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Financial lessons from the movie: The Big Short
- Posted on August 27, 2020
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By Karan Kapoor
There are lessons hidden everywhere, even in catastrophe. The Big Short, a movie on the greatest financial crisis faced by America, is there a lesson we can learn from it?
Movies, television shows, web series, video games, all were created for the sole purpose of entertainment. They are a source for us to move away from our reality and lose ourselves into a world of unknown. We watch them, get rest, and forget our problems for a few hours. However, we can also learn while we enjoy ourselves. Knowledge is everywhere, we just need the eye to understand it.
The Big Short starring Christian Bale, Steve Carell, Ryan Gosling, and Brad Pitt is a movie based on the financial crisis of 2007-2008, which triggered the global financial crisis. The crisis later was the reason to spark the international banking crisis, which resulted in the Great Recession. The movie is about a few investors who find the loophole in the corrupt mortgage system of the USA, and they bet against the US mortgage market.
There is a lot to learn from the movie, about the financial markets, how you should invest.
Here are some lessons from the movie, The Big Short.
This lesson can be implemented in various places. When investing in anything, be it playing a baseball match. But in the world of business, do not only blindly follow an expert without first doing your homework. The business is ever-changing, so a specialist can quickly ignore signs of danger, particularly if they do not have the latest details. They will also have their own goals on how they earn a paycheck, and their motivations may clash with yours.
The phrase high risks gives high rewards, it sounds enticing, but we should never underestimate any risk. We might win in the end, but we have to be sure we do not lose more than we win. One should never underestimate their achievement, and this should also be a part of your homework(point1).
Never put all your money in one deal, no matter how high yields it might give. You have to be prepared for risk, even if it is a once in a lifetime opportunity. Do not put everything in one deal. Always be resilient.
Look at this as a procedure, if you have done your homework, and you are sure of the risks, then you should go for the investment or deal you want, no matter if your family or friends go against you.
If the world is going in chaos and there is a catastrophe around you, you should have the eye to find the right opportunity, every time. Even if you sense the market is crashing, there is always an opportunity there too. Micheal Burry in the movie did that, he saw his opportunity in the mortgage crisis and took the risk.
Even when we see a bullish turn in the financial markets, never be greedy, the markets can turn bearish any moment. You have to be patient in the times when the markets are down, the human brain tends to get signals.
Always have a keen eye for signs, these signs can be in the downfall or something as the greatest opportunity.
Never try to become rich in one night, you should always try to go long term because long term investments have longer and higher yields.
When you have completed everything you have to double-check everything. You have to double-check the homework, double-check the analysis. You have to double-check your investment idea. Always double-check and then finalize. This is a point that we can apply in other parts of our lives, but this is also one point most people omit.
There is a lot more to learn from the movie The Big Short, and not just this movie, every movie has a lesson in them. If you watch a movie more closely and not just from a perspective of entertainment but the perspective of learning, you can find more things that you can apply in your everyday life.
Further Readings...
