Impressions of the Finance World on the Movie, The Big Short
POST 1:
The first part of the discussion should be fun. Many of you without a background in finance may have gotten your impression of the finance world from TV or movies. Even the highly prestigious Certified Financial Analyst (CFA) Institute has published Top 20 Films about Finance: From Crisis to Con Men.
Share what your impressions are based on a recent TV show or movie, or one of the movies from the CFA Institute’s list if you can find one of the movies online. If you haven’t watched anything finance-related lately, check out the one of these movies: The Big Short, Margin Call, or Wall Street (the original one, not the awful sequel). TV shows include Billions or some early episodes of Silicon Valley that involve getting finance for the new company. Post your thoughts in the first week of the module.
POST 2:
For the second week of the module, dig into the assignments and start to use Microsoft Excel. There are some videos on Excel in the background reading page, but find an additional video or two that helps you get started. Share the link with your classmate and discuss the usefulness of the video you found.
FIN501 Module 1 Discussion
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FIN501 Module 1 Discussion
Post 1:
While many documentaries and TV shows display complex financial systems in different contexts or expose the unscrupulous dealings by corporations to gain a competitive advantage, the film The Big Short offers a more analytical view of a financial crisis. After watching the movie featuring renowned casts, including Christian Bale as Michael Burry, Brad Pitt as Ben Rickert, Steve Carell as Mark Baum, and Marisa Tomei as Cynthia Baum, among many other big names in the filming industry, I realized that financial literacy is fundamental for anyone investing in any business (Mader et al., 2020). Thus, the learnings reveal the complexity of financing circumstances, their vulnerabilities, and underlying opportunities.
The losses incurred by investors due to the collapsing housing market in the film highlight the need for individuals to remain analytical and suspicious of any highly popularized investment opportunity. For instance, as people signed up for the housing frenzy, financially informed individuals such as Michael Burry chose to critically analyze the market, leading to his discovery that the investments reflected high-risk credit products (McKay, 2015). This finding allowed him to exploit the short concept by swapping credit defaults. Such a creative approach to investments at the time was informed by his reliance on analysis of the market trend and risks rather than depending on the propagated perspective about the housing market’s stability (Mader et al., 2020). His convictions about the vulnerability of mortgage securities reflect the teachings in this class about integrating critical thinking in all financial decisions and cross-checking offers.
The crisis represented by this film demonstrates that stable financial investments require well-thought-out instruments. The decision by banks to use high-risk loans that failed to comply with the basic structuring, such as links to collateral, was akin to fin...