A Story Behind “The Big Short” Movie

Have you already seen “The Big Short”? This movie was nominated for an Oscar as the best picture this year. It didn’t win. Yet, the story itself deserves attention anyway. The film is about a mortgage crisis of 2007–2008. Some say, that even today we see consequences of it. Many people lost their jobs and homes. But let us take an emotional part aside.

Who has gained from the crisis?

It is obvious that the banks that enabled the crisis made huge profits before everything collapsed, except for Lehmann Brothers, which shut down. There were also traders who noticed that subprime mortgages and the bonds based on them are a bubble, and it will burst sooner or later. Michael Burry was among them.

Burry left work as a Stanford Hospital neurology resident to start his own hedge fund “Scion Capital”. He had already developed a reputation as an investor by demonstrating astounding success in “value investing,” which he wrote about on message boards on the stock discussion site Silicon Investor beginning in 1996. He was so successful with his stock picks that he attracted the interest of such companies as Vanguard, White Mountains Insurance Group and such prominent investors as Joel Greenblatt.

Burry’s research on the runaway values of residential real estate convinced him that subprime mortgages, especially those with “teaser” rates, and the bonds based on these mortgages would begin losing value when the original rates reset, often in as little as two years after initiation. He persuaded Goldman Sachs to sell him credit default swaps against subprime deals he saw as vulnerable in 2005.

Though he suffered an investor revolt before his predictions came true, Burry earned a personal profit of $100 million and a profit for his remaining investors of more than $700 million.

From 2000 to 2008

Michael Burry is one of the most successful and smart traders in the world, and you could become one too.

What to short right now?

China stock market crash started in June 2015 and continued into July and August. In January 2016, Chinese stock market experienced a steep sell-off which set off a global rout. Almost every week different sources report another bear trend of Chinese stocks.

At UpDown.Club you can trade Chinese stocks and SHCOMP (The Shanghai Composite Index). Would you take this chance to become a new Michael Burry?


Originally published at www.facebook.com.