If you haven’t seen this movie. Check it out. It stars some big hitters like Christian Bale, Brad Pitt, Steve Carell and a host of other familiar faces. I found it on Netflix and was reminded of this gem by a student in my recent investing class.
For a movie about investing and the housing bubble they actually made it very edge-of-your-seats exciting.
WHAT I LEARNED FROM “THE BIG SHORT”
1. The Value of Short Sellers
The whole basis of the movie is the strategy of short selling. Ultimately, this is profiting from an investment that goes down. What this strategy leads to is a sort of investigative journalism in the investing markets. These short sellers are trying to find the dirty truth of what’s going on with particular companies, industries or entire economies.
When things are being covered up and colluded upon, short sellers will dig for the facts. Like the journalists of old.
2. Don’t Trust Wall Street
They’re always looking out for their fees and commissions. You need to get an expert that profits when you profit and loses when you lose.
3. We’ll Make It Through the Bad Times
Despite massive losses or faults in the system, we will make it to the next stage of growth. The Great Recession was a bleak time. The pessimism was profound. You could feel it in the air.
And then…we made it out the other side.
4. You Need to Diversify
I sound like a broken record on this one. I say it everywhere and to anyone: get into unique asset categories. Not ten mutual funds that sound different. Ten funds that are different. Do your homework. Study up on what your money is in.
5. Most Importantly, Don’t Think You Can Short
You might be able to. You might do it a few times and make some money. But always remember the potential of a short gone bad: you can have unlimited losses.
Just be a “long” investor. If you believe the U.S. and world economy is going to go up, then buy solid, global investments and hang on. If you can get significant income from the investments then that’s even better for you.
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There’s a lot more to learn from this movie. And there’re some fun cameos, too. Take a look.