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Principles of Finance: Unit 2, The Big Short 6 Views
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Description:
Missed the movie The Big Short? After watching this video, you'll feel as if you've seen it. (But... you should still see it anyway.)
Transcript
- 00:00
principles of finance a la shmoop the big short wait the big short like
- 00:07
the movie the one with Steve Carell and Christian Bale and that guy from lala [movie actors in a line]
- 00:11
land yeah that's the one well we're gonna
- 00:14
give you the quick and dirty plot summary why well because as outlandish [man drinks champagne in bathtub]
- 00:17
as the story may seem all this really happened I'm gonna be summarizing from
Full Transcript
- 00:23
this bathtub a la Margot Robbie in the movie a because like why not and be
- 00:28
because while I really need to exfoliate anyway okay so basically the big short [man exfoliates leg in bathtub]
- 00:32
focuses on the investor who predicted the collapse of the housing bubble in
- 00:36
2008 and he bet the ranch almost literally that the markets would [Christian Bale holding balloon]
- 00:40
collapse he recognized that overly easy terms had been given to too many
- 00:45
borrowers and that the market was poised for a massive correction to reflect the
- 00:50
inability to pay of oh so many marginal borrowers yeah big bubble yeah kind of
- 00:55
like that one by deeply analyzing the data and zeroing in on the ignorance and [stock market data]
- 01:00
a quasi corruption of the players responsible for this financial crisis
- 01:04
this hedge fund manager Michael burry who looks a little bit like Batman there [man working at computer in the dark]
- 01:09
yeah realizes that a collapse is imminent and decides to warn everyone
- 01:13
shouting from the rooftops that the economy is in major trouble and that
- 01:17
people should sell and get out just kidding he totally does the opposite he
- 01:21
quietly on his own figures out how to take best advantage of that situation
- 01:25
for himself and his shareholders well that's what they hired him to do anyway
- 01:29
right okay well how does he do this well he invests in a credit default swap and [writing on white board]
- 01:34
starts essentially shorting the housing market much to the temporary dismay of
- 01:38
his clients and even of the vaunted goldman sachs who he warns could almost
- 01:43
go bankrupt and they literally laugh at him and they almost do to refresh
- 01:47
shorting is the act of selling a security at say the par value of a
- 01:51
thousand bucks in the case of a bond and then betting that you can buy it back
- 01:54
later for say yeah 400 bucks at some future date in the same vein a credit
- 01:59
default swap is basically life insurance sold by the issuer in this case mortgage
- 02:04
selling banks such that if the bonds went bankrupt while the banks would be [bank on a hook in the ocean]
- 02:08
on the hook not only for the bonds themselves but for the entire package of
- 02:12
bonds and given mortgage portfolio well it turns
- 02:15
out that Batman was right and a few others catch wise as well including the
- 02:19
guy from lala land and the guy from 40 year old virgin they identify the
- 02:23
culprit cdo's AKA collateralized debt obligations basically giant pools of [writing on white board]
- 02:29
mortgages all packaged up in one investment vehicle
- 02:32
they've been rated by the credit rating organizations like Moody's and SPS in
- 02:36
the gang way higher than they should have been and it's the public's faith in
- 02:41
these bogus loan packages that has been steadily driving the market over a cliff [cars driving over cliff]
- 02:46
so in the end it was the ratings agencies and their tendency to hand out [trick or treaters on halloween]
- 02:50
triple-a ratings like their Milky Way bars on Halloween that led to this
- 02:54
horrible mortgage crisis that almost bankrupted our country well a lot of
- 02:58
very smart and observant people made fortunes shorting all of this when they
- 03:02
recognized it in advance while the rest of the world well had yet to uh figure
- 03:06
it out and guess that's how Batman was able to afford his Batcave regardless
- 03:10
this is a must watch movie for anyone who cares about government regulations
- 03:14
irresponsible fiduciary dealings by banks and those evil money-grubbing
- 03:18
bankers who just live to make the commission of another quick buck and if
- 03:23
you're here because you were looking for the biopic of Danny DeVito you actually
- 03:28
want to watch the little short
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