The Big Short: Primary Sources

The Big Short: Primary Sources
The Big Short

The Big Short: Primary Sources (1) – Draw Your Own Conclusions

A lot of us will be watching The Big Short in theaters this month or sometime down the road. Many of us have read the nonfiction book written by Michael Lewis on which the movie is based, a retelling of the story of the key players involved in the shorting of subprime mortgages during the financial crisis.

Having said that, we urge you to look at the first of three The Big Short primary sources (#2 and #3 will come later) related to this story to help you draw your own conclusions, even if they are partially formed; most of us don’t have the time that Michael Lewis spent to investigate this story, but even if we spend 5 minutes on a primary source and can call a small observation our own – the less and less we have to rely on Lewis’ (and the movie producer’s) recounting of the story and the closer we become to arriving at our own view of the world, which could be significantly (or minimally) different from that of the book and movie.

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In the same way that no two people will ever arrive at the exact same valuation for a company, there is always more than one valid way to tell a true story. Furthermore, this goes with our philosophy that no amount of expertise is a substitute for looking at the real thing with your own eyes. We echo Jim Rogers when he once said in an interview (Jim Rogers: The best advice I ever got):

“If you get interested in a company and you read the annual report, he said, you will have done more than 98% of the people on Wall Street. And if you read the footnotes in the annual report you will have done more than 100% of the people on Wall Street. I realized right away that if I just literally read a company’s annual report and the notes — or better yet, two or three years of reports — that I would know much more than others.”

Lewis is a proven storyteller and historian, so this is not to take anything away from his work. Nor do we wish to take anything away from the movie’s portrayal of history. However, we can tell you one thing for certain, the real story didn’t involve this many good-looking men (Brad Pitt, Ryan Gosling, Christian Bale) involved in one trade.

Please find here a pdf link to the transcript of part 1 of a testimony by Gregg Lippman to the FCIC: Testimony by Gregg Lippman to the FCIC.

The Big Short  audio is available here: Audio of Gregg Lippmann’s testimony (part 1) to the FCIC

Source: The Cognitive Dissonance

Our mission is to replicate Berkshire Hathaway & Warren Buffett’s liability & asset management strategy. As a team of professional investors and insurance executives, we’ve been studying the Berkshire model for several years, including analyzing those that have successfully replicated it. We have also studied those that have failed.
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