Those same opinions could not stop the finacial apocalypse that was about to happen. If he had asked that, he would get opinions. He doesn’t asks “Do you think a housing bubble exists?” or “Do you think you will be able to honor your installments until 2007?”. Don’t ask if everything is going to be okĭuring field research, Mark and his team made questions like: One method is not better than the other, and it’s interesting to see that Mark didn’t ask for more answers to the questions that had already been answered. Mark Baum needed a new layer of data to take an important decision and for that he had to use another method to acquire them. Qualitative data answer the Whys and the Hows. Quantitative data is able to answer questions like How much, When and What. Still not satisfied, Mark decides to visit newly released real estate developments, speaking to brokers and low-income folks who bought mortgages. Even though, Mark doesn’t believe: how is the real estate market going to fall apart? Mark Baum is flooded by quantitative data during the presentation. He even takes a statistician to the meeting, to ensure the veracity of his arguments. Ryan Gosling’s character tries to convince Mark Baum (Steve Carell) to also invest against the real estate market. To challenge the status quo, we have to develop resilience in order to advocate for ourselves, and, even more important, to not commit political suicide. Michael is pressed by the investors to cancel the operation, but he stands up for two years (TWO YEARS), until the real estate market finally breaks giving him US$ 2.5 bi of profits.Įven succeeding, Michael closes the investment fund after sharing the profits, because of such huge stress level. In the movie, Michael goes through a similar situation, but infinitely more delicated: he decides to bet his investors money AGAINST the real estate market, which is seen by everyone as a synonym of stability. I know you've been there: you find information that stands against the group deep beliefs. I bet it’s a skill the market will demand even more in the next years.
#THE BIG SHORT SUMMARY HOW TO#
I see designers studying about metrics and predictive analysis for business in order to understand how to work with this data in a better way. What behavior patterns can we observe in the quantitative data that we got? What kind of data is hidden within your product, which maybe has the power to give you clues about how the market and consumers will behave in the future? MICHAEL BURRY - I don’t think they even know what they made. Only the lawyers who put them together read them. SHAREHOLDER - You read them? No one reads them. SHAREHOLDER - And how do you know the bonds are built on subprime crap? Aren’t they filled with hundreds of pages of mortgages? In one scene, one of the shareholders ask him:
“But the bigger point, that the failures of the secondary mortgage market led to the crash of the housing market, is spot on.The data was already there, but no one cared to analyze them in such diligent way like Burry did. “It would not sound as cool if only the top part of the stack crashed,” Reiss concedes.
In other words, only the top half of the Jenga tower should have crumbled … but that wouldn’t have looked quite as flashy, would it? “I would have put the AAA at the bottom of the Jenga stack. In fact, the failure of the Bs and BBs did not cause the failure of AAAs, and many AAAs survived just fine or with modest losses.” “I would argue that there is one big inaccuracy that exists, I am sure, for dramatic effect,” he says.
#THE BIG SHORT SUMMARY MOVIE#
Yet there is one thing that the movie did fudge, according to Reiss. “And like the Jenga tower collapsing, the defaults led to more price declines, taking the entire market down with it.” “As soon as prices showed signs of weakness in a few bubble markets, speculation ended, prices started to decline, and then the scenario started to unfold of borrowers defaulting,” Smoke says. “There was a misconceived financial market illusion that the very process of ‘slicing and dicing’ mortgages into structured investment vehicles somehow magically neutralized the risk of even the lowest-grade tranches,” he says.īut the reality was catastrophically different. Our own chief economist, Jonathan Smoke, adds that Lewis’ book provides a solid foundation.