Entertainment & Music The Big Short Movie

I watched "The Big Short" movie yesterday and loved it.

It's about the smart and very single-minded traders who predicted the subprime disaster / GFC and bet millions or billions of other peoples money that it would happen.

The film is very entertaining and informative. It didn't dumb things down too much but also it wasn't boring to watch.

It is a good film to watch to get a good idea about how to spot opportunities. And how difficult it is to even believe something yourself if no one else has the same opinion but no one else has looked at the facts. A bit like believing the earth goes around the sun, err. back in the day when people didn't believe that.

The traders are obviously very math smart but what I take away from it is there willingness to do the due diligence and believe in the numbers over emotion (the emotions of every other person in the USA, indeed the world!) netted them a lot of money.

 

Great movie.
So how could you make money, and bet against Australia's property market and economy with the view of it collapsing in the near future?

 

If you can calculate the collapse like those did in the movie. Why not ?

 

Agreed, but how? What would you do?

 

Firstly you'd need to be damn sure it would collapse, and soon. The problem with going short is each day you are wrong waiting to be right you need to stump up more cash. I played with shorting shares a long time ago, lost about 500 pounds then gave up and realised how foolish it was. Because assets like shares and properties generally rise in value and sometimes fall so it is all about timing.

I'm not sure how you could bet against property per-se in Australia maybe a trader on the forum could give some insight.

Clearly if you already own IPs then selling them is equivalent.

 

Another thing is these traders would have ridiculous advantages over say myself in terms of networks, experience, access to data, access to resources (human, technical), full time devoted to it. I don't believe I could call the next market crash.

 

I think the first step in calculating a crash would be to have a good reason for there to be a crash. There was a recent (bloomberg? wsj?) article on a Japanese day-trader who made millions shorting the August crash; true story and an interesting read.

 

How bout if your cashed up with a million or more, what would you buy if the economy and house market crashes?
Homes I'd stay away from for a while as they would be hard to rent with unemployment so high and you don't know when the bottom has hit with the correction.
What else could you purchase and hold onto, then on sell at a later stage?

 

So the timing of this film's release is pretty on point given all the hype around a property crash in Australia (especially Sydney) in the coming years. What does everyone think about our position compared to the U.S. in 2007?

 

Could a film like this cause even more of a lack in confidence among potential buyers who are already thinking to themselves that this is a terrible time to be making a purchase?

 

i'm looking forward to watching it

 

Not remotely comparable.

 

The movie doesn't really have much new to it, same old recount with an A list cast. Definitely enjoyable though! So its more a question of whether Australia today looks like the US in 2006/7.

I see some basic origination of loan failures in Australia, but nothing nearly as bad as in the US. We'll have some people who can't refinance loans at maturity points and may roll into higher repayments, but it won't be the everyday person, it'd be people who have larger existing debt holdings in the main.

We've learned some lessons from their mistakes and regulated our industries to be more in tune with it. Also banks in Australia are relatively healthy comparatively, even to a serious property crash. At least thats the information and data the public have on it - stress testing of the banks to serious shocks have shown that (but the validity of results can be up for debate).

 

I'm sure the media will twist the story to make it sound like it's similar to Australia to boost sales.
Australia has its own current issues with recently taking the title of unconsolidated household debt to gdp ratios, number one country in the world. Doesn't matter what I think as someone else will have 10 other viewpoints as to why australias property market will continue to grow.
Time will tell

 

Any time is a good time to buy. As long as you have done your due diligence and the purpose of the purchase fits with the goal you are trying to achieve.

 

I enjoyed Michael Moore documentation "Capitalism : A love store" more than the big short movie. Personally I think the original book is better.

 

This is the article about the Japanese trader. Well worth a read.

While Many Panicked, Japanese Day Trader Made $34 Million

 

In a nutshell America collapsed because their banks were issuing loans that were unsustainable. Essentially fake credit that could never eventuate into real cash being used in the economy.
(There is evidence of 40 year+ mortgages being handed out to 30 year olds).

So while everyone was jacked up on (low LVR no risk) larger than life home loans, the minute there was a downturn in the world economy and job losses causing foreclosures, banks costs and therefore losses and therefore premiums go up to compensate, this flows onto the everyday consumer almost at tipping point causing a snowball effect of repossessions.

Australia's lending policies have always been much more economically sustainable and responsible. To our credit we as a nation are more savvy and take responsible for our own actions.

We got through the GFC much more cleaner than many other nations due to our own in house management.

Of course they were the liberals saving us! hehehehe

 

There is no precise equivalent of "shorting" property like you can short shares. If you want to bet that Australia's property market will fall... if you own property, you would sell it now, betting that the price will fall in the future and you will be able to buy something equivalent in the future for less. Or simply don't buy property now, betting that property will be cheaper in the future due to price falls. A lot of people are "shorting" the Perth market, not buying now because they believe properties will be cheaper in the future.

If you think the share market will collapse, you can always short sell shares. BHP and RIO seem like obvious candidates. Of course every man and his dog are already doing that...

A growing number of investors are betting that BHP Billiton shares will fall further, with short positions in the resources giant rising to their highest levels in almost four years.​

Read more: http://www.smh.com.au/business/mining-and-resources/short-sellers-are-increasingly-targeting-bhp-shares-with-bets-rising-fivefold-20151105-gkrmie.html#ixzz3xwU4hKzM

 

The D&Gers deny this but I agree. Lending got slack before GFC. If I wanted more money I just talked to my local branch manager and he wrote me the loans no questions asked. Lending tightened a lot during and immediately following GFC. Policy loosened up a little, more recently, however I don't think back to pre-GFC. Then APRA tightened up the rules again. I know things can always be better but I don't think Australia has anywhere near the same lex level of lending that the USA had that led to the collapse.