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From my movie review in Taki’s Magazine:

The Bubble, Hollywood-Style
by Steve Sailer

December 16, 2015

The Big Short, a comedy starring Christian Bale, Steve Carell, Ryan Gosling, and Brad Pitt as finance-industry renegades betting against the Housing Bubble in 2005–08, is another in the rather improbable new genre of nonfiction feature films that display the business world with more complexity than Hollywood dared before this decade. Based on the 2010 best-seller by Michael Lewis, the king of Frequent Flyer books (e.g., Moneyball and The Blind Side), The Big Short pushes the envelope of just how many acronyms for abstract financial instruments (such as MBS and CDO) a popcorn-eating audience can digest.

Read the whole thing there.

 
• Tags: Mortgage, Movies, Real Estate 
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  1. Steve,

    Does Taki’s Magazine count as foreign press and, if so, are you qualified to be a member of the Hollywood Foreign Press Association and thereby vote for the Golden Globes?

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  2. But you won’t see any of that in McKay’s movie version.

    Loved Moneyball, but never got around to seeing Steve Jobs after the annoying PC moralizing of the trailer.

    Likewise, haven’t made it to The Big Short.

    Call it taboo fatigue.

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  3. The sense I got from watching the Jenga scene after having read the book is that Hollywood took a similar tack with The Big Short as it did with Bonfire of the Vanities. Your review seems to confirm that.

    Did the movie mention Joel Greenblatt at all? I blogged about that part of the book a few years ago: http://steamcatapult.com/2011/04/08/plan-not-to-panic/

    Read More
    • Replies: @Citizen of a Silly Country
    Dave,

    Don't know if you need to make investing too complicated. Asset allocation actually works pretty well in controlling risk (at least deflation/market meltdown risk) in a simple and cheap way - if investors to use the right tools. In the case of bonds, they should use U.S. Treasuries for their bond allocation and nothing else.

    Treasuries hold their value and, usually, increase a bit (interest rates falling and flight to safety) during a recession/market meltdown. Corporate bonds sometimes do alright but can get hammered due to credit concerns, so leave them out. You can also assume that stocks will fall ~50% in a sharp downturn. Therefore, if your Cry Uncle point is a 20% drop in your portfolio, you should be alright with a 40 stock/60 intermediate Treasury portfolio. If its 30%, go with 60/40; if it's 15%, go with 30/70.

    The key is to use Treasuries and no other type of bond. Granted, you could have a Depression-style meltdown of stocks (~85%), but that's a special case. Regardless, the Treasuries would still provide the needed protection and would definitely increase quite a bit in value (~10% to 20%) as interest/inflation rates collapse, mitigating the additional decline in stock values.

    Use puts as downside protection seems needlessly complicated and expensive. The research seems to show that Portfolio Insurance isn't the best course. Larry Swedroe had a nice write up about the subject here.

    http://www.etf.com/sections/index-investor-corner/swedroe-cheap-volatility-illusion?nopaging=1

    Now, inflation risk is a bit more difficult. Using TIPs for your bond allocation could be effective for both deflation and inflation risk, but TIPs got nailed in 08-09 due to illiquidity, so that was an issue. I'd suspect that won't happen again, but who knows.

    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  4. “Gosling collects a bonus check for $47 million for having the testosterone level to bet against the American Dream and the IQ to keep straight in his head what a credit default swap is.”

    Steve Carrel ends up pocketing over $200 million dollars from betting against the housing market.

    Read More
    • Replies: @keypusher
    The man who really made out was Paulson (John not Hank) -- over $2 billion I believe. But presumably because he declined to cooperate with Lewis, he is mentioned only in passing in the book.

    Of course, how much you money can make on any wager depends on how much you can afford to bet. Paulson could bet a lot more than Burry or even Eisman (the Carrell character, Baum).
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  5. http://www.nytimes.com/interactive/2015/12/15/upshot/100000004092149.mobile.html?_r=0

    Some notices that anticompetitive behavior creates increased costs.

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  6. Weeks or months ago, Sailer asked us for ideas for the government to plan for the next Camp-of-the-Saints surge. (I am not a deadline person).

    The best place to warehouse large numbers of unwanted aliens is probably Puerto Rico. It’s US territory, the local economy and government badly need the boost, and if the unwanted escape from their dormitories (camps), they’ll have a very hard time getting to the mainland.

    Continuing the Isteve tradition of comments entirely irrelevant to the post they are attached to.

    Read More
    • Replies: @Reg Cæsar

    The best place to warehouse large numbers of unwanted aliens is probably Puerto Rico
     
    Thanks. I was trying to think of ways to get the borinqueños off their culos and declare the independence that we-- excuse me, they-- so desperately need.

    This will do it!
    , @flyingtiger
    Alaska would be better. They have lots of space, and they will be far away from us. I know it can get cold there, but if you want to be an American, you have to live where the living is the hardest.
    Those who survive the first winter will get our respect.
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  7. You mentioned Ron Shelton – he never got enough scorn for directing Tin Cup. What a piece of sh*t. One of the worst movies ever made.

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    • Replies: @middle aged vet
    Tin Cup is one of the only three movies I have ever walked out on.
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  8. Therefore, after all these years, McKay remains unsure whether the mortgage meltdown was due to fraud or stupidity. But Occam’s razor suggests that long-term ignorance and deceit is caused by taboo: Our most sacred value today is diversity, so that was the one cause we weren’t allowed to question.

    Please share this article by using the link below. When you cut and paste an article, Taki’s Magazine misses out on traffic, and our writers don’t get paid for their work. Email [email protected] to buy additional rights. http://takimag.com/article/the_bubble_hollywood_style_steve_sailer/print#ixzz3uUFMLDI2

    The ads are very clear that it’s fraud. I’m curious to see what the movie says.

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  9. If Lewis wrote Blind Side, he is a cuckservative, not a closervative

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  10. Lewis, a protégé of Tom Wolfe, appears to be a closeted conservative, but I doubt if McKay has noticed.)

    I don’t know if you noticed, but Michael Lewis directly lies about the origins of the housing bubble in “The Big Short”. He mentions the allegation that the government pressured banks to lend to minorities, and then states that this was not a factor in the bubble.

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  11. Read More
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  12. Great review Steve, am reading the book now. The fact that these banksters got the bailouts they did (i.e. AIG) is truly sickening. David Stockman said they should have been allowed to fail, I totally agree.

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  13. The Sailer Method:

    1) Magnify the role race played in something/reduce the whole thing to race.
    2) Claim the reason you haven’t heard about it this way is because They ™ don’t want you to know.
    3) Repeat.

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    • Replies: @anon
    The MSM method

    1) Minimize the role race plays in something/reduce any racial element to zero.
    2) Accuse anyone who disagrees of being a big fat nazi and get them fired from their job.
    3) Repeat.
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  14. Lewis wrote a very insightful book. And he explained that the federal HUD policy under Clinton and Bush Jr. was to insist banks lend to damn near anyone. Clinton was more about diversity uber alles, Bush interested in an ownership society, but operationally they were no different.And what happened was in an ever-escalating market banks lent money to almost anyone with a W2 and a pulse, assuming realty values would never go down.People who shouldn’t have been buying houses did so, and people bought more house than they could ever afford.

    Appears sadly Hollywood din’t think the audience was smart enough to understand turning questionable nonperforming mortgages into investment instruments led to this mess. As per most of the reviews sounds like this movie was more happy with slapstick interludes trying to explain all this instead of explaining things with the narrative. By contrast “Moneyball” had no problem explaining how Billy Beane exploited backward thinking and unappreciated analysis of statistical data when considering the value of a player.

    Can recall doing a closing for a relative of less than wonderful credit right before the mess. The realty broker’s exactly insane words were “Don’t worry if you get in deep trouble with your payments because we can simply turn it around an sell it for a big profit any time”. Of course that house is now in foreclosure.

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    • Agree: Jim Don Bob
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  15. @Discordiax
    Weeks or months ago, Sailer asked us for ideas for the government to plan for the next Camp-of-the-Saints surge. (I am not a deadline person).

    The best place to warehouse large numbers of unwanted aliens is probably Puerto Rico. It's US territory, the local economy and government badly need the boost, and if the unwanted escape from their dormitories (camps), they'll have a very hard time getting to the mainland.

    Continuing the Isteve tradition of comments entirely irrelevant to the post they are attached to.

    The best place to warehouse large numbers of unwanted aliens is probably Puerto Rico

    Thanks. I was trying to think of ways to get the borinqueños off their culos and declare the independence that we– excuse me, they– so desperately need.

    This will do it!

    Read More
    • Agree: Brutusale
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  16. @Dave Pinsen
    The sense I got from watching the Jenga scene after having read the book is that Hollywood took a similar tack with The Big Short as it did with Bonfire of the Vanities. Your review seems to confirm that.

    Did the movie mention Joel Greenblatt at all? I blogged about that part of the book a few years ago: http://steamcatapult.com/2011/04/08/plan-not-to-panic/

    Dave,

    Don’t know if you need to make investing too complicated. Asset allocation actually works pretty well in controlling risk (at least deflation/market meltdown risk) in a simple and cheap way – if investors to use the right tools. In the case of bonds, they should use U.S. Treasuries for their bond allocation and nothing else.

    Treasuries hold their value and, usually, increase a bit (interest rates falling and flight to safety) during a recession/market meltdown. Corporate bonds sometimes do alright but can get hammered due to credit concerns, so leave them out. You can also assume that stocks will fall ~50% in a sharp downturn. Therefore, if your Cry Uncle point is a 20% drop in your portfolio, you should be alright with a 40 stock/60 intermediate Treasury portfolio. If its 30%, go with 60/40; if it’s 15%, go with 30/70.

    The key is to use Treasuries and no other type of bond. Granted, you could have a Depression-style meltdown of stocks (~85%), but that’s a special case. Regardless, the Treasuries would still provide the needed protection and would definitely increase quite a bit in value (~10% to 20%) as interest/inflation rates collapse, mitigating the additional decline in stock values.

    Use puts as downside protection seems needlessly complicated and expensive. The research seems to show that Portfolio Insurance isn’t the best course. Larry Swedroe had a nice write up about the subject here.

    http://www.etf.com/sections/index-investor-corner/swedroe-cheap-volatility-illusion?nopaging=1

    Now, inflation risk is a bit more difficult. Using TIPs for your bond allocation could be effective for both deflation and inflation risk, but TIPs got nailed in 08-09 due to illiquidity, so that was an issue. I’d suspect that won’t happen again, but who knows.

    Read More
    • Replies: @Dave Pinsen
    The point of my linking to that post was to highlight Greenblatt's hypocrisy in expecting small investors to tolerate drawdowns much larger than he was willing to tolerate. I have since developed a better approach to investing while managing risk, one I detail here: https://portfolioarmor.com .

    Your stock/bond allocation is fairly common, and it's a better approach than Greenblatt's. A couple of corrections about Treasury bonds are worth noting though: market values of Treasury bonds can decline steeply during rising inflation or rising interest rate environments, and stocks can decline during those periods too.
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  17. When I saw the trailer my reaction was “wow, I actually wanna go see that”. Thanks for the review Steve, I’ll pirate it instead.

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  18. Steve,

    The link to Unreal Estate in your Taki article goes nowhere.

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    • Replies: @Steve Sailer
    Sorry:

    http://isteve.blogspot.com/2010/03/unreal-estate.html

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  19. @Discordiax
    Weeks or months ago, Sailer asked us for ideas for the government to plan for the next Camp-of-the-Saints surge. (I am not a deadline person).

    The best place to warehouse large numbers of unwanted aliens is probably Puerto Rico. It's US territory, the local economy and government badly need the boost, and if the unwanted escape from their dormitories (camps), they'll have a very hard time getting to the mainland.

    Continuing the Isteve tradition of comments entirely irrelevant to the post they are attached to.

    Alaska would be better. They have lots of space, and they will be far away from us. I know it can get cold there, but if you want to be an American, you have to live where the living is the hardest.
    Those who survive the first winter will get our respect.

    Read More
    • Replies: @Discordiax
    Why Puerto Rico over Alaska?

    1. Alaska is cold, Puerto Rico is hot. We're talking (mostly) about Central and South Americans, who are used to a climate like Puerto Rico's.

    2. Puerto Rico already has the infrastructure for a sizable population. Alaska is pretty empty.

    I'm not warehousing them with the plan that some die and the survivors win citizenship, I'm warehousing them until their re-patriation gets processed.
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  20. @Jim Don Bob
    Steve,

    The link to Unreal Estate in your Taki article goes nowhere.
    Read More
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  21. i think the breaking fourth wall to explain details of plot was borrowed from scorsese. he had dicaprio do it a few times in wolf of wall street and worked well to explain some wall street jargony type stuff. scorsese had ray liotta do it quite memorably in good fellas. can’t recall it in other scorsese movies. wolf of wall st was likely a big source of ideas for turning big short into a movie.

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  22. @Citizen of a Silly Country
    Dave,

    Don't know if you need to make investing too complicated. Asset allocation actually works pretty well in controlling risk (at least deflation/market meltdown risk) in a simple and cheap way - if investors to use the right tools. In the case of bonds, they should use U.S. Treasuries for their bond allocation and nothing else.

    Treasuries hold their value and, usually, increase a bit (interest rates falling and flight to safety) during a recession/market meltdown. Corporate bonds sometimes do alright but can get hammered due to credit concerns, so leave them out. You can also assume that stocks will fall ~50% in a sharp downturn. Therefore, if your Cry Uncle point is a 20% drop in your portfolio, you should be alright with a 40 stock/60 intermediate Treasury portfolio. If its 30%, go with 60/40; if it's 15%, go with 30/70.

    The key is to use Treasuries and no other type of bond. Granted, you could have a Depression-style meltdown of stocks (~85%), but that's a special case. Regardless, the Treasuries would still provide the needed protection and would definitely increase quite a bit in value (~10% to 20%) as interest/inflation rates collapse, mitigating the additional decline in stock values.

    Use puts as downside protection seems needlessly complicated and expensive. The research seems to show that Portfolio Insurance isn't the best course. Larry Swedroe had a nice write up about the subject here.

    http://www.etf.com/sections/index-investor-corner/swedroe-cheap-volatility-illusion?nopaging=1

    Now, inflation risk is a bit more difficult. Using TIPs for your bond allocation could be effective for both deflation and inflation risk, but TIPs got nailed in 08-09 due to illiquidity, so that was an issue. I'd suspect that won't happen again, but who knows.

    The point of my linking to that post was to highlight Greenblatt’s hypocrisy in expecting small investors to tolerate drawdowns much larger than he was willing to tolerate. I have since developed a better approach to investing while managing risk, one I detail here: https://portfolioarmor.com .

    Your stock/bond allocation is fairly common, and it’s a better approach than Greenblatt’s. A couple of corrections about Treasury bonds are worth noting though: market values of Treasury bonds can decline steeply during rising inflation or rising interest rate environments, and stocks can decline during those periods too.

    Read More
    • Replies: @Citizen of a Silly Country
    Yea, sorry, I went off on a bit of a tangent. Interesting about Greenblatt, though. Sounds like a great guy.

    Regarding Treasuries, that's why I mentioned TIPs. But, I agree, inflation is problematic, crushes intermediate to long-term nominal treasuries and doesn't do stocks any favors either. (It's somewhat of an urban myth that stocks hedge against inflation, certainly in the short run.) Even TIPs could theoretically get creamed if real interest rates rise. Everyone worries about deflationary downturns, a la '08-'09, but we have tools to deal with that. It's inflation that's hard to combat in a regular portfolio. (There is an interesting alternative fund that could help, but it's too new to evaluate.)

    Risk Parity is an interesting idea to deal with inflation and deflation, but levering up Treasuries and commodities to match the risk/return of stocks has its problems as well.

    Anyway, thanks for mentioning Greenblatt, I'd like to read more about that.

    , @Anonymous
    I think you misunderstood what spooked Greenblatt. It was that the bet involved credit derivatives rather than equities.

    Greenblatt and his colleagues had been following Curry's web posts for some time before approaching him.

    Curry was part of an online value investing discussion group that, characteristically, focused in individual equity issues. In other words, the sort of investing Greenblatt had been doing for over twenty years.

    Wagers on broad categories of debt are "macro" types of investing that might be typical of someone like George Soros but not classic value investors like Greenblatt and his partners.

    I don't think Greenblatt & Co. had any opinion about mortgage-backed securities and, when their relationship with Curry began, had no reason to expect that he would eventually be taking a massive position in credit derivatives.

    Greenblatt is comfortable with a high degree of equity risk because he believes his understanding keeps the odds in his favor over multi-year periods.

    Put options on indices of mortgage-backed securities were simply outside of his area of competence and not something he had anticipated Curry getting involved with.
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  23. Is Tim Burton sort of a closet-con?

    His POTA was one of the most un-PC movies ever.

    And MARS ATTACK… that’s sort of ‘xenophobic’, aint it?

    All those flaky Libs getting zapped all over.

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  24. @flyingtiger
    Alaska would be better. They have lots of space, and they will be far away from us. I know it can get cold there, but if you want to be an American, you have to live where the living is the hardest.
    Those who survive the first winter will get our respect.

    Why Puerto Rico over Alaska?

    1. Alaska is cold, Puerto Rico is hot. We’re talking (mostly) about Central and South Americans, who are used to a climate like Puerto Rico’s.

    2. Puerto Rico already has the infrastructure for a sizable population. Alaska is pretty empty.

    I’m not warehousing them with the plan that some die and the survivors win citizenship, I’m warehousing them until their re-patriation gets processed.

    Read More
    • Replies: @Reg Cæsar

    I’m not warehousing them with the plan that some die and the survivors win citizenship, I’m warehousing them until their re-patriation gets processed.

     

    The important point is not repatriation, but expatriation. We plant them in Puerto Rico, and tell the Puerto Ricans they can do whatever they want with them-- after they accept our offer of independence.

    That way, we're rid of two millstones.
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  25. @Jefferson
    "Gosling collects a bonus check for $47 million for having the testosterone level to bet against the American Dream and the IQ to keep straight in his head what a credit default swap is."

    Steve Carrel ends up pocketing over $200 million dollars from betting against the housing market.

    The man who really made out was Paulson (John not Hank) — over $2 billion I believe. But presumably because he declined to cooperate with Lewis, he is mentioned only in passing in the book.

    Of course, how much you money can make on any wager depends on how much you can afford to bet. Paulson could bet a lot more than Burry or even Eisman (the Carrell character, Baum).

    Read More
    • Replies: @Mark Eugenikos
    I'll second that comment about John Paulson. He actually made $3.5 B in 2007 during the real estate collapse. Compared to what he made, everyone else seems like a bit player.

    I haven't read The Big Short, but I read The Greatest Trade Ever by Gregory Zuckerman and it's an excellent account since it covers all the known traders who profited from the real estate collapse: John Paulson and his team, Jeffrey Greene, and also Dr. Michael Burry, in a collection of intertwined stories. Paulson spent over 50 hours talking to Zuckerman so the book is very well researched and documented. It's a great read if you want to understand what happened.
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  26. I know this is hopelessly pedantic, but it’s a pet peeve of mine, and I have to say something. MBS and CDO are not acronyms; they are abbreviations. Acronyms are abbreviations that are spoken as word (e.g. NASA, NATO).

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  27. Lewis did indeed write the Blind Side, and is indeed a cuckservative. Steve keeps writing about closet conservatives in Hollywood, but they are really just cuckservatives. They believe in the same old tired stuff, Jews and Gentiles alike: the pre-ordained saved, seen by their material success and devotion to PC/Diversity, the pre-ordained damned (the White working/middle class); the sacredness of Blacks and Third Worlders including Muslims, the whole Puritanism in another form.

    It is just that some cuckservatives in Hollywood are less insane than others. That’s all. Not quite ready to drink the Kool Aide for Revolutionary Suicide.

    Hollywood is rotten this way not because of Jews: when Sam Goldwyn, Louis B. Mayer, and Jack Warner owned everything it was much, much “Yankee Doodle Dandy” better. But because no one owns anything; thus the desire to extract rent like an Ottoman Tax Farmer rather than grow profits and value.

    Allow young and hungry writer/directors like McKay to OWN a good portion of the revenue stream, with honest accounting and no cheating, and they will seek to maximize their money. Instead the studios cheat the talent a sign of falling revenue; like a chef shorting his wait staff on tips; and talent seeks to status-signal for their next job.

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  28. A lot os these guys who won shorting ended up in gold, which hasn’t ( but will IMO) do well.

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  29. @keypusher
    The man who really made out was Paulson (John not Hank) -- over $2 billion I believe. But presumably because he declined to cooperate with Lewis, he is mentioned only in passing in the book.

    Of course, how much you money can make on any wager depends on how much you can afford to bet. Paulson could bet a lot more than Burry or even Eisman (the Carrell character, Baum).

    I’ll second that comment about John Paulson. He actually made $3.5 B in 2007 during the real estate collapse. Compared to what he made, everyone else seems like a bit player.

    I haven’t read The Big Short, but I read The Greatest Trade Ever by Gregory Zuckerman and it’s an excellent account since it covers all the known traders who profited from the real estate collapse: John Paulson and his team, Jeffrey Greene, and also Dr. Michael Burry, in a collection of intertwined stories. Paulson spent over 50 hours talking to Zuckerman so the book is very well researched and documented. It’s a great read if you want to understand what happened.

    Read More
    • Replies: @keypusher
    Thanks, I will take a look.

    The Big Short feels very truncated, and ultimately unsatisfying. Lewis clearly wanted to nail Goldman Sachs, but whether for fear of a libel suit or because he just couldn't get the story he wanted, he winds up practically leaving them out. It's hard to tell the story of the real estate collapse without talking about Goldman or John Paulson.

    In an interview with the CBS morning show Lewis said The Big Short was a character-driven book, and he definitely found some characters. He's a financial reporter for book lovers, as Mr. Sailer might say.
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  30. Alaska is a terrible idea. We need to keep a plausible Alpine Redoubt.

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  31. I used to run a derivatives desk. The so called smarts are much over-rated. Sure, the Quants slapping together the pricing models need to have some serious math but when push comes to shove the models are useless: When the market is moving the prices bear no relation to the models and are are much more a function of ones ability to smell fear and greed.
    The models are there to give the regulators something to fill the long afternoon hours.
    btw, the smartest guys I dealt with were the Mormon money managers at LDS. Being in the Sin business seems to be good training for separating other people from their money and hanging on to yours.

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  32. @Mark Eugenikos
    I'll second that comment about John Paulson. He actually made $3.5 B in 2007 during the real estate collapse. Compared to what he made, everyone else seems like a bit player.

    I haven't read The Big Short, but I read The Greatest Trade Ever by Gregory Zuckerman and it's an excellent account since it covers all the known traders who profited from the real estate collapse: John Paulson and his team, Jeffrey Greene, and also Dr. Michael Burry, in a collection of intertwined stories. Paulson spent over 50 hours talking to Zuckerman so the book is very well researched and documented. It's a great read if you want to understand what happened.

    Thanks, I will take a look.

    The Big Short feels very truncated, and ultimately unsatisfying. Lewis clearly wanted to nail Goldman Sachs, but whether for fear of a libel suit or because he just couldn’t get the story he wanted, he winds up practically leaving them out. It’s hard to tell the story of the real estate collapse without talking about Goldman or John Paulson.

    In an interview with the CBS morning show Lewis said The Big Short was a character-driven book, and he definitely found some characters. He’s a financial reporter for book lovers, as Mr. Sailer might say.

    Read More
    • Replies: @Jim Don Bob
    I agree. I read the book and it just sort of ended. But I agree with the Tom Wolfe (long may he live and write) influence.
    , @Mark Eugenikos
    In that case you'll probably like The Greatest Trade Ever; it doesn't seem incomplete by any measure. It starts by giving the background on all the main characters, then it talks about the history of the subprime market from the early 2000s, and then goes into more detail about the setup and the trade, and finally it wraps up in 2008/early 2009. Goldman Sachs is mentioned 14 times (I counted in the Index). :)
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  33. OT, but as per custom putting them at the top of the queue: Mistrial in Baltimore, and Saudi Prince acquitted of rape charge. The first points to the questionable Freddie Gray hysteria, the second to the fact that Muslim immigration spells the death of sexual assault (yes, I’m aware his defense amounted to a riff on an old Talmudic thought experiment.)

    http://www.baltimoresun.com/news/maryland/freddie-gray/bs-md-porter-trial-jury-wednesday-20151216-story.html

    http://www.dailymail.co.uk/news/article-3361640/Saudi-millionaire-cleared-raping-teenager-telling-court-accidentally-penetrated-18-year-old-tripped-fell-her.html

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  34. @Discordiax
    Why Puerto Rico over Alaska?

    1. Alaska is cold, Puerto Rico is hot. We're talking (mostly) about Central and South Americans, who are used to a climate like Puerto Rico's.

    2. Puerto Rico already has the infrastructure for a sizable population. Alaska is pretty empty.

    I'm not warehousing them with the plan that some die and the survivors win citizenship, I'm warehousing them until their re-patriation gets processed.

    I’m not warehousing them with the plan that some die and the survivors win citizenship, I’m warehousing them until their re-patriation gets processed.

    The important point is not repatriation, but expatriation. We plant them in Puerto Rico, and tell the Puerto Ricans they can do whatever they want with them– after they accept our offer of independence.

    That way, we’re rid of two millstones.

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  35. OT: Another entry under “Race and Medicine”, this time from NPR.

    “Clinical Trials Still Don’t Reflect The Diversity Of America”

    [...]
    “We’ve known for years that certain drugs don’t work on parts of our population,” says Sam Oh, an epidemiologist at the University of California, San Francisco Center for Genes, Environment and Health.
    [...]
    “Only 2 percent of cancer studies and less than 5 percent of pulmonary studies have studied enough minorities to provide useful information,” Oh says.

    Because of genetic differences, some people’s bodies process drugs in very different ways. Racial and ethnic categories can serve as a proxy for those differences.

    The blood thinner clopidogrel, or Plavix, doesn’t work in the 75 percent of Pacific Islanders whose bodies don’t produce the enzyme required to activate the drug. For them, taking the medication is like taking a placebo.

    People with epilepsy who are of Asian descent are supposed to get genetic testing before being prescribed the seizure medication carbamazepine, because the drug can damage the skin and internal organs of patients with a certain gene variant.

    And, says Oh, “African-Americans and Puerto Ricans don’t respond as well to some of the most common asthma controller medications, and that’s really a tragedy since these two groups are the most affected by asthma in the United States.”
    [...]

    http://www.npr.org/sections/health-shots/2015/12/16/459666750/clinical-trials-still-dont-reflect-the-diversity-of-america

    The paper that’s referenced in the article is:
    “Diversity in Clinical and Biomedical Research: A Promise Yet to Be Fulfilled”

    http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001918

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  36. OT:

    “A Tale of Two Sisters”

    As a gymnast born without legs, Jen Bricker grew up idolizing Olympic gold-medalist Dominique Moceanu from afar. Her discovery that they are long-lost siblings shines light on the complicated interplay of genes and environment in the creation of athletic prowess.

    https://www.psychologytoday.com/articles/201511/tale-two-sisters

    Read More
    • Replies: @Brutusale
    HBO's Real Sports covered the story 3 years ago:

    https://www.youtube.com/watch?v=3qkOIZovkf8

    Athletes tend to breed athletes, right, Mrs. McCaffrey?

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  37. @Dave Pinsen
    The point of my linking to that post was to highlight Greenblatt's hypocrisy in expecting small investors to tolerate drawdowns much larger than he was willing to tolerate. I have since developed a better approach to investing while managing risk, one I detail here: https://portfolioarmor.com .

    Your stock/bond allocation is fairly common, and it's a better approach than Greenblatt's. A couple of corrections about Treasury bonds are worth noting though: market values of Treasury bonds can decline steeply during rising inflation or rising interest rate environments, and stocks can decline during those periods too.

    Yea, sorry, I went off on a bit of a tangent. Interesting about Greenblatt, though. Sounds like a great guy.

    Regarding Treasuries, that’s why I mentioned TIPs. But, I agree, inflation is problematic, crushes intermediate to long-term nominal treasuries and doesn’t do stocks any favors either. (It’s somewhat of an urban myth that stocks hedge against inflation, certainly in the short run.) Even TIPs could theoretically get creamed if real interest rates rise. Everyone worries about deflationary downturns, a la ’08-’09, but we have tools to deal with that. It’s inflation that’s hard to combat in a regular portfolio. (There is an interesting alternative fund that could help, but it’s too new to evaluate.)

    Risk Parity is an interesting idea to deal with inflation and deflation, but levering up Treasuries and commodities to match the risk/return of stocks has its problems as well.

    Anyway, thanks for mentioning Greenblatt, I’d like to read more about that.

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  38. Holman Jenkins column in the WSJ today covered the Big Short in typical contrarian fashion.

    The “big shorts” paid millions to Goldman Sachs and others to concoct convoluted contracts that let them bet against these securities, and to find banks to take the opposing, or “long,” bet. (The irony being that, in this way, the movie heroes actually supported the manufacture of more subprime housing loans.) If they had really seen what was coming, our heroes would have saved themselves a lot of trouble and expense and simply shorted the big banks and the entire stock market—a bet that any day trader can make from the comfort of his bathrobe.

    Read More
    • Replies: @Mark Eugenikos
    I haven't read the column Jenkins wrote, but from what you posted he should have researched more (not like he didn't have the means, being employed by WSJ).

    Back to John Paulson, after his firm made $20 B in 2007 (of which $3.5 B was his personal take) shorting subprime mortgages using those very complex instruments, in 2009 he made another several billion dollars shorting the banks themselves. So yeah, he dipped twice into that toxic pond, and in the process went from being a relative nobody (his firm managed only about $300 M before the subprime crisis) to being worth over $10 B personally.

    The day trader comment was just plain ignorant on Jenkins's part: all who profited from the subprime crisis sat on their positions for 2-3 years before they finally made the killing. That's about as exact opposite of a day trader as it gets.
    , @keypusher
    Yeah, Jenkins' column is just a whole big pile of stupid. "They could have just shorted the banks" -- Michael Burry had to figure out what the hell a mortgage-backed security was (which the people running most of the big banks never managed to do, until it was too late) -- and the banks' exposure was changing (and getting bigger) in real time. Burry was making bets in 2005. The first real ripples of the crisis came in 2007, when the auction-rate securities market began to seize up. The first big bank to go down, Bear Stearns, didn't fail until early 2008, and things didn't get truly dire until Lehman and AIG went up in flames in September 2008.

    Probably the dumbest thing in the column is the following: "Even John Paulson, the biggest short of all, according to later court testimony by a top deputy, didn't foresee Armageddon, only that the 'housing market had appreciated excessively and that housing pries would stabilize or flatten out or decline.'"

    I realize that Holman Jenkins is merely a financial journalist working for the allegedly leading business publication on the planet, but shouldn't he have at least heard of leverage? Does he have no idea that borrowing lots of money can amplify profits AND losses? And wasn't the central insight of the shorts that even a tiny decline in the housing market could wipe out a leveraged MBS completely?

    And anyone could have made out like John Paulson or Steve Eisman by being short any old thing? Poor John Paulson, "myopically focused on a narrow class of mortgage securities." So why is Holman Jenkins still having to write crap for the Journal to earn his bread? Shouldn't he own his own island by now?
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  39. @keypusher
    Thanks, I will take a look.

    The Big Short feels very truncated, and ultimately unsatisfying. Lewis clearly wanted to nail Goldman Sachs, but whether for fear of a libel suit or because he just couldn't get the story he wanted, he winds up practically leaving them out. It's hard to tell the story of the real estate collapse without talking about Goldman or John Paulson.

    In an interview with the CBS morning show Lewis said The Big Short was a character-driven book, and he definitely found some characters. He's a financial reporter for book lovers, as Mr. Sailer might say.

    I agree. I read the book and it just sort of ended. But I agree with the Tom Wolfe (long may he live and write) influence.

    Read More
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  40. @Anonymous
    The Sailer Method:

    1) Magnify the role race played in something/reduce the whole thing to race.
    2) Claim the reason you haven't heard about it this way is because They (tm) don't want you to know.
    3) Repeat.

    The MSM method

    1) Minimize the role race plays in something/reduce any racial element to zero.
    2) Accuse anyone who disagrees of being a big fat nazi and get them fired from their job.
    3) Repeat.

    Read More
    • Replies: @Citizen of a Silly Country
    Nice.
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  41. @keypusher
    Thanks, I will take a look.

    The Big Short feels very truncated, and ultimately unsatisfying. Lewis clearly wanted to nail Goldman Sachs, but whether for fear of a libel suit or because he just couldn't get the story he wanted, he winds up practically leaving them out. It's hard to tell the story of the real estate collapse without talking about Goldman or John Paulson.

    In an interview with the CBS morning show Lewis said The Big Short was a character-driven book, and he definitely found some characters. He's a financial reporter for book lovers, as Mr. Sailer might say.

    In that case you’ll probably like The Greatest Trade Ever; it doesn’t seem incomplete by any measure. It starts by giving the background on all the main characters, then it talks about the history of the subprime market from the early 2000s, and then goes into more detail about the setup and the trade, and finally it wraps up in 2008/early 2009. Goldman Sachs is mentioned 14 times (I counted in the Index). :)

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  42. @anon
    The MSM method

    1) Minimize the role race plays in something/reduce any racial element to zero.
    2) Accuse anyone who disagrees of being a big fat nazi and get them fired from their job.
    3) Repeat.

    Nice.

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  43. Immigration may have played a role in the housing bubble but given that it was a world wide phenomenon, it isn’t likely that it was the root cause.

    Read More
    • Replies: @anon
    The root cause was they thought they'd figured out a mathematical way of reducing risk from bad loans so (simplified)
    - prime loans became prime+
    - sub-prime became prime
    - bad loans became sub-prime
    so they went looking for what they would previously have considered sub-prime or bad.

    (They were wrong of course.)

    The form that search took varied by country - including the fake anti-racism in the US.

    #

    The real underlying reason why the banks will always dream up a "this time it's different" scenario at regular intervals is the banks can make so much money from being reckless they are in a permanent state of restrained frenzy that is only controlled by the memory of the financial disaster that frenzy caused the last time it was unleashed.

    If banks are allowed to fail in the disaster then it might take 60-80 years before everyone involved has passed on and the memory forgotten.

    If banks are bailed out then the cycle will be much more frequent e.g. the TBTF banks are already back to their old sub-prime tricks with car loans even though the housing bubble they created still isn't fixed yet and there's also now a massive stock bubble created by the attempt to repair the damage done by the partial unwind of the housing bubble.

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  44. anon • Disclaimer says:
    @Erik L
    Immigration may have played a role in the housing bubble but given that it was a world wide phenomenon, it isn't likely that it was the root cause.

    The root cause was they thought they’d figured out a mathematical way of reducing risk from bad loans so (simplified)
    - prime loans became prime+
    - sub-prime became prime
    - bad loans became sub-prime
    so they went looking for what they would previously have considered sub-prime or bad.

    (They were wrong of course.)

    The form that search took varied by country – including the fake anti-racism in the US.

    #

    The real underlying reason why the banks will always dream up a “this time it’s different” scenario at regular intervals is the banks can make so much money from being reckless they are in a permanent state of restrained frenzy that is only controlled by the memory of the financial disaster that frenzy caused the last time it was unleashed.

    If banks are allowed to fail in the disaster then it might take 60-80 years before everyone involved has passed on and the memory forgotten.

    If banks are bailed out then the cycle will be much more frequent e.g. the TBTF banks are already back to their old sub-prime tricks with car loans even though the housing bubble they created still isn’t fixed yet and there’s also now a massive stock bubble created by the attempt to repair the damage done by the partial unwind of the housing bubble.

    Read More
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  45. @EriK
    Holman Jenkins column in the WSJ today covered the Big Short in typical contrarian fashion.

    The “big shorts” paid millions to Goldman Sachs and others to concoct convoluted contracts that let them bet against these securities, and to find banks to take the opposing, or “long,” bet. (The irony being that, in this way, the movie heroes actually supported the manufacture of more subprime housing loans.) If they had really seen what was coming, our heroes would have saved themselves a lot of trouble and expense and simply shorted the big banks and the entire stock market—a bet that any day trader can make from the comfort of his bathrobe.
     

    I haven’t read the column Jenkins wrote, but from what you posted he should have researched more (not like he didn’t have the means, being employed by WSJ).

    Back to John Paulson, after his firm made $20 B in 2007 (of which $3.5 B was his personal take) shorting subprime mortgages using those very complex instruments, in 2009 he made another several billion dollars shorting the banks themselves. So yeah, he dipped twice into that toxic pond, and in the process went from being a relative nobody (his firm managed only about $300 M before the subprime crisis) to being worth over $10 B personally.

    The day trader comment was just plain ignorant on Jenkins’s part: all who profited from the subprime crisis sat on their positions for 2-3 years before they finally made the killing. That’s about as exact opposite of a day trader as it gets.

    Read More
    • Replies: @EriK
    Read the column, then opine. Jenkins is no rube.
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  46. @Danindc
    You mentioned Ron Shelton - he never got enough scorn for directing Tin Cup. What a piece of sh*t. One of the worst movies ever made.

    Tin Cup is one of the only three movies I have ever walked out on.

    Read More
    • Replies: @Joe Joe
    what are the other two???
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  47. By the way , why has Tom Wolfe never written a novel, or even a short story, about movie guys? Most of the research could be free googling judiciously selected terms in blog and similar blogs – and a few leisurely hours talking to a few of the thousands of Americans who worked in the movies for a year or two or more and are more than happy to talk about their experiences. He could explore real interesting questions – to focus on one that is relevant this week, but other similar questions could be just as narratively full of interest – would a Star Wars infatuated graphic artist be good at what he does because Star Wars was about what it was like to be a teenage Californian in cruising’ Modesto at a time when no generation of young people had ever been given a more hopeful view of life by their hardworking parents than any previous generation – a historically unique and unrepeatable topic? Its not like Homer or Dante, for all their angelic-level gifts, could have accurately described the world one sees in American Graffiti or Peggy Sue Got Married or even Back to the Future. Or would that artist be a bad artist because the more extreme Star Wars fanboys are intense losers who are more interested in why Star Wars was the biggest film of the 70s for kids than why the 70s was the last decade that had lots of great Westerns for adults?

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  48. @Mark Eugenikos
    I haven't read the column Jenkins wrote, but from what you posted he should have researched more (not like he didn't have the means, being employed by WSJ).

    Back to John Paulson, after his firm made $20 B in 2007 (of which $3.5 B was his personal take) shorting subprime mortgages using those very complex instruments, in 2009 he made another several billion dollars shorting the banks themselves. So yeah, he dipped twice into that toxic pond, and in the process went from being a relative nobody (his firm managed only about $300 M before the subprime crisis) to being worth over $10 B personally.

    The day trader comment was just plain ignorant on Jenkins's part: all who profited from the subprime crisis sat on their positions for 2-3 years before they finally made the killing. That's about as exact opposite of a day trader as it gets.

    Read the column, then opine. Jenkins is no rube.

    Read More
    • Replies: @Mark Eugenikos
    I did read the column afterwards, and it is as dumb as keypusher described it. It basically boils down to "nothing to see here, just move on, and we told you about it many times before it happened anyway". What a load of crap. No wonder Jenkins got massacred in the comments to this column. To quote just one:

    I was at the SEC. I started the SEC's Libor rate manipulation case. I read contemporaneously the 10Ks of banks like Citi, WaMu, BofA, Countrywide, and Wachovia. I've seen the charts from their disclosures about low LTV loans made in 2005 and 2006.

    This man does not know what he is talking about, without extending the post to be too long. Truly. I'm surprised the Journal didn't ask someone with knowledge in the area to read his "opinion" on a fact-based issue.

    Has he read Friedman & Schwartz, "The Great Contraction," about what caused the Great Depression? Does he even know what happened in the Fall of 1930 and its effects on the US economy.

    This is silliness, truly, published by the most respected US financial newspaper. The editors need to review who authorized this piece, and what sort of fact-checking was done -- because it's not an opinion; it's about facts.

    Robert Swanson
    Senior Counsel, SEC (2003-2010)
    Assistant Counsel to the President, GHWB (1990-1993)
     
    Conclusion: Jenkins is a rube.
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  49. A TV movie with Jim Garner – Barbarians at the Gate (1993) – About the Tobacco industry was not a bad business movie. It still gets 7.4 on IMDb.

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  50. @EriK
    Holman Jenkins column in the WSJ today covered the Big Short in typical contrarian fashion.

    The “big shorts” paid millions to Goldman Sachs and others to concoct convoluted contracts that let them bet against these securities, and to find banks to take the opposing, or “long,” bet. (The irony being that, in this way, the movie heroes actually supported the manufacture of more subprime housing loans.) If they had really seen what was coming, our heroes would have saved themselves a lot of trouble and expense and simply shorted the big banks and the entire stock market—a bet that any day trader can make from the comfort of his bathrobe.
     

    Yeah, Jenkins’ column is just a whole big pile of stupid. “They could have just shorted the banks” — Michael Burry had to figure out what the hell a mortgage-backed security was (which the people running most of the big banks never managed to do, until it was too late) — and the banks’ exposure was changing (and getting bigger) in real time. Burry was making bets in 2005. The first real ripples of the crisis came in 2007, when the auction-rate securities market began to seize up. The first big bank to go down, Bear Stearns, didn’t fail until early 2008, and things didn’t get truly dire until Lehman and AIG went up in flames in September 2008.

    Probably the dumbest thing in the column is the following: “Even John Paulson, the biggest short of all, according to later court testimony by a top deputy, didn’t foresee Armageddon, only that the ‘housing market had appreciated excessively and that housing pries would stabilize or flatten out or decline.’”

    I realize that Holman Jenkins is merely a financial journalist working for the allegedly leading business publication on the planet, but shouldn’t he have at least heard of leverage? Does he have no idea that borrowing lots of money can amplify profits AND losses? And wasn’t the central insight of the shorts that even a tiny decline in the housing market could wipe out a leveraged MBS completely?

    And anyone could have made out like John Paulson or Steve Eisman by being short any old thing? Poor John Paulson, “myopically focused on a narrow class of mortgage securities.” So why is Holman Jenkins still having to write crap for the Journal to earn his bread? Shouldn’t he own his own island by now?

    Read More
    • Replies: @Dave Pinsen

    The first big bank to go down, Bear Stearns, didn’t fail until early 2008
     
    But the pure-play mortgage companies (like New Century Financial) started blowing up a year earlier. I recall a message on its Yahoo Finance message board, by a guy who ran out to do an errand only to come back and see the stock had tanked ("That was the most expensive gallon of milk ever"). Too Yahoo doesn't keep those boards up when a stock goes bust.

    realize that Holman Jenkins is merely a financial journalist working for the allegedly leading business publication on the planet, but shouldn’t he have at least heard of leverage? Does he have no idea that borrowing lots of money can amplify profits AND losses?
     
    Yeah, this has been a blindside of his for a long time. I remember him saying, before the bust, that most people would be better off not owning real estate because the long term average return of it was less than the stock market. Of course, this ignores the impact of leverage: someone with a 20% down payment effectively has 5x leverage.
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  51. @EriK
    Read the column, then opine. Jenkins is no rube.

    I did read the column afterwards, and it is as dumb as keypusher described it. It basically boils down to “nothing to see here, just move on, and we told you about it many times before it happened anyway”. What a load of crap. No wonder Jenkins got massacred in the comments to this column. To quote just one:

    I was at the SEC. I started the SEC’s Libor rate manipulation case. I read contemporaneously the 10Ks of banks like Citi, WaMu, BofA, Countrywide, and Wachovia. I’ve seen the charts from their disclosures about low LTV loans made in 2005 and 2006.

    This man does not know what he is talking about, without extending the post to be too long. Truly. I’m surprised the Journal didn’t ask someone with knowledge in the area to read his “opinion” on a fact-based issue.

    Has he read Friedman & Schwartz, “The Great Contraction,” about what caused the Great Depression? Does he even know what happened in the Fall of 1930 and its effects on the US economy.

    This is silliness, truly, published by the most respected US financial newspaper. The editors need to review who authorized this piece, and what sort of fact-checking was done — because it’s not an opinion; it’s about facts.

    Robert Swanson
    Senior Counsel, SEC (2003-2010)
    Assistant Counsel to the President, GHWB (1990-1993)

    Conclusion: Jenkins is a rube.

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  52. Other People’s Money (1991) was a surprisingly very well-written and well-acted movie where Danny Devito plays a corporate raider with an ostensibly awful personality who explains very clearly why his corporate take over of a struggling Rhode Island factory-company actually is better for everyone than letting the old WASP (played by Gregory Peck) who ran it for years continue to run it into the ground. Cold-blooded libertarian logic actually looks good over small-town sentimentality in the film. DeViot’s character also lightly but clearly goes into how he goes about his business generally.

    I say surprising because the business-explanation parts seem almost after thoughts, as the real action in the movie is how DeVito humanizes himself and makes the gorgeous Peneople Ann Miller fall for him. DeVito is such a homely middle aged midget and his personality is so odious at the start and he’s literally trying to put Miller’s own (step) father out of business that it really is a master work of acting and writing that makes you believe he could get Miller. It’s almost Richard III esque, but without the killing.

    It’s definitely not like the typical “hate you-but-will-fall for you later” setup to a rom com where the future couple are both good looking people of “appropriate” age who just happen to meet for the first time when they’re both in bad moods.

    p.s. I’ve long had the suspicion that it had started out as a play (very talky, strong but few characters) and I just found I was right: it was based on a Jerry Sterner play.

    Read More
    • Replies: @Steve Sailer
    I saw "Other People's Money" as a play in Chicago around 1989.
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  53. @whorefinder
    Other People's Money (1991) was a surprisingly very well-written and well-acted movie where Danny Devito plays a corporate raider with an ostensibly awful personality who explains very clearly why his corporate take over of a struggling Rhode Island factory-company actually is better for everyone than letting the old WASP (played by Gregory Peck) who ran it for years continue to run it into the ground. Cold-blooded libertarian logic actually looks good over small-town sentimentality in the film. DeViot's character also lightly but clearly goes into how he goes about his business generally.

    I say surprising because the business-explanation parts seem almost after thoughts, as the real action in the movie is how DeVito humanizes himself and makes the gorgeous Peneople Ann Miller fall for him. DeVito is such a homely middle aged midget and his personality is so odious at the start and he's literally trying to put Miller's own (step) father out of business that it really is a master work of acting and writing that makes you believe he could get Miller. It's almost Richard III esque, but without the killing.

    It's definitely not like the typical "hate you-but-will-fall for you later" setup to a rom com where the future couple are both good looking people of "appropriate" age who just happen to meet for the first time when they're both in bad moods.

    p.s. I've long had the suspicion that it had started out as a play (very talky, strong but few characters) and I just found I was right: it was based on a Jerry Sterner play.

    I saw “Other People’s Money” as a play in Chicago around 1989.

    Read More
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  54. @keypusher
    Yeah, Jenkins' column is just a whole big pile of stupid. "They could have just shorted the banks" -- Michael Burry had to figure out what the hell a mortgage-backed security was (which the people running most of the big banks never managed to do, until it was too late) -- and the banks' exposure was changing (and getting bigger) in real time. Burry was making bets in 2005. The first real ripples of the crisis came in 2007, when the auction-rate securities market began to seize up. The first big bank to go down, Bear Stearns, didn't fail until early 2008, and things didn't get truly dire until Lehman and AIG went up in flames in September 2008.

    Probably the dumbest thing in the column is the following: "Even John Paulson, the biggest short of all, according to later court testimony by a top deputy, didn't foresee Armageddon, only that the 'housing market had appreciated excessively and that housing pries would stabilize or flatten out or decline.'"

    I realize that Holman Jenkins is merely a financial journalist working for the allegedly leading business publication on the planet, but shouldn't he have at least heard of leverage? Does he have no idea that borrowing lots of money can amplify profits AND losses? And wasn't the central insight of the shorts that even a tiny decline in the housing market could wipe out a leveraged MBS completely?

    And anyone could have made out like John Paulson or Steve Eisman by being short any old thing? Poor John Paulson, "myopically focused on a narrow class of mortgage securities." So why is Holman Jenkins still having to write crap for the Journal to earn his bread? Shouldn't he own his own island by now?

    The first big bank to go down, Bear Stearns, didn’t fail until early 2008

    But the pure-play mortgage companies (like New Century Financial) started blowing up a year earlier. I recall a message on its Yahoo Finance message board, by a guy who ran out to do an errand only to come back and see the stock had tanked (“That was the most expensive gallon of milk ever”). Too Yahoo doesn’t keep those boards up when a stock goes bust.

    realize that Holman Jenkins is merely a financial journalist working for the allegedly leading business publication on the planet, but shouldn’t he have at least heard of leverage? Does he have no idea that borrowing lots of money can amplify profits AND losses?

    Yeah, this has been a blindside of his for a long time. I remember him saying, before the bust, that most people would be better off not owning real estate because the long term average return of it was less than the stock market. Of course, this ignores the impact of leverage: someone with a 20% down payment effectively has 5x leverage.

    Read More
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  55. Read More
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  56. I know Intrade ceased operations but I do think there is value to the idea of a betting market in outcomes that takes advantage of the arbitrage opportunities opened up by political correctness. In a sense that was what was happening in The Big Short.

    The effect of PC thinking is two fold. The true believers are happy to ditch Occam’s Razor for that wonderful feeling. Cynics embrace it as a language they can employ to hide their true beliefs.

    Provided contracts could be drafted that are sufficiently measurable (like the famous Ehrlich-Simon bet) a betting market would permit Occam’s Razor enthusiasts (both open and secret) to clean up at the expense of those who actually think the world works the way they think it does.

    A market like that would have other cleansing effects as well. It would serve as a way to highlight actual outcomes in public ways. And it could operate as a feedback loop, as players realized over time that their opinions are losing them money are might need further scrutiny.

    My sense is that comments sections have drifted more in an anti-PC direction in the recent past. Someone ought to try to measure that, if they have not already. But comments sections are unreliable in their own ways. Let someone put money where is mouth is, and see what happens.

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  57. Speaking of movies, the NY Times is out with its review of the new Star War movie and the critic Manohla Dargis proclaims that the #1 best thing about it is that the cast is diverse – the three stars are a white chick, a Hispanic guy and a black dude “who look more like the multitudes humankind contains, a genuine diversity infrequently represented in our movies.” No stale pale males.

    http://www.nytimes.com/2015/12/18/movies/star-wars-the-force-awakens-review.html?action=click&contentCollection=Business%20Day&module=MostPopularFB&version=Full&region=Marginalia&src=me&pgtype=article

    also now available in Spanish:

    http://www.nytimes.com/2015/12/17/universal/es/star-wars-the-force-awakens-review.html?ref=topics

    I guess so that Slim can read the articles in his own newspaper.

    And then again, at the end of the review, in case we are senile and have forgotten what she just said, “[The director Abrams] most far-reaching accomplishment here is casting Mr. Isaac, Mr. Boyega and Ms. Ridley — a Latino, a black man and a white woman”.

    You got that folks? Forget the plot, the special effects, the costumes, the sets, the quality of the acting – the main thing you should do to earn the praise of the NY Times is to replace all the white guys in your movie (company, government, etc.) with women and people of color.

    Remember, this is ostensibly a movie review but the reporter just can’t restrain herself from letting her political views show. If Trump is the nominee, look for (not so) hidden denunciations of him everywhere – in the book review, the sports pages, even the cooking column.

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  58. far-reaching accomplishment here is casting Mr. Isaac, Mr. Boyega and Ms. Ridley — a Latino, a black man and a white woman”

    Oh, yeah? So which one is gay, transgender, and bisexual? Otherwise it doesn’t “look like America.” Also, no Asians. What’s that about?

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  59. “The Big Short” sounds like it could have been a good movie if Adam McKay hadn’t directed it. McKay, like Seth McFarlane, is a smug, posturing limousine-liberal jerk. I wouldn’t watch any movie he was associated with.

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  60. @dk
    OT:

    "A Tale of Two Sisters"

    As a gymnast born without legs, Jen Bricker grew up idolizing Olympic gold-medalist Dominique Moceanu from afar. Her discovery that they are long-lost siblings shines light on the complicated interplay of genes and environment in the creation of athletic prowess.

    https://www.psychologytoday.com/articles/201511/tale-two-sisters

    HBO’s Real Sports covered the story 3 years ago:

    Athletes tend to breed athletes, right, Mrs. McCaffrey?

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  61. Anonymous • Disclaimer says:
    @Dave Pinsen
    The point of my linking to that post was to highlight Greenblatt's hypocrisy in expecting small investors to tolerate drawdowns much larger than he was willing to tolerate. I have since developed a better approach to investing while managing risk, one I detail here: https://portfolioarmor.com .

    Your stock/bond allocation is fairly common, and it's a better approach than Greenblatt's. A couple of corrections about Treasury bonds are worth noting though: market values of Treasury bonds can decline steeply during rising inflation or rising interest rate environments, and stocks can decline during those periods too.

    I think you misunderstood what spooked Greenblatt. It was that the bet involved credit derivatives rather than equities.

    Greenblatt and his colleagues had been following Curry’s web posts for some time before approaching him.

    Curry was part of an online value investing discussion group that, characteristically, focused in individual equity issues. In other words, the sort of investing Greenblatt had been doing for over twenty years.

    Wagers on broad categories of debt are “macro” types of investing that might be typical of someone like George Soros but not classic value investors like Greenblatt and his partners.

    I don’t think Greenblatt & Co. had any opinion about mortgage-backed securities and, when their relationship with Curry began, had no reason to expect that he would eventually be taking a massive position in credit derivatives.

    Greenblatt is comfortable with a high degree of equity risk because he believes his understanding keeps the odds in his favor over multi-year periods.

    Put options on indices of mortgage-backed securities were simply outside of his area of competence and not something he had anticipated Curry getting involved with.

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  62. @middle aged vet
    Tin Cup is one of the only three movies I have ever walked out on.

    what are the other two???

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  63. Oddly, I haven’t heard a thing about this film! Really looking forward to it now though, thanks!

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