Friday, October 20, 2017

Friday Feature Movie Review: The Big Short by Michael Lewis マネー ・ ショート マイケル・ルイス

The Big Short is surprisingly entertaining as a movie, and is over before you know it, despite 130 minutes in length. Based on a true story, this documentary style movie is a great way to review what really happened around 2008. It brings a true view to the build up before Lehman Brothers collapsed, and who within financial markets, knew there were warning signs very early in the process. It was one of the biggest trades ever, and shines a wonderful light on some of the winners from this period. The most interesting takeaway I found was the emotions of each character, and what they had to go through. The total lack of support in any negative vision. Most people did not want to hear the bad news. They wanted the positive false hopes to continue, even in the face of hard facts showing another negative wave to come.

It must be understood that nobody knew how big the collapse would have been, or what the final housing defaults were actually going to be before the pop. As Ryan Gosling, who plays Jared Vennett, says in one scene, a key Deutsche Bank trader for Credit Default Swaps, it was a tough time. He was known as "Chicken Little" who thought the sky would fall on the US housing market. He was laughed at inside the firm, and not considered a realististic player on Wall Street. The honest truth hurts most when it is not popular.

Christian Bale plays Michael Burry, the founder of Scion Capital. It was he who had the idea to short the US housing market, and asked Wall Street to help. He plays a very off beat character very realistically, especially his social inability to communicate with people normally. A trader who really needed his odd personality to believe in himself, and his clear vision, when many others felt he was very wrong and possibly mentally ill.

Steve Carell plays the founder of FrontPoint, Mark Baum, who has his own demons emotionally, yet still contains his drive towards a hugely profitable CDO trading opportunity. It is ultimately discovered from a wrong number phone call, that leads to over US$1BN+ dollars in profit for his hedge fund firm and US$200M+ in personal bonus wealth. There is nothing funny about this part, in fact painful is a better description of his portrayal on screen. He really pulls it off well in a great performance.

Last but not least is Brad Pitt, who plays a former JPMorgan trader Ben Rickert. He worked in both New York & Singapore, yet retires in Colorado. He has lost his confidence in the financial system years before the crisis, but finds his way into the heart of it again. All this only due to a chance meeting while walking his dog. He becomes friendly with 2 amazing hedge fund founders at Brownstown Capital, Charlie Geller & Jamie Shipley, who turn US$100K of savings into US$30M well before the crisis, and a lot more afterwards. 

All of the characters are very real, and very much in your face. Nobody is trying to be anything they are not. They are all in many ways, a cast of human oddities who get a chance to see the world crash well before the event, and benefit from it enormously. This is a drama with comedic moments, but do not assume every man on the street will follow it easily. They take a very dry subject and make it entertaining, but a financial background would certainly help to follow the plot. 

The Top 3 Takeaways from this book that really impact any reader are:

1) There is no limit to being too careful with your beliefs on investment opportunities. Ethics and counter trends are a true test of any financial firm long term.

2) Reputation can be a weapon, but can also be a weakness. Conviction in any single trade needs to be rock solid the more radical is seems to others in the same market.

3) The long history and legacy of original thinkers making a fortune. George Soros, is one of many examples of top-tier risk takers seeing a chance and going "all in".

I must add though, that unlike the tech boom and bust of 2001, more people felt the pain from the many lost homes. They do not really enjoy being right as they know that it only can mean that millions of people will then suffer as a result. It was a sobering thought, but still a great movie to enjoy. It is the details of these characters that make the movie. The bigger picture is assumed, and does not take away any enjoyment from this film. Highly recommended, but more appealing for those in finance!

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