Financial wisdom from the Big Short!

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Hate the idea of breaking down the stock market, money, investment and all the complex links in between? Watch the Big Short. It’s entertaining, crisp, and sort of an investment guide except it’s got a dazzling array of stars in it to help you stay on track. Yep, Christian Bale as the oddball financial genius, Brad Pitt as a grizzled banker and Steve Carrell as a potty-mouthed fund manager to name a few.

Financial advice from the big short

Beware of the herds!

Hoards of folks rushing in to cash in on property didn’t necessarily make it a wise investment. For crying out loud, there’s a scene wherein the fund manager’s team knock on a mortgaged house and find out the mortgage is in the owner’s dog’s name.

The so-called experts could be wrong

Most folks don’t do their own research—me included—there’s a scene where Christian Bale’s boss calls him out for being a fool quoting Wall Street biggies- do you mean they’re wrong and you’re right?
Well he was right to the tune of $2.69 billion so yeah it’s possible. Expert advice can be a yardstick you use, feeding off their wisdom, but ultimately you need to be able to distinguish the wood from the trees yourself. Easier said than done, but yeah, educating yourself and doing your groundwork is unavoidable.

Don’t blindly put your faith in ‘ratings’

One of the subtle jabs at ratings agencies I loved in the movie, was the lady at one of the premier ratings agency wearing dark glasses—the kind you wear after a cataract operation—squealing – I’m blind, I can’t see! She spoke the truth sadly not just on a personal level but also on her firm’s.

She went on to explain how the ratings agency needed to give certain ratings because of competition and she said another larger-than-life true statement—I have a boss too you know!

In short, even ratings agency may not always be in a position to be impartial. They too have ‘bosses’, are fighting off the competition and are under pressure to rate in a certain way or risk it all.

Big money don’t come easy

Yes Christian Bale’s character made tons of money. But at what cost? He suffered through two years? of flak from his investors for his tactics, everyone deserted him—his own secretary was shown working in a supermarket supposedly thinking that was a better bet than working for him—and he had to live with the knowledge that he’d made honcho’s rich while the economy crashed.

How many of us I wonder have the stones to pull off:
1. Going against the flow
2. Withstanding constant pressure to withdraw and cut losses before potentially losing it all
3. Being laughed at and still holding to your conviction—yes literally big investment bank employees were rolling on the floor laughing when Christian Bale’s character left their conference room after putting his proposition forward.

Seeing the end result when he clocked $2.69 billion makes it look relatively easy, but don’t be fooled there were quite a few low points—more if anything than the highs.

That’s it folks- my two penny on the movie. Watch it if you can. It’s teeming with financial goodies for rookie investors. Also, uhm did I mention Brad Pitt’s in it?

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