A number of movies have been made on the Wall Street and the Global Financial Crisis of 2008 but none is better than ‘The Big Short’. Michael Lewis’ Big Short, the non-fiction book on which the film is based came out in 2010. Lewis is one of those authors who can explain complicated finance in an extremely creative and interesting way.
What is the movie about?
The movie focuses on three hedge funds that made the right trade at the right time to capture huge profits as the entire banking system collapsed in 2007-08. They recognized that the U.S. housing market of the early 21st century was practically an asset bubble inflated by high-risk loans.
The collapse ultimately happened since banks were callously giving mortgages to people without actually checking their background and if they could afford them. In the movie, a representative of S&P explains that these home loans were given AAA ratings because “we’re a business and we have to make money.”
In the film, a hedge fund manager, Michael Burry created a credit default swap that would allow him to short the housing market. However, no one believed him since everyone was under the impression that the housing market can never crash.
Learning from the movie
One of the very important learning from this crisis was to do your own research before investing anywhere and not rely on professionals since, in 2004 and 2005, everyone was making crazy money as the mortgage market expanded particularly in the Wall Street. It is very shocking that no one actually saw this bubble bursting. Economist Andreas Fuster quoted novelist Upton Sinclair to explain this humanistic problem:
“It is difficult to get a man to understand something when his salary depends on his not understanding it.”
The crisis was felt by everyone around the world, some even lost homes, jobs, and their families while some took their own lives. It was so severe that some economists believe that it is still affecting us in some way or the other.
Who should watch this movie?
The answer is anyone and everyone who values money! No matter whether you understand the stock market or you don’t, you should watch it if you value money. The movie is so well directed and written that it explains all the financial jargon in a comic way. So here is your weekend-boredom-buster guys. Go watch it!