The Big Short Investors Who Lost $9.4 Billion
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- เผยแพร่เมื่อ 16 พ.ค. 2024
- The Big Short depicts two distinct sides of the 2008 financial crisis. Those that saw a disaster forming, such as Michael Burry and Steve Eisman and those who actively contributed to creating one of the worst financial crisis’ ever. But while we know Burry’s big short bet ultimately paid off, earning him and his clients hundreds of millions of dollars you might not have heard about what happened to those who were perpetuating the economic crisis with their greed and fraud.
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Including Wing Chau, the CDO manager who 'Mark Baum' (Steve Carrel) had dinner with in Las Vegas, Bill Miller who debated Steve Eisman as Bear Stearns stock collapsed, and Howard Hulber (Benny Kleeger in the movie) who lost Morgan Stanley $9 Billion in his subprime mortgage trade.
TIMESTAMPS
INTRO 0:00
CDO MANAGER'S FRAUD 0:30
GREEDY BEAR STEARNS INVESTOR 4:52
$9 BILLION TRADING LOSS 6:30
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Disclaimer:
The information in this video is general information only and should not be taken as constituting professional advice from Hamish Hodder.
Hamish Hodder is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
Hamish Hodder is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this video.
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The bundling of bad loans didn't crush the economy... It was the synthetic c d o's which could be bought by anybody, Even though she didn't own the bonds
NINJA loan
I love the "sub-prime" wording too... a way to call total garbage something "just slightly below perfect".... genius.
Wait till people find out that Banks print money out of thin air to loan for the purchase of your home and then when you default on something they never gave you they get to come in and take the real asset, the home....
Derivatives
What impress me the most is the fact that this $9.4 Billion is only the 4th biggest loss in trade history... Make a video of the other 3 please 🙌
I'm more impressed that the banks paid enough politicians to get bailed out with huge bonuses, paid for by American taxpayers. And none of them went to prison.
Does it include that English Guy who bankrupted a Bank?
@@kagisocalvinramz3826 that was only a loss of 1.4 billion
@@kagisocalvinramz3826 Nick Leeson 'only' lost $1.3 billion, but in 1995 that was enough to bankrupt Barings Bank
@@kagisocalvinramz3826 George Soros isn't English.
I was working at a webcasting company called TalkPoint Communications and we were the ones who webcast the American Subprime Lenders Association summit, and the Eisman-Miller debate definitely happened--across my desk. There were raised voices, and I had a semi-circle of colleagues standing around me asking why a guy was yelling.
BearStearns was also one of our biggest clients, as was AIG and GoldmanSachs. We webcast the end of the world, and I nearly SHIT MYSELF when I saw this scene in The Big Short because I lived it in realtime.
Did someone in the audience shout out like in the movie and did Bear Sterns collapse whilst the talk was happening?
@@JCJW101 There was shouting that drew colleagues to my desk... but honestly I cannot remember if that was also the day BS collapsed. Bear was *also* a client and all of this stuff happened in the back half of '08.
This actually makes Forensic Accounting sound like a fascinating career.
It is interesting to see it come together but having to find the connections is mind breaking stuff and most cases end incomplete because they end up settling before the full extent of the crime can be discovered
Just learn accounting you will never be poor knowing everything
Forensic accountants get d3ath threats too much. The higher the stakes, the higher the desperation, and the more dirty people are willing to play.
Yeah it's almost as dangerous as being a journalist covering the story of a dictator. They will find a way to get you and all you'll be is just an obit in the newspaper for a week or two. There's so many cases of financial investigators being disappeared
it is! My ex was one and travelled with armed security around the world auditing suppliers. Crazy stories!
I knew something was up when, in 1998, my wife and I applied for a mortgage of $159,000 and they said we actually qualified for a mortgage of $250,000. They said "You could completely furnish the house or even buy a bigger house and furnish that one". We said "No Thanks" and walked away with our smaller mortgage, and I told my wife at the time that something bad is going to happen with this whole mortgage thing, but I was an unsophisticated with money at the time and didn't know how to act on my instinct.
It happened all over just like this. The banks were and are as crooked as hell. Everyone wanted to blame the mortgage holders, but the BANKS were just giving money away and fomenting the crisis.
It is going to happen again. You should learn from success stories and dig further.
It get's worse. I was given the name of a reputable banker from Stifel Bank, here in St. Louis..and old money brick and mortar bank. Hell..they have their bank's name on the St. Louis Cardinals' baseball uniform. Anyway, I applied for a loan, and here's the phone conversation. Him..."How much do you want?" Me..."3". Him..."I'll give you 7." Ummm...NOPE. The loan was for $289,500.00. There is no way in hell I could ever have managed a five thousand dollar a month loan. Well..maybe...but I would have been house-poor.
Ok boomer
It`s the same now. We can borrow with our current income up to 300 000 pounds.
Bought a bouse for 125 000. Deposit 32 500. Nice house somewhere in Wales.
Bought based on a single salary so that we can still live like we do now if one of us loses income, separate or whatever.
The mortgage guy just kept pushing that 300 000 mark. Big fucking finger.
"A real engineer builds bridges, a financial engineer builds, builds dreams. And when those dreams turn out to be nightmares, other people pay for it." - Andrew Sheng
Who puts up the toll booths
When construction projects are nightmares the engineer isn't footing the bill either. But nice philosophizing
Great channel thx you
Great stuff..this was very revealing and thank you
I'm a big fan of the Big Short and knowing what went on, but you presented a lot of stuff I didn't know and I appreciate it because it really put some of the stuff that I understood, but didn't see the foundational pieces together.
x2
Agree. Good work.
same here
Please, please read the book. It’s very, very interesting. It goes into the Hubler trade in detail and it’s crazy, it’s the chapter “A Death of Interest”.
thanks. you're the only one who made me understand the big short and the financial crash of 2008. 😊
When I saw the title, I thought this video was going to be about Phil Falcone... now there's a fascinating Wall Street story no has really told yet... guy was one of the biggest winners on the short housing bet... guy was a legit billionaire, he even owned part of the Minnesota Wild, but 10 years later he was flat broke
To be honest why would someone continue trading that aggressively with a billion dollars?
He and his offsprings could live indefinitely from it and have whatever they want to have.......
@@lonelydogclub Because someone like that always wants one more dollar...
Great video in helping explain some of the finer elements of what was going on in the film.
Hamish, appreciate the content and effort as always 👏
Another excellent video. Thank you.
Awsom video dude keep it up!
Good research thanks
Subscriber for life right here man you’re great at what you do
Honestly this is the best and clearest summary of the big short, really amazing
Great analysis, especially with the real life references. One of my best movies ever.
Recording your video in Imax? what is that clarity?
OOOHHhhhh. This movie makes SO much more sense now. I never really understand that scene at the end.
This was interesting video!
He said the credit agencies gave high ratings because if not the bank would go to another agency. That's not true. They gave high ratings because they had no obligation to be honest. And they still don't.
Quiet funny how there are laws for everything. Except for stuff that really matters.
This would make sense if their where mot emails from investment banks threatening to fire a rating agency if they didn't give a CDO a higher rating
@@alibizzle2010well that's a certainly a way of saying you're missing the point. Them firing or going to another bank is literally the same effect...loss of revenue. And my point, which still applies, is that the rating agencies had no obligation to be honest. Officers of a company have a fiduciary responsibility, lawyers have a legal obligation to represent to the best of their abilities, ratings agencies, whose products impact millions, have a responsibility only to businesses in their ecosystem.
This was great
Great idea for a video
nice vid. thanks
This was a great video
Beautiful thing about finance guys is that they call "poisoning the water supply" as offloading which is equivalent to terrorist attack with chemical wepon
Boom!
Great share. I never knew the deets of this subplot
The Big Short is one of my favorite movies. Your insight and analysis has enhanced my understanding. Thank you! Entertaining and educational.
I've watched this movie sooo many times, it is one of my favorites. But I could never make sense of the scene where Eismann sits in his boss' office and has this revelation about the outfit he works for. I just moved past it, thinking it has no real relevance.
Thank you for laying this out for us and putting the scene into context. As many times as I have watched this movie, I find out new angles that I hadn't known existed.
Great video
This video was dope my boy! 🙌 Kudos to you
Good informations
G’day Hamish. Very much enjoyed this video. I’ve watched The Big Short 3 times and had so many holes in my understanding even after the 3rd watch! This video has been excellent for me. Much appreciated.
GREAT VIDEO BUDDY! I wouldn't dream in a modern colony as Romania, my home country, that such transcripts would exist.
Nothings changed
I stopped trading for a month after losing 3,000 rupees once. = $40
A perfect case of "You can't make this sh it up."
Now, please do a video on total return swaps as it relates to citadel capital, market structure, naked shorting, and Gamestop.
This was a really great explanation of some of the aspects of the GFC ( although it made me feel sick).
But how have some of these short funds done with continuing short selling. I read that Bury lost big short selling Tesla? How much of the short selling success was just luck?
The other real question, who lost this money during the GFC. Yes the FED ( the public) but also how much of the losses were "shifted" to pension funds and ordinary investors?
I lived in NYC back then, working in a completely different field. My neighbor was a banker, great parties, interesting (not always nice...) guests. Weird group dynamics. I usually was one of the only non-bankers. After having witnessed them (middle management) I didn't feel comfy with my investment and sold 90% of my stocks in winter 2006/2007. Best decision ever. Then bought my apartment when the prices were low.
The "buy back*" mistake seems like a pretty big correction that probably just warrants re-recording that whole section.
Any idea whats going to happen this time around with the housing markets?
It sounds like what is happening today. I have friends who have, but they have a lot of student loan debt and consumer debt. The reason they didn't feel like living paycheck to paycheck was because of the low-interest rates. It's happening all over again. A lot of people are one job lose away from their assets being seized.
Hang on, what's the difference between credit default swaps and synthetic CDOs? It sounds like both behave like insurance against bonds?
Synthetic CDOs can be comprised of CDSs and other non-cash assets and is insurance against CDS.
Some people say they are awesome. Other say they are effing crazy.
The movie likens it to betting on the outcome of a blackjack hand, then betting on whether someone betting on that outcome will win their bet and so on and so forth
This beyond amazing. Whoever’s reading this hope you find success.
Making money is action, keeping money is behavior and Growing money is knowledge.
I am fortunate I made productive decisions that changed my life forever through my finance-mentor. I'm a single parent living in Bn Italy, bought my second house in April and hoping to retire at 40 by next year.
You're really doing well for yourself, I'm forty five and my financiaI life is in a mess. Any tips would really go a long way in shaping my life.
To possibIy grow, a mentor is needful to make it a reality. I engage in aIot with the ldeas of my mentor and so far have achieved so much already.
sear ch her full name below, if you care
He didn’t tell the full story the same guy that lost 9 billion ended up getting all that back plus more.
Great video, I have a quick question. I am an aspiring trader, I am looking study some traders and earn off their expertise rather than investing myself and lose money emotionally. Whats your take on copy trading? Do people really make money? Just looking for some reassurance.
Thank you!
Focus on long term investments in property, stocks, and bonds. Avoid copying, daytrading and 'chart astrology'. Diversify across different geographies, industries, and value chain stages - to reduce your risk. You can do this with ETFs, or by selecting different stocks yourself. This is the best way to invest for more than 90% of people
I'm still curious about what happened with the libor scandal...
I think it was a convention for securities. Not specifically sub prime mortgage bonds. Even if that is the group of portfolio managers and such who attended.
So many conflicts of interests and I'm sure it has not all been fixed.
Even if they fix the problems, they loosen their regulations as time goes on. People forget the lessons of the bad times.
Haha
No because the purpose is utter destruction
@@evegreenificationNever attribute to malice that which is adequately explained by stupidity.
Thank you for the explanation of the Morgan Stanley counterparty scene, I tried to research it and was stonewalled by the lack of proper names to search. I understood what had happened but needed to know how and why.
Love the better call Saul reference
There is a problem among financial academics and practicers not understanding inherent risks that aren’t factored into their mathematical models…not knowing what they don’t know and their risk exposure is open tailed…just because it hasn’t happened recently doesn’t mean it’s never going to happen.
I studied Finance and what you talk about has always fascinated me. Pricing and risk management used to be more subjective, but with all the mathematical models we have now, it gives pricing and risk management an air of objectivity. But like you said, this ´objective´ way of looking at things favours certain risks while ignoring others. So in a way it is subjective, but it´s a subjectivity that we like to copy of of each other. This is dangerous because if everyone is wrong in the same way, then when shit hits the fan and the assumptions of the models aren´t holding up, then it goes bad for everyone at the same time, and the impact is magnified. In practice not everyone will use the exact same models, but there is significant overlap. Maybe we should shift to a more bayesian model of risk and pricing where expert opinions are also factored in. This would allow more diversity in pricing and risk assessments.
Please make a video that tells what would happen when A.I. bubble burst.
Many products are said using AI while no actual AI is used or even required for the product. It is ridiculous. They just say AI because it sells apparently.
@@pcdispatch you are right 👍
Some people keeps comparing the 2007 collapse to today. If you look into the recession in 80's what we have happening today is very similar to before the recession in the 80's. 🤷♂️
Can you please elaborate. How so?
I love this scene
You explaining this better than the movie lol
Slightly innacurate, most of the bonds Hubler sold on were fine in the long run. The thing is they lost enough value in the short term to trigger the terms of the swaps. The markdowns that were agreed on were excessive, at the time (but understandable). Upper tranche of the AAA rated stuff paid out just fine in the long run, but their value dropped massively while the GFC was going on.
The problem is a CDS is an insurance policy regulated not as an insurance policy but as a security. First, you don't need an "insurable interest". You can't buy insurance on someone else's property or life, but you can buy a swap against securities you don't own. This means the swap and related markets can be several times the size of the assets they are securing, which they in fact were. When an asset-tracking investment class becomes several times larger than the asset class it's supposedly tracking, it's tulip time. Second, an insurance policy can't be traded up and down an investment chain; a CDS and related instruments can. Which means your "insurance policy" is worth only as much as the ability to pay of the weakest link in that investment chain, regardless of any repo agreements.
Fine I'll watch the big short again
When I saw your vid title I thought it was going to be about Carl Icahn. You should do another vid on Carl Icahn because he ALSO lost $9 BILLION in his "big short" just over the last several years and his case is particularly interesting because he was recently featured in an HBO documentary "Icahn: The Restless Billionaire" where they didn't mention any of this massive loss. He is famous for being an activist shareholder. His Wiki entry described him as "Widely regarded as one of the most successful hedge fund managers of all time and one of the greatest investors on Wall Street".
in Ireland there were abandoned houses in my village that you couldn't give away for free in 1995. by 2005 the same houses were selling for 200 k. i knew something was wrong as it wasn't as if a gold mine opened in the area. the banks were begging people to borrow.
Nobody ever talks about the US Congressional Banking committee politicians like Barney Frank who set the whole system up, told the banks the govt would backstop them and convinced them that they would be required to lend to subprime buyers or get shut out of the whole system. Not Michael Lewis, not the players, nobody ever brings this up.
Out performing the market for an extended period like that really is quite impressive. It is not like saying you avoided a tornado until a tornado came. The markets had all sorts of ups and downs during the period described. There were very prudent and responsible portfolio managers who did really poorly due to the impacts of the sub prime mortgage bond collapse. So that in itself doesn't take away from his success before or after. Even though he looked quite foolish during and up to the collapse. He was certainly wrong about that.
i've never understood why no one has ever made a comparison video between *the big short* and *margin call* .
maybe i should have said *the big short* vs *margin call* .
Did you read the book?
👍🏼 nice
1:31 CDO isn’t clever, it’s illegal to sell insurance on a bond because it increases the risk of default. Credit default swaps were a big part of this.
This and many other things are happening again , be prepared for a bumpy ride 😮
Ty
Did Michael Scott drop a “boom” 😄😄
Before the bubble popped I heard for at least a year that it was coming. Mostly from people that had been in the mortgage business but had jumped ship to the industry I was in. It took long enough that I decided it wouldn’t happen and I had no idea how bad it would be how could mortgages be worthless?
You heard because everyone heard.
@@mastpg thanks
People didn’t want to believe it because it was such an immense inflectional fraud at every stage of the system. That’s hard to believe. But even more so it’s terrifying to imagine happening and even people who may have thought it may happen didn’t want to believe it because as we saw the consequences were horrifying beyond what anybody thought could be possible. But who in their right mind would’ve believed people were writing the mortgage paper that was being written at the time? I mean it’s still hard to imagine that people wrote loans without even bothering to see if somebody made what they said they made.
“hey there’s bubble” who doesnt know
A flailing U.S. economy and elevated global tensions reduce the likelihood of prolonged inflation or higher long-term Treasury yields. All my focus right now is how to safeguard and improve my $2m portfolio from market changes based on the conflict in the middle east.
Consider hiring financial advisors, estate planners or tax experts. They can provide specialized knowledge and help you navigate complex financial decisions. Right now treasuries and HYSAs pay 4.5-5% risk free, do that.
That is exactly the reason I stopped taking advise from TH-camrs; in the long run, I only end up with a jumbled collection of stocks and bonds. Whereas all I needed to earn over $350k in less than two years was guidance from a true market expert.
Amazing! Could shed more light or info on how you came along such world class expertise and how to possibly get across to this aforementioned individual?
I receive financial advice from "Monica Selena Park", a well-qualified and well-established wealth counselor headquartered in California. Her basic information can probably be found online.
When I curiously typed in her entire name to search online, I saw that her site was highly ranked and really professional. Thank you for sharing this; it has stoked my desire to achieve my objective again.
To my understanding this just proves how much we need an edged as an investors because playing the market like everyone else just isn’t good enough. I’ve been quite ensured about investing in this current market and at the same time I feel it’s the best time to get started on the market, what are your thoughts?!
That’s true , I’ve been getting assisted by ‘Margaret Johnson Arndt’ for almost a year now , I started out less than $200k and I’m just $19,000 short of half a million in profits.
I am being advised by Margaret Johnson Arndt, an experienced financial professional. If you're interested, you can easily find more information about her as she has accumulated years of expertise in the financial market.
I just checked her out on google and I have sent her an email. I hope she gets back to me soon.
Over 70% of these bad loans were directly originate by GSEs. And 100% of these ARMs felt the pain of interest rate hikes leading to these massive defaults. Two of the largest contributing factors to the “bubble” and people have been conveniently kept in the dark. People act rationally given the economic/regulatory environment they find themselves in. Economics is predictable and virtually natural law. Regulation is unpredictable and arbitrary, often countering intuitive. Good luck
Why is the thumnail a tweet
Saw recently Michael Burry has taken a large short position on Tesla . Shortly after saw that the EV market has dropped severely and Tesla one of the worst hit with sales dropping by 15%.
Makes you think doesn't it lol
Funny that there are no yards full of unsold Teslas.
If there were we WOULD know about it.
@thosoz3431
Check out the videos of massive acres and acres of electric cars in China just rotting. Don't know the makes though. Tesla sales are down by 15% this year though and that's a fact.
Don't forget the American housing market was rock solid in 2007. If it hadn't been you would have heard about it right ?
NINJA sounds nice by No Income No Job is redundant 😂
Whats even better, once the mortgages cdo failed and the companies bailed out.. the debt was written off. You now own the house.
…you got CDOs (collateralised debt-obligations) mixed with CDSs (credit default swaps)
Nice
Well, none of this could happen without regulators allowing it or even forcing it to happen. Enter Fannie Mae and Government subsidized debt. Where Government forced banks to loan money to black home buyers who could never service their loans and who never had any intention of paying them off. The debt was then packaged and sold off..... and that's the real scandal.
10:46 Jfc, either clean your spacebar or buy a new keyboard. Wtf.
"That is fucking crazy."
"It's not. It's awesome."
I love this movie so much.
Film name?
The big short.
Ole Wing Chow
They weren't mortgage backed assets. The bonds were the returns on the mortgages backed by an asset. The house!
Byran Mann is Canada's CMHC
Make $42mil by fraud, get fined $7mil. Sounds about right.
Don’t hate the players, hate the game
@@sirlost94 those players are the ones who rigged the game that way.
They only proved 7 million was fraud money, so thats what they got. For other millions, they did not have proof or time to find it all. Beurocracy got killed by beurocracy....
@@sirlost94we can quite easily do both.
I think you are confusing Synthetic CDOs and Credit default swaps (CDS). Your descriptions of Synthetic CDOs is in actuality the definition of a CDS.
I never got what the “BOOM” at 5:53 meant. It is set as an obvious thing in the movie but I guess I’m way too slow for it.
Steve Carell's character is arguing that the market is on the verge of collapse while the other guy argues it's better than ever. During their debate one of the other guys major stocks has fallen 38%, indicating that Carell is right and the market is plummeting.
@@Hadesthief right but why is Armageddon when the other guy says he would buy more? I mean META fell around 30% a while ago and if Zuck said “I’d buy more now”, why would that be wrong? Doesn’t everyone buys “on discount”?
Your analysis of the financial crisis and the individuals involved is both insightful and clear. I'm intrigued to know, looking back, do you believe the financial industry has implemented substantial reforms to avoid a recurrence of such a crisis, or are there lingering systemic issues that could potentially lead to another crisis in the future?
Wow, the story of this investor's journey is both fascinating and a powerful reminder of the risks in the financial world since it takes a lot of courage to share these experiences. Really appreciates this shedding light on the ups and downs of investing with us, thank you.
Could you please create a video explaining the potential outcomes of an A.I. bubble bursting?
I gained a lot of knowledge in this video! Great content!
The video provides a detailed and informative overview of the financial crisis of 2008, with a focus on the key players and events. It is well-written and engaging, and it does a good job of explaining complex financial concepts in a way that is easy to understand.
Hammish, I found your explanation of the financial crisis, especially the stories of key figures like Howard Hubler and the events at Morgan Stanley, incredibly insightful. How do you think the financial industry has changed since the 2008 crisis, and what lessons can we learn from these events to prevent future crises?
I know of a Dutch bank ceo who at the time did not know the difference between the Dutch (European) and American mortgage system. In America the mortgage is on the house and the person can walk away from the property, giving the keys to the bank. In Europe the mortgage is on the persons (man and woman) with the house as collatoral. And any remaining debt after (forced) selling of the house will still be payable to the bank for the rest of your lives.
It works like that here too, the only way to get rid of a mortgage for good is to file bankruptcy.
Europeans seem to be more mature than Americans in every aspect of governance
Lol you mean that continent that couldn’t create a constitution after hundreds of years of government?
Brutal
States he’s not going to explain a Synthetic CDO… Proceeds to explain a Synthetic CDO
synthetic explanation
And yet, they never learn and history keeps repeating itself....
To be fair the rating agencies didn’t know how to rate these bonds. They used the banks formula to rate these bonds.