The Big Short
QUESTION: Marty; I am curious what you thought of the Big Short especially since you are the one who got the timing right to the day. In markets, I do not have to tell you that being too early is more dangerous than being too late. Since that fateful day on the floor when the Case-Shiller real estate index peaked and the stock market began to crash, everyone was calling it Armstrong’s Revenge for it began on the day of your ECM. They lucked out on their trades since they were all too early and played a game where the bankers fixed the price rigging the game. So any comment?
ANSWER: The BIG SHORT was financed by Plan B Entertainment Inc., which is owned by Brad Pitt. I thought the film was very accurate in describing what took place. It is questionable to what extent the bankers knew the full implications of what they had done. They knew they will filling the CDOs with garbage. They knew what they sold would collapse in price. I think what they did not comprehend was the extent to which the leverage would implode.
The movie did a fair job of trying to explain complex issues for the average person. But I think it still was over the heads of most. The casino explanation was clever, but short of the mark. Perhaps they should have used the analogy of life insurance. You can take a policy out on yourself. However, anyone else can as well. Your boss may take an insurance policy on you because you have a key role. There can be multiple policies on you but there is only one you.
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