  Prepare for the inevitable, or the predictable.

 

Sadly, there will be many more of these "Senior Bankruptcy" stories in the paper, before too long. But do I feel sorry for these people? Not a chance!

 

[merkhet]

I mean, I suppose that the flip side is that watching old people slowly starve to death is... not particularly uplifting and/or mildly horrific?

 

I get what you're both saying here, but it's not a repeatable game for these particular folks. You shouldn't incentivize poor decision-making. Totally agree. Perhaps old people slowly starving to death because of bad decisions serves as a helpful reminder to everyone that they should adopt long-range thinking. (Much like how seeing the increasing incidence of Type 2 diabetes in the U.S. has caused obesity rates to plumm... hm. Wait.)

 

I'm not entirely sure what to do about the old people who have made bad decisions in life policy-wise. However, I'm not sure that feeling sorry for your fellow man or woman when you see them struggling is... completely irrational? And/or something to be stomped out?

 

I guess what I'm saying is that you can simultaneously think: (1) wow, you made some poor decisions during your lifetime and (2) wow, I feel some compassion in seeing you struggling at your age.

[Jurgis]

By the time you reach age 60, your life is mostly over.  You may have 20-26 years or so left, on average. 

 

::)  :o  :-X

 

 

Edit: +1 to merkhet.

[Travis Wiedower]

Good post merkhet. Thanks to some psychology-related books I've read in the past year my compassion for strangers has been increasing. It's important to remember that those people led very different lives than you and if you were in their situation you may have done the same thing. If I was born into a poor family with an abusive dad and crappy mom who sent me to a shitty school in the ghetto I sure as hell wouldn't have turned out how I am today. It's also extremely difficult to imagine having a low IQ, but a lot of those people simply can't comprehend and analyze things as easily as the vast majority of people on this board can.

[jay21]

Thought the movie was good, not great. Too populist / anti Wall Street for me. What I love about the financial crisis is the greed and stupidity at every strata of society. Multiple parties were accountable. Im fine with Wall Street taking the brunt of it because they might deserve it. But I prefer a more holistic approach.

 

The bespoke tranche opportunities was a good example of what I mean. Fear mongering that shows Wall Street as unrepentant when IB is actually doing pretty poorly because they cant prop trade, have too much regulations, etc.

[randomep]

 

 

I overall really enjoyed the movie because it stayed true to the book. I feel everything we observe shape our opinions and educate us to some extent. If this movie can teach us anything I think it is that high power people with inflated salaries are clueless, starting with Eddie Greenspan.  My favourate quote in the movie was when Ryan Gossling was grilled about how the CDS market wasn't working out the way they expected: "you have no idea how stupid these people are, do you?". 

 

One might think oh that is obvious. No it is not obvious.  It is not obvious when you hear CoBF members argue that Theranos cannot be a fraud because people in the know have invested $400M.  My counter-argument the same as what Ryan Gossling said. 

 

Jon Stewart of the daily show didn't realize this either when he brought Jim Cramer on his show and said, you guys knew the housing market was going tits up...... smh.....  I wouldn't give Jim Cramer credit knowning anything before it happens.  Anyway, I think it is a great educational movie for the public just on that point. 

 

[JayGatsby]

Interesting interview with Michael Burry: http://nymag.com/daily/intelligencer/2015/12/big-short-genius-says-another-crisis-is-coming.html#

[ScottHall]

The biggest thing that I've gotten out of this thread is that we should all be douchebags to people who don't have the same opinions, outlooks on life, and socioeconomic backgrounds as we do.

[wknecht]

I mean, I suppose that the flip side is that watching old people slowly starve to death is... not particularly uplifting and/or mildly horrific?

 

I get what you're both saying here, but it's not a repeatable game for these particular folks. You shouldn't incentivize poor decision-making. Totally agree. Perhaps old people slowly starving to death because of bad decisions serves as a helpful reminder to everyone that they should adopt long-range thinking. (Much like how seeing the increasing incidence of Type 2 diabetes in the U.S. has caused obesity rates to plumm... hm. Wait.)

 

I'm not entirely sure what to do about the old people who have made bad decisions in life policy-wise. However, I'm not sure that feeling sorry for your fellow man or woman when you see them struggling is... completely irrational? And/or something to be stomped out?

 

I guess what I'm saying is that you can simultaneously think: (1) wow, you made some poor decisions during your lifetime and (2) wow, I feel some compassion in seeing you struggling at your age.

Thanks. I totally agree and of course feel bad for folks that are starving or struggling greatly. Regardless of whether it was due to bad decisions or something they couldn't control (lost job, health situation etc.).

 

Except for my last sarcastic comment, which I can see the other side of, I was thinking of the retiring generation in general - which is usually the context I hear people discuss this issue.

 

The Fed's trying to get the economy going with low interest rates. That is fine from my perspective because this benefits the most number of people. But is not a big picture result that a gap is being filled by savers (full disclosure: I am one), not the retirees (who are dissavers)? People seem to think that it's the retirees (in general) that are filling the gap via low rates. Wah, wah, life's not fair for savers, I get it. I just think the cause and effect should be understood.

[randomep]

I mean, I suppose that the flip side is that watching old people slowly starve to death is... not particularly uplifting and/or mildly horrific?

 

I get what you're both saying here, but it's not a repeatable game for these particular folks. You shouldn't incentivize poor decision-making. Totally agree. Perhaps old people slowly starving to death because of bad decisions serves as a helpful reminder to everyone that they should adopt long-range thinking. (Much like how seeing the increasing incidence of Type 2 diabetes in the U.S. has caused obesity rates to plumm... hm. Wait.)

 

I'm not entirely sure what to do about the old people who have made bad decisions in life policy-wise. However, I'm not sure that feeling sorry for your fellow man or woman when you see them struggling is... completely irrational? And/or something to be stomped out?

 

I guess what I'm saying is that you can simultaneously think: (1) wow, you made some poor decisions during your lifetime and (2) wow, I feel some compassion in seeing you struggling at your age.

Thanks. I totally agree and of course feel bad for folks that are starving or struggling greatly. Regardless of whether it was due to bad decisions or something they couldn't control (lost job, health situation etc.).

 

Except for my last sarcastic comment, which I can see the other side of, I was thinking of the retiring generation in general - which is usually the context I hear people discuss this issue.

 

 

 

Yes, at the risk of digressing too much. This is a constant battle for all society. We always struggle with the tradeoff. Do we let everyone go free for all within the confines of some law framework.  In that case the rich will prey on the poor.  Examples are, payday loans, borderline fraudulant investments, pyradmid schemes.  If you let less knowledgable, less capabile people control their financial destiny then you have the stripper-with-5-houses problem from the big short.  If we regulate and restrict these mechanisms then there is less feedback and its like rewarding bad behaviour.  The bad consequence shows up everywhere also, the biggest example now is Greece. 

 

 

That's one reason I believe there is always money to be made in the market, especially for small players, because we can provide feedback to less sophisticated investors.

 

 

[dekano90]

I guess Joel Greenblatt will not be too happy with how he was portrayed in the movie.. I wonder who`s right: did Burry sidepocket the corporate CDS positions or not? See attached arguments from both sides.

 

[clayroad]

I guess Joel Greenblatt will not be too happy with how he was portrayed in the movie.. I wonder who`s right: did Burry sidepocket the corporate CDS positions or not? See attached arguments from both sides.

 

In your attached argument, Greenblatt says "Mike sold some of his corporate CDSs a few weeks later to meet the redemptions and did not side-pocket the remaining corporate CDS portfolio." Seems like they both agree that corporate CDSs were not side-pocketed.

 

[eclecticvalue]

Was Joel in the movie? Because the old guy didn't seem to look like Joel at all nor was his name Joel.

[dekano90]

I guess Joel Greenblatt will not be too happy with how he was portrayed in the movie.. I wonder who`s right: did Burry sidepocket the corporate CDS positions or not? See attached arguments from both sides.

 

In your attached argument, Greenblatt says "Mike sold some of his corporate CDSs a few weeks later to meet the redemptions and did not side-pocket the remaining corporate CDS portfolio." Seems like they both agree that corporate CDSs were not side-pocketed.

 

I.e. he was portrayed wrong by Lewis.

 

"Greenblatt was a little annoyed by the question: “Michael Lewis has never let the facts get in a way of a good story."

[dekano90]

Was Joel in the movie? Because the old guy didn't seem to look like Joel at all nor was his name Joel.

 

Burry was the only one who agreed to use his own name I guess.

[randomep]

Was Joel in the movie? Because the old guy didn't seem to look like Joel at all nor was his name Joel.

 

Well that's what I didn't like about the movie, they changed the name of all the folks in the movie. The only person with their real name is Michael Burry.

 

Eisman was renamed Baum

Lipperman was renamed Vennett (played by Gossling)

Jamie Mai was renamed Jamie Shipley

and ya the guy who was Greenblatt didnt' use the name Greenblatt, but he had the memorable line in the scene: "give me my money back you fucking sob!"... testy testy

 

 

[doughishere]

The clothes that Christian Bale wears in the movie are actually Michael Burry clothes.

[LongTermView]

I liked the movie.

[Jurgis]

I watched the movie today. I thought it was great. My wife liked it a lot too.

 

So Lewis says that after "Liar's Poker" he was inundated by letters of young people asking how to make it in Wall Street.

I wonder if after "Big Short", there is a similar wave of "what can I short to make $Billions".

 

Edit: Also reading the Canadian RE thread, I wonder how much of Burry's & co success was luck. The US housing market looking back was not horribly overvalued - or at least no more so than a bunch of other markets that have not crashed for longer. The music could have played couple years more - and most of the shorts would have gone bust, especially the ones who had to pay fees and/or put collateral.