Investment Analyst Explains: The Big Short
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- čas přidán 17. 08. 2023
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This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).
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What if I like the risk?
The claim that VPNs provide any meaningful cybersecurity benefit is misleading marketing nowadays. The vast majority of internet traffic, including everything remotely security sensitive, goes through encrypted channels (HTTPS, TLS) anyway, so an attack on the connection doesn't expose or compromise any of the data. The only advantage of using a VPN nowadays is hiding what websites you visit, or to circumvent IP-based geographical restrictions, by tunneling through a different country. I wish people understood that VPN does almost nothing to protect against data breaches, and VPN providers are just taking advantage of their uninformedness through fearmongering.
@@placeholderdoe Go buy HE!
Bro you should have made a short about this.
Thank you Hans for such nice movie review
As a cybersecurity professional, I gotta say that a lot of the claims that are made about the added layer of protection that a VPN offers are overblown. They don't protect against malware, phishing, ransomware, most data leaks, and they aren't a perfect protection against tracking since a lot of that is done through cookies or browser fingerprinting. The protection they do offer is that they add a layer of encryption, but since most internet traffic is encrypted already nowadays, that too is of limited value. I agree that joining a shady wifi network is probably a bad idea without a VPN, but my solution to that would be to use the hotspot on my phone. That's always safer.
Sorry to bust your sponsor's balls, Richard, I don't mean you harm. Love your channel and all, just thought I'd share some of my professional expertise.
Maybe we might just be living in a VPN bubble and you are the Jared Venett of this story and I am Mark Baum who randomly found this out. So how do we short VPNs now anyways?
i think they know we just use them to acsess content in different areas and bypass network restrictions but thats a bad look for nord lol
its still useful for hiding what websites you visit from your isp
What about changing locations?
@@shaunsensei6948 how about a VPN squared? A VPN of a VPN. Maybe even a synthetic VPN
Using credit default swaps to make money off of the housing market crashing sounds an awful lot like taking out a life insurance policy on a dying man that nobody realizes is sick in order to get a big payout when the man does indeed croak.
That is in effect what it is. Brad Pitt's character even emphasizes exactly that immoral aspect in one scene where he points out that even though anyone betting against the housing market stand to make a lot of money, that it isn't exactly something to be proud or happy about.
To quote the character; *"For every 1% rise in unemployment, 40.000 people die."* - (Do keep in mind that there seem to be no proof to this statistical claim)
In the movie Ryan Gosling's character says he's selling fire insurance on a building that is on fire.
It is pretty much the same thing
Yes, that is indeed the premise of this movie.
Isn’t it funny how the movie tries to portray these guys as some sort of heroes? The reality is that they all seek the same thing: profit
This was long due!
it was a Big Due
More like SHORT due
This was long, dude.
8 years by my count.
He couldn't release it earlier, had to hold it to maturity.
Almost 10 yrs after that movie came out i found that sea food stew analogy not only apt for the said situation but also very useful explanations of most things in life 😂😂😂😂
Yeap. Its the simple things...
I mean, as a chef and someone who holds Anthony Bourdain with high regards, I think I can speak for most restaurants about serving customers ‘fish stew’ that we do it naturally 😂
I watch this movie every year. It's so epic. I work in the industry and I'll tell you now, absolutely nothing has changed.
facts. i worked at BoA 2yrs after the collapse. The execs of Countrywide went on to found PennyMac. none were ever punished. They must likely got their multi million payout upon departure. The American people got screwed so badly. they have no idea how much money was wasted
ikr
greed is good
thats kinda scary
You're 100% correct on how it hasn't changed one bit. We are ready for another one soon.
Next one should be the movie Too Big to Fail. HBO had a decent cast and follows the book by Andrew Ross Sorkin surprisingly well.
nobody seem to realize that the scariest line of the movie is at the end, when it says that Michal Burry is focused now on only one commodity: water.
“They weren't being stupid, they just didn't care.” was more eye opening
One of my top favourite films and really appreciate you providing this additional explanatory video. It helps me to understand the film and its message more!
My absolute favorite movie about this era in financial history. Once again you have done a masterful job of explaining the sometimes arcane, but always interesting, story and details of these very complicated financial instruments. Thanks for this excellent run down! Keep up the great work. Your channel, along with Patrick Boyle's, is THE ABSOLUTE BEST!
That cut to "theres a bubble" fuckin killed me 😂😂😂😂
You consistently have fantastic and interesting content. Thank you!
CZcams recommended “Enron: The Smartest Guys in the Room” with this video. It’s a documentary, but I’d like to see you do a video on Enron for guys like me who were too young to really understand what happened back then.
Enron scandal was basically an accounting scam involving the top guys at the company to inflate Enron's revenue, profit, and share price.
They took advantage of an accounting practice called "mark-to-market” that allowed the company to book unrealized future gains from some trading contracts into current income statements, thus giving the illusion of higher current profits. They also hide loses by transferring them out of Enron books and into the books of these specially created corporate vehicles.
Essentially, it's an accounting scam that went on for years because the outside auditor, which was one of the biggest accounting firms in the world at that time, were compliant fools.
Enron's story is somewhat more boring because it was really just fraud at a massive scale.
Love the Plain Bagel, plain explations of complex stuff. Well done! You should have 7 million subscribers!
I like that you got technical with the explanations. keep up the good work
Thanks for doing this. There were definitely some questions I still had after watching the movie and this helped a lot!
I thought I saw you do a video on Big Short a while ago, so I checked and it turns out it has been three years already! Damn, time flies! Never got tired of your content, I love it.
Love these technical deep dives! do more!!
Happy channel birthday, Plain Bagel! Big fan of your work here on CZcams and your capacity to solidly staying put in the no-BS lane! 🎉 l do really, really appreciate it.
I remember when I was buying my house one of the options I had was to use an adjustable rate interest only loan. My mortgage guy explained how it worked. automatically I came a parent to me that this was unsustainable. Last time went on a few years later I asked him how to short the market and he wasn't sure. Either way I don't have that kind of money. I could never have done that. The only good thing was I took a conventional loan and I bought a house so I could afford.
Barbie and Ken left the barbie world to go be financial advisers during the 2008 crisis
Will need to re-watch this video 3 times to dive deep but as usual, immense content! Thanks from Italy!
i watched the other CZcams before this - and it helped allot in understanding this one - thank you for sharing that info !!! what a great channel - thank you !!
I loooooved this video a lot. Mainly cause it’s one of my favourite movies 😂 but I loved your perspective on it due to your professional background. More please!!
What an incredible coincidence that I literally finished watching The Big Short on Prime, and then see YT notification from our Bagel over the same. Ha!
Thank you, even as someone who understood the housing crisis, you still helped me pick up details and things I missed during the movie. Thank you!
A more accounting related movie but “Smartest Guys in the Room” is for sure one that should be reviewed!
This was very helpful. Thank you and congratulations Richard 🎉❤
For real watched this movie again yesterday!
And now you are talking about it…
Awesome timing man
It's not timing bro
spite is perhaps the single greatest motivator of all human action.
Commenting mostly to improve engagement, I think it's silly to have your previous video demonetized. Always love your work Richard!
So glad I found your channel! I learned a lot from your engaging explanation here- even though I saw the movie. Can’t wait to dive into more of your content
Spite uploads are the best type of video essays 😂
You are doing a great work putting this out
The thumbnail is just art lol
Soneone said that Credit Default Swaps are kinda like taking out a life insurance on a sick man. And that it's kinda rough.
But the difference here is that this man is being given a metric ton of food-coupons by the market. But you are the only one seeing that the coupons are for McDonald's exclusively.
You know this man will die, so you will profit of it. The Brad Pitt scene "Just don't fkn dance" is a reminder not to be happy about that money because a man will actually die!
This is one of the best movies that doesn’t require guns and explosions to capture the audience’s attention.
Appreciate the content on this channel. Would it be possible for you to make an educational video highlighting some pros and cons of investing in a dividend ETF vs index fund? Would be interesting to hear your two cents on the topic.
Probably no big news to most here... But one more addendum: In the end the movie also states that Michael Burry is only investing in water now. Michael Burry is very much still doing long and short bets on the stock market.
Maybe it was a joke? XD
Maybe it was /partially/ true at the time? I mean now his SEC filings show lots of energy companies so definitely not true atm.
some people, I don't know cut out audio while using music, it gives the music a new life, thanks for the edit, truly one of the best, I ever watched
I appreciate this breakdown. Thank you
Hey richard make a video on recent news of michael burry shorting US market
US market is probably overvalued but where else are you going to put your money? Real estate just got a lot more expensive to own. Starting a business is a lot of work and labor costs are high. If population trends continue I don't doubt that S&P 500 P/E average could drop back down from it's 25 to 1 to 15 to 1 or so but I'd suspect that'll take decades to happen.
I saw this movie while researching information about 401ks when I started my current job almost 5 years ago: how much to put in, how much to diversify, how big a match, the pros and cons, and somehow this film ends up on a recommendation on youtube.
I watch the film and my jaw hit the floor. Not only was it pretty informative, as well as being a movie that starts as a comedy, turns into a drama, and ends as a horror movie, but it made me read the book it's based on written by Michael Lewis.
Since then, Ive always recommended people to watch the movie and read the book to understand what is going on now and how to best prepare their finances for an inevitable drop or crash.
Thanks for putting your thoughts on this film and better explaining some of the stuff that wasn't fully explained.
Even my cousin, who is a financial advisor, i remember speaking to him about how i have my 401k invested and such and he was very impressive at my knowledge of it and i said i saw and read The Big Short and then follow-up on reading Millionaire Next Door and The Intelligent Investor and he felt everything I was doing was perfect and to keep it up.
How do I know what to do with my 401k
@@poisonpotato1 , spend the money on a reputable fiduciary financial advisor, note that I used the word fiduciary, to guide you. It will be worth the investment.
Great video. Thank you very much for your informative and entertaining content.
Breathtakingly elegant analysis/dissection🎞👏🏿
I was kind of surprised that Kyle Bass wasn't talked about in the film despite being one of the most profitable short sellers against the sub prime mortgage crisis
I love that you waited for it to be free on CZcams to make a review video.
Bro this was an amazing video. Good job.
This was a pretty complex and dense video. I had to pause and rewind your explanation multiple times to understand. As a test I urge everyone to reformulate in your own words all that the Plain Bagel explained in this video including just as an example how the synthetic CDO works where the money comes from and goes too and why.
So, if the CDS are basically like insurance contracts (or sideline bets) for the MBS, then the synthetic CDOs are like insurance contracts/sideline bets for the CDOs? Which are pools of the worst rated mortgages?
Did I get it right?
"I'm jacked! I'm jacked to the tits!!!!!!!" - Ryan Gosling, Noah Calhoun, The Driver, Jared Vennett, Officer K, Ken, Literally Me
It's literally me buying FDs on margin
thank you, finally an explanation of the "carry"
20:49 steve carell’s face is my favorite reaction ever
You took one of your good videos and made it even better! Kudos
I’ve needed this! I just watched the big short a few days ago
This was a great explaination . I had just watched this video 3-4 days ago , It's one of the best financial movies ever,
"out of spite" Ya know what, best reason ever.....
The thing that I'm surprised about is that the banks didn't get in trouble for is improperly marking the swaps. I guess that's the risk you run when you're in an illiquid market, but surprised it wasn't illegal activity.
It is very common for the banks to be the ones deciding the value of the underlying. They justify it by the fact that the desk running derivatives is completely independent from the traders that do the marking but everybody knows they are not. Leverage longs are even more brutal on the markings
well seeing as how they pretty much own congress, they knew any wrong doing wouldn’t have consequences and the taxpayers would bail them out.
They pretty much all got away with their shady stuff. I do think the ratings agency deserve an even worse fate, it is a given that banks try to make their products look good, but the agencies should be able to see when you give them a polished turd instead of a good product.
Pretty much all the higher up guys deserve to be in prison for their whole life for this but they got away with it. Madoff is a saint compared to them.
@@MoonShineKidBaby I don't think they could have known they would have gotten a bailout since it came from Treasury making the recommendation. I just think the individuals in the firms didn't care what would happen because they all got rich in the process.
It was an issue of misaligned incentives with the individual employees versus the organization.
Love the thumbnails for this series
love that you finally reviewed my comfort film
I actually just watched this for the first time a few weeks ago since it was free on CZcams, which is surprising to me since I have an Econ degree, work in Finance (healthcare, not investments but still) and enthuse in the policy and market responses that preceded and came as a result of the Great Recession.
Great analysis
great explanation on everything thank you
Love your explanation!
Good coverage, congratulations on turning six!
Thank you! and the technical part is what made it good!
Love your channel! I am learning so much, and even when it’s topics I understand very well, I massively enjoy your neutral and comprehensive analysis of things.
Cheers from Israel 🇮🇱 😊
Great explanation
I didn’t understand the film when I watched it but you’ve explained it all really well.
Fun facts: The Big Short is on Bulgarian Netflix, but a cutout version, which is why I consider buying a VPN. Another fun fact is that I can't find my previous comment that said the same thing, because I described the scene that was missing - the one where Mike Baum and Co. meet with the young brokers and the lady with the five properties, and I mentioned her occupation. Is CZcams censoring things now?
Anyways, I wanted to also mention that since there are literally zero good contemporary films on Bulgarian Netflix, Big Short is indeed an undervalued film. If it was valued, it wouldn't have been on our Netflix 😁
Rogue Trader please
It's April 27 2024 and I just saw this video and its GOLD. I went to a private prescreening of TBS (The Big Short) and I remember walking out looking like I'd seen ghost only to be interviewed on the way out. I actually invited a few clients to screen with with me who was in the banking industry. I am in the financial services industry so it was a good watch for me. This movie does a great job showcasing what goes on in the world of Big Finance.
Another good watch is The Inside Job, it's more of a documentary style but it's on this level. It follows some of the big players who allowed all this to happen including our government!
My favorite thing to point out about subprime mortgage was that "subprime" referred to the borrower being subprime haha .. which is in a roundabout way pretty accurate haha
Really glad helped me understand many scenarios in a much depth which I knew little about while watching the movie and helped in getting more clarity.
Love this explanation! This is my favorite movie of all time. To those who love this movie, I recommend the following movies. Watching them is like seeing the 2007 crash from different perspectives:
(1) Too Big To Fail
(2) Inside Job
(3) Margin Call
you miss this: THE BIG SHORT.
Thanks! Great job! I'm impressed!
hi, i like Plain Bagel, i suscribed. The analytics are just secondary. Thank you.
Long overdue, but very much appreciated.
I think its probably useful to explain the basic mechanism of how to short a stock instead of simply saying you bet against it
Also in Michael Lewis book it also explained thar DB was only the middle charging fees for sellinf credit default swap
The institute that underwrote them was AIG (which IMO was a massive part thet thr film left out)
Great timing it just got put on Netflix
Thank you for this video 😊
Just want to say - thumbnail? Top tier!
I would love something like this but more technical with math equation and graphs
Cracking film, I wondered how accurate it really was, I guess im about to find out...
Excellent reviews and explanation on the concept, you have no idea how much time you have saved me explaining the movie and the entire idea of what happened in the debacle to the youth and the otherwise uninformed or mal informed individuals I run into about this subject.
Since this movie hit Netflix, I watched it 3 times and always discover something new. Thank you for this video!
Thanks for the video. Learned something. Any suggestions for other useful financial channels like yours?
Nice one, thanks Richard.
So, what of the future?
Do you think we will experience anything dramatic like the GFC anytime soon?
Do we think it was really a wrong number... or a well disguised cold call?
also the prospectus was likely left on the table as bait for somebody. An cornwall cap bit. More brilliant marketing.
Well done explanative review!
I'm pretty sure they stop right in the middle of that particular scene to say it didn't actually happen that way. They did not just happen to find the prospectus randomly sitting on a coffee table in the lobby.
one of my favorite films of all time covered by my favorite "finance" (?) youtuber
I’ve just finishing watching this movie 🎥
Excellent outline of The Big Short
One of the mortgage guys was in that other finance film... Margin Call
I love that movie, thanks for the explainer!
Been waiting for this one yessss
The thumbnail of this video goes hard!
Let me ask you something. Those B through BBB are they intrinsically bad investments or the problem is that they were used as if they were rock solid as a safety net investment? Because the impression I had was that the problem wasn't that they were risky, but that they were mislabeled as prime derivatives and people had huge exposition to it.
Also, the problem seemed to be that just because you had a diverse group of junk derivatives they were safe because they were not expected to fail altogether. Problem is they started to be dominant in those funds and not backed by real AAA derivatives.
Moral of the story to me is that when funds are investing derivatives too complex they loose transparancy and it is easy to a biased analysis and be too optimistic about their risk when the funds really shouldn't. Not to mention all the synthetic CDO's that had a much larger marketshare than the actual things they were derived from.
Question is, how would investors have all that information? Can they even have access to it? They should be able to at least know how much of actual assets are backing their investment, that is not all just based on faith and wishful thinking.
Really really helpful for understanding everything. With all the financial terms its very hard understanding exactly how and why things are happening.
Would love to see your take on Rogue Trader (probably my favorite finance movie)
Great video. Congrats and thanks!
Excellent explanation!!