7 Investing Lessons From The Big Short

Kim Snider  |

Last night, I couldn’t bear to watch any more mid-term election prognosticating. So I decided to be productive and watch a movie instead.

The Big Short is based on a book, by author Michael Lewis, of Blind Side and Money Ball fame, both of which I love!

But many may not know his first book, Liar’s Poker, was based on his year’s as a bond salesman, at Salomon Brothers, during the late- 1980s.

That book featured, very prominently, Lewis Ranieri, considered the father of the mortgage-backed securities… the same mortgage-backed securities that later almost caused the collapse of the world’s financial system.

Which was the subject of his seventh book and the movie I watched last night, The Big Short: Inside the Doomsday Machine.

If you haven’t read the book or watched the movie, I highly recommend it.

It is also a stark reminder of the fundamental disconnect between the profit motives of Wall Street and well-being of average investors… who mistakenly believe that Wall Street’s job is to make them money.

Nothing could be further from the truth.

Wall Street’s job is to make themselves money. And their shareholders’ money.

If you happen to make anything along the way, that is just a happy coincidence for everyone, just like the gambler at the Vegas slot machine.

And yet, the conundrum is that you HAVE to invest. Because you can’t possibly save enough money to retire unless you do.

Many people suggest that Bitcoin, as a trust-less system, is an antidote to a financial system which is based on trust, and which destroyed that trust.

We can debate whether or not bitcoin replacing the fiat financial system is even feasible and, if it is, how long it might take. (I don’t think it is.)

As always, I hope you find that helpful.

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