Investment Analyst Explains: The Big Short 

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As a cybersecurity professional, I gotta say that a lot of the claims that are made about the added layer of protection that a VPN offers are overblown. They don't protect against malware, phishing, ransomware, most data leaks, and they aren't a perfect protection against tracking since a lot of that is done through cookies or browser fingerprinting. The protection they do offer is that they add a layer of encryption, but since most internet traffic is encrypted already nowadays, that too is of limited value. I agree that joining a shady wifi network is probably a bad idea without a VPN, but my solution to that would be to use the hotspot on my phone. That's always safer. Sorry to bust your sponsor's balls, Richard, I don't mean you harm. Love your channel and all, just thought I'd share some of my professional expertise.

Almost 10 yrs after that movie came out i found that sea food stew analogy not only apt for the said situation but also very useful explanations of most things in life 😂😂😂😂

This was long due!

It's April 27 2024 and I just saw this video and its GOLD. I went to a private prescreening of TBS (The Big Short) and I remember walking out looking like I'd seen ghost only to be interviewed on the way out. I actually invited a few clients to screen with with me who was in the banking industry. I am in the financial services industry so it was a good watch for me. This movie does a great job showcasing what goes on in the world of Big Finance. Another good watch is The Inside Job, it's more of a documentary style but it's on this level. It follows some of the big players who allowed all this to happen including our government!

Using credit default swaps to make money off of the housing market crashing sounds an awful lot like taking out a life insurance policy on a dying man that nobody realizes is sick in order to get a big payout when the man does indeed croak.

I watch this movie every year. It's so epic. I work in the industry and I'll tell you now, absolutely nothing has changed.

Next one should be the movie Too Big to Fail. HBO had a decent cast and follows the book by Andrew Ross Sorkin surprisingly well.

nobody seem to realize that the scariest line of the movie is at the end, when it says that Michal Burry is focused now on only one commodity: water.

That cut to "theres a bubble" fuckin killed me 😂😂😂😂

Soneone said that Credit Default Swaps are kinda like taking out a life insurance on a sick man. And that it's kinda rough. But the difference here is that this man is being given a metric ton of food-coupons by the market. But you are the only one seeing that the coupons are for McDonald's exclusively. You know this man will die, so you will profit of it. The Brad Pitt scene "Just don't fkn dance" is a reminder not to be happy about that money because a man will actually die!

My absolute favorite movie about this era in financial history. Once again you have done a masterful job of explaining the sometimes arcane, but always interesting, story and details of these very complicated financial instruments. Thanks for this excellent run down! Keep up the great work. Your channel, along with Patrick Boyle's, is THE ABSOLUTE BEST!

You consistently have fantastic and interesting content. Thank you!

This was a pretty complex and dense video. I had to pause and rewind your explanation multiple times to understand. As a test I urge everyone to reformulate in your own words all that the Plain Bagel explained in this video including just as an example how the synthetic CDO works where the money comes from and goes too and why.

"out of spite" Ya know what, best reason ever.....

RU-vid recommended “Enron: The Smartest Guys in the Room” with this video. It’s a documentary, but I’d like to see you do a video on Enron for guys like me who were too young to really understand what happened back then.

A more accounting related movie but “Smartest Guys in the Room” is for sure one that should be reviewed!

Happy channel birthday, Plain Bagel! Big fan of your work here on RU-vid and your capacity to solidly staying put in the no-BS lane! 🎉 l do really, really appreciate it.

One of my top favourite films and really appreciate you providing this additional explanatory video. It helps me to understand the film and its message more!

i watched the other RU-vid before this - and it helped allot in understanding this one - thank you for sharing that info !!! what a great channel - thank you !!

I thought I saw you do a video on Big Short a while ago, so I checked and it turns out it has been three years already! Damn, time flies! Never got tired of your content, I love it.

For real watched this movie again yesterday! And now you are talking about it… Awesome timing man

Thanks for doing this. There were definitely some questions I still had after watching the movie and this helped a lot!

Thank you, even as someone who understood the housing crisis, you still helped me pick up details and things I missed during the movie. Thank you!

Commenting mostly to improve engagement, I think it's silly to have your previous video demonetized. Always love your work Richard!

Love the Plain Bagel, plain explations of complex stuff. Well done! You should have 7 million subscribers!

I remember when I was buying my house one of the options I had was to use an adjustable rate interest only loan. My mortgage guy explained how it worked. automatically I came a parent to me that this was unsustainable. Last time went on a few years later I asked him how to short the market and he wasn't sure. Either way I don't have that kind of money. I could never have done that. The only good thing was I took a conventional loan and I bought a house so I could afford.

I like that you got technical with the explanations. keep up the good work

I saw this movie while researching information about 401ks when I started my current job almost 5 years ago: how much to put in, how much to diversify, how big a match, the pros and cons, and somehow this film ends up on a recommendation on youtube. I watch the film and my jaw hit the floor. Not only was it pretty informative, as well as being a movie that starts as a comedy, turns into a drama, and ends as a horror movie, but it made me read the book it's based on written by Michael Lewis. Since then, Ive always recommended people to watch the movie and read the book to understand what is going on now and how to best prepare their finances for an inevitable drop or crash. Thanks for putting your thoughts on this film and better explaining some of the stuff that wasn't fully explained. Even my cousin, who is a financial advisor, i remember speaking to him about how i have my 401k invested and such and he was very impressive at my knowledge of it and i said i saw and read The Big Short and then follow-up on reading Millionaire Next Door and The Intelligent Investor and he felt everything I was doing was perfect and to keep it up.

Will need to re-watch this video 3 times to dive deep but as usual, immense content! Thanks from Italy!

So glad I found your channel! I learned a lot from your engaging explanation here- even though I saw the movie. Can’t wait to dive into more of your content

spite is perhaps the single greatest motivator of all human action.

Love these technical deep dives! do more!!

This was a great explaination . I had just watched this video 3-4 days ago , It's one of the best financial movies ever,

Probably no big news to most here... But one more addendum: In the end the movie also states that Michael Burry is only investing in water now. Michael Burry is very much still doing long and short bets on the stock market.

I loooooved this video a lot. Mainly cause it’s one of my favourite movies 😂 but I loved your perspective on it due to your professional background. More please!!

Really glad helped me understand many scenarios in a much depth which I knew little about while watching the movie and helped in getting more clarity.

This was very helpful. Thank you and congratulations Richard 🎉❤

Great explanation. I love the movie and your video has given me more depth for future rewatches!

some people, I don't know cut out audio while using music, it gives the music a new life, thanks for the edit, truly one of the best, I ever watched

20:49 steve carell’s face is my favorite reaction ever

I was kind of surprised that Kyle Bass wasn't talked about in the film despite being one of the most profitable short sellers against the sub prime mortgage crisis

Hey richard make a video on recent news of michael burry shorting US market

I’ve needed this! I just watched the big short a few days ago

What an incredible coincidence that I literally finished watching The Big Short on Prime, and then see YT notification from our Bagel over the same. Ha!

Breathtakingly elegant analysis/dissection🎞👏🏿

Thank you! and the technical part is what made it good!

Barbie and Ken left the barbie world to go be financial advisers during the 2008 crisis

You are doing a great work putting this out

You took one of your good videos and made it even better! Kudos

Thanks for the video. Learned something. Any suggestions for other useful financial channels like yours?

Great video. Thank you very much for your informative and entertaining content.

I actually just watched this for the first time a few weeks ago since it was free on RU-vid, which is surprising to me since I have an Econ degree, work in Finance (healthcare, not investments but still) and enthuse in the policy and market responses that preceded and came as a result of the Great Recession.

I love that you waited for it to be free on RU-vid to make a review video.

"I'm jacked! I'm jacked to the tits!!!!!!!" - Ryan Gosling, Noah Calhoun, The Driver, Jared Vennett, Officer K, Ken, Literally Me

Excellent outline of The Big Short

Bro this was an amazing video. Good job.

Excellent reviews and explanation on the concept, you have no idea how much time you have saved me explaining the movie and the entire idea of what happened in the debacle to the youth and the otherwise uninformed or mal informed individuals I run into about this subject.

thank you, finally an explanation of the "carry"

The thumbnail is just art lol

I appreciate this breakdown. Thank you

hi, i like Plain Bagel, i suscribed. The analytics are just secondary. Thank you.

Good coverage, congratulations on turning six!

I didn’t understand the film when I watched it but you’ve explained it all really well.

love that you finally reviewed my comfort film

great explanation on everything thank you

Spite uploads are the best type of video essays 😂

Appreciate the content on this channel. Would it be possible for you to make an educational video highlighting some pros and cons of investing in a dividend ETF vs index fund? Would be interesting to hear your two cents on the topic.

Cracking film, I wondered how accurate it really was, I guess im about to find out...

Thanks! Great job! I'm impressed!

Love this explanation! This is my favorite movie of all time. To those who love this movie, I recommend the following movies. Watching them is like seeing the 2007 crash from different perspectives: (1) Too Big To Fail (2) Inside Job (3) Margin Call

Love the thumbnails for this series

Really really helpful for understanding everything. With all the financial terms its very hard understanding exactly how and why things are happening.

Love your channel! I am learning so much, and even when it’s topics I understand very well, I massively enjoy your neutral and comprehensive analysis of things. Cheers from Israel 🇮🇱 😊

One thing often missed is the bad incentives that all this loose credit had on the construction industry itself. It's not that much more expensive to build a luxury property compared to a normal one, especially not compared to the difference in sale price. What normally keeps construction companies from only making luxury properties, besides regulation, is the difficulty in finding buyers for those projects. BUT if the banks are willing to make preposterous loans to people as part of a scheme to resell the mortgages then... that incentive disappears. They WILL find buyers. Speculators, bad loans, and just greedy investors drove home prices way up but they also drove the actual construction industry toward unsustainably pricey units. Even after the subprime crash, two of those forces are still active.

Great video. Congrats and thanks!

Just want to say - thumbnail? Top tier!

Love the movie. My favorite when it comes to finance. Maybe because of the cast. Great explanation of the terms used in movie.

The thing that I'm surprised about is that the banks didn't get in trouble for is improperly marking the swaps. I guess that's the risk you run when you're in an illiquid market, but surprised it wasn't illegal activity.

Excellent explanation!!

Fantastic video. Thank you sir

Love your explanation!

one of my favorite films of all time covered by my favorite "finance" (?) youtuber

Great analysis

Great explanation

Great timing it just got put on Netflix

I love that movie, thanks for the explainer!

Steve Eisman is a funny smart dude. Always a good listen

3:43 - are these data publically available, or is it like a Bloomberg terminal, where you probably need to be working for an investment fund/bank etc. to be able to access the data?

Fun facts: The Big Short is on Bulgarian Netflix, but a cutout version, which is why I consider buying a VPN. Another fun fact is that I can't find my previous comment that said the same thing, because I described the scene that was missing - the one where Mike Baum and Co. meet with the young brokers and the lady with the five properties, and I mentioned her occupation. Is RU-vid censoring things now? Anyways, I wanted to also mention that since there are literally zero good contemporary films on Bulgarian Netflix, Big Short is indeed an undervalued film. If it was valued, it wouldn't have been on our Netflix 😁

Nice one, thanks Richard. So, what of the future? Do you think we will experience anything dramatic like the GFC anytime soon?

Nice video, you are filling the gaps of the movie.

Thank you for this video 😊

I think its probably useful to explain the basic mechanism of how to short a stock instead of simply saying you bet against it Also in Michael Lewis book it also explained thar DB was only the middle charging fees for sellinf credit default swap The institute that underwrote them was AIG (which IMO was a massive part thet thr film left out)

One of the biggest problems with the false AAA ratings for a lot of the MBS products was that many of them were - technically - 100% insured by the U.S. government (as a part of W. Bush's policy that as many Americans as possible should own a home). This "100% insurance" was only technically insuring a massive default, though, because it accounted for less than 0,1% of the total volume of MBS products on the market. Looking at an individual product, the rating agencies could concur that it was "100% insured" and therefore a "safe" AAA bet, yet, looking at the bigger picture, lots of those MBS should have been C+ at best.

Thanks

@9:06 one thing that’s worth noting here is that the idea behind the CDO, at least in the beginning, is a sound one. If you believe that bubbles in housing were regional (I.e there might be a housing bubble in a particular city or state but not nation wide), then a CDO makes sense. By pooling together the lower tranches of various mortage-backed securities, you end up with a security that pays out as long as housing remains stable on a national scale. Of course in 2008, housing collapsed nationwide which is why these CDOs ended up being worthless, but the CDO is the perfect example of yet another idea that made sense in the beginning but got totally out of hand

just curious if glass steagall would have been still in place could it have kept the 08 crisis from getting as bad as it did? for some reason I'm thinking it would have but not sure why.

This is one of the best movies that doesn’t require guns and explosions to capture the audience’s attention.

My favorite thing to point out about subprime mortgage was that "subprime" referred to the borrower being subprime haha .. which is in a roundabout way pretty accurate haha