THE BIG SHORT (Part II – Packages Of Risk And Reward.)

Have assignment, will brb...


Cont'd from Part 1... Mark Baum and his little hedge fund team of nerds are on an investigative trip to decide whether there is a Housing Market bubble and they should take on that massive short position betting against it. So they start interviewing housing agents who refer them to the guys selling the loans, these jock Mortgage Brokers, in Dilbert-esque conversations.

Hedgie 1: So... you target.. immigrants. 
Mortgage Broker 1: ...Their credit actually isn't bad enough for him <indicates friend> -
Mortgage Broker 2: Trust me, I'm not driving a 7 series without strippers. No one on the (strippers') pole has good credit and they're all cash rich. 
Hedgie 2: I think I read somewhere Warren Buffet said that once.
Mortgage Brokers: Who's Warren Buffet?

Hedgie 1: .....Does anyone ever get rejected (for a housing loan)?
Mortgage Broker 2: Seriously? They get rejected, I suck at my job.
Mortgage Broker 1: My firm offers Ninja Loans. No income, no job... I just leave the income section blank. (Come on), these people just want homes... 

(So these mortgage brokers are the people who will "save" immigrants and strippers from homelessness. Because Brutus is an Honourable Man.)

"Ninja" is like secret sauce for marketing things in America. Look what the word did for pizza-eating turtles named after High Renaissance Artists! (Y-eah Japanese History isn't the only thing tortured to death in the name of entertainment... Love, love, love. Leonardo. Who's your favourite Turtle? (pic from

Oh, the carnage on culture, the over-use of alliteration... 🙂 In case you're wondering why I get so fascinated, it's because it makes absolutely NO. SENSE. Yet somehow, people like the creators of TMNT succeeded in producing a wildly popular pop culture reference. Out of absolute nonsense. What made TMNT fly, where Tattooed Teenaged Alien Fighters From Beverly Hills didn't?

Turtles aside, take Chanel costume jewellery. What makes coated canvas, bakelite, base metal, glass - even if it IS gripoix - store and appreciate in value like gold (or diamonds*)when so many countries' currencies risk devaluation, "just because" it's got the "Double C" Chanel logo on it?

I haven't bought a single bag or piece of clothing, but I collect brooches and after trolling vintage sites (variety! authentication!) because of an almost voyeuristic pleasure in pricing discrepancies (arbitrage!) I put this together with all their bits and bobs (Canvas stretched at Lee Wah framing)

Barter trade, currency, the keeping of value against depreciation, inflation, governments and politics, it's all so exciting - what makes that price? We do. It's all our fault 🙂 The Kardashians get no respect BUT Kylie Jenner surpassed Mark Zuckerberg as youngest self-made billionaire months agoWho's Kylie Jenner?

She looks so much better covered up ok... (pic from

What can I say - Kylie Jenner, youngest half-sister to the Kardashians grew up with the most awful older sister role models, a ridiculous amount of money to fund irresponsible, tasteless behaviour, a dad who is now a woman - all of it under crushing media attention and a powerful social media platform, guaranteeing massive distortion of view. She was 11 years old when the infamous Keeping Up With The Kardashians began. In other words, she has a higher propensity than most girls to turn out pretty messed up. (But YES for the record I can't stand 90% of their stuff and if you don't have a childhood that confusing it should be even easier for you to not become a barely-dressed headcase right 🙂 )

Critics of the Forbes article argue she was born into fame and fortune and cannot claim to be self-made, whereupon her biggest car crash of an older half sister Kim Kardashian West (and her other car crash friend Paris Hilton) stood by Jenner to say she deserves the credit. I mean, I wouldn't dress like them 99.99% of the time <shrugs>, but - Kim Kardashian herself was worth a "paltry" USD 350 million despite all the extreme drama. Her littlest sister about to oust Mark Zuckerberg as youngest billionaire, and she comes out in support. 

Before everyone screams at me for bringing up the Kardashians or in any way approving (of course NOT la, for me they're like from another planet in some MIB spin-off, in which case I have more in common with Frank.)

This is Frank. Besides shirts, blazers and canines, he also enjoys the hit single Who Let The Dogs Out and thinks Will Smith is da bomb. So do I.

Can I just point out that the previous holder of the Youngest Billionaire title, Mark Zuckerberg, and how the so-powerful-and-widespread-they-want-their-own-currency-Facebook came about wasn't exemplary either. Nor was what happened to Zuckerberg's then-roommate Eduardo Saverin before the conclusion of a painful court battle. They went to Harvard though. Does that make it all better?

Larry Summers, then-president of Harvard, was depicted in The Social Network movie as being extremely unsympathetic to several well-heeled students coming to him and "tattling" that Zuckerberg had stolen their idea. His screen response was "this is Harvard. Everyone's always making something." When asked for comment, the real Summers reaffirmed his position, "...If an undergraduate is wearing a jacket and tie 3pm on a Thursday afternoon... he either has a job interview or he is a first class @sshole. In this case, it was the latter," regarding the the Winklevoss twins and their petition.

(The Winklevosses and fellow student Divya Narendra received ~USD 65 mio in settlement for their original Facebook idea. They were not happy. They were also mostly "blackmarked" from investing in other tech startups. However, they turned USD 11 million of the original Facebook settlement into some USD 1 bio by being some of the earliest investors in Bitcoin (BACK WHEN IT WAS INCREDIBLY CHEAP OK..). I guess I'd call that Well-Heeled Snobs Ticked Harvard President Off For Being Pompous About Being Right, Have To Go To Court. BUT They Didn't Dwell, Kept Looking For Opportunities, And Became Billionaires Too. Comeback story here)

Quick further aside (to nix any potential gender-profession seeming-bias):

Blythe Masters, another early Bitcoin investor like the Winklevosses, is also Youngest Banker to make Managing Director - aged 28 years - at JP Morgan Chase (she's now in her 50s). She's also credited as one of the pioneers of Credit Derivative Swaps (of the sort used in The Big Short) - pic from

Y'know, in case you thought only people who look like pugs looks, brains and dedication all need to exist together as a constant, in any equation (more on that later)..

ANYWAY, back to Big Short. Ninja Loans, Strippers (censored below), And A Rise In Housing Prices So Rapid If You Had Gotten In AND Out It Would've Paid For That First Class Ticket To Get Drinks With Little Umbrellas Sticking Out Of Them In Bali . And the vacation home you were staying in. In case you wanted to go back. Or your friends wanted to. (Imma simple mama, don't need a whole billion, y'know?):

It. Really. Was NOT rocket science. In yet another eg of how the Jarringly Obvious went unseen, very nearly everyone placed blind faith where they shouldn't have - no, not re the instrument or asset class, but human nature. Steve Carell (Steve Eisman in real life) who plays Horrified Mark Baum above says, "When you start peeling back layers, it's actually really, really terrifying."

Saying "no,"and the people who "said no" (to horribly risky mortgages) looked wayyy less cool than the swaggering brokers who were behaving irresponsibly. Youtube is full of idiots jumping from building to building with cams attached to them - irresponsibility and bravado can look very cool - and Big Short has that, with VERY big numbers to boot. Money. (And there you thought numbers were boring..) Hold that thought...

In the Matrix movie franchise, leader of the human revolution against machines who have enslaved humans' minds within a virtual reality world so as to harness the energy from their brain activity, Morpheus*, offers all would-be truth seekers a choice: to believe what you want, take the blue pill... but take the red one and discover what the world really is like, outside the one your mind thinks you live in. 

Red or blue? Take the red pill, find out how deep the rabbit hole goes. pic from

*Morpheus gets his name from the Greek god of dreams (there's the method to the madness, all those Magnus Chase and Goddess Girls and Heroes In Training the kids read, that revolve around Greek and Roman mythology (and Rockstar can tell you the difference <cringe> hope of having any future grandchildren may now fall exclusively to our second born 😀 ) - so many things have their origin names in Greek/Roman mythology - drugs (morphine), spiders (arachnids), plants (Venus flytrap), shoes (Nikes), music (Calypso), several planets, etc etc) Btw - Scion Capital, the asset management firm "hobby" Michael Burry shorted the market through and made USD 725 mio from is named after his favourite Terry Brooks fiction, Scions of Shannara (#NerdsOfTheWorldRejoice!)

Dis is he reading Scions in the movie (screen shot off Reddit)

See, Burry's original intended profession was Medical Doctor, until he was thrown out of an operating theatre for falling asleep on his feet while watching the attending surgeon operate, crashing into the patient's oxygen tent thereby getting himself thrown out. (Oh, you thought you had a bad day at school?)

So anyway. Welcome to Wonderland... 

I can create for you a 100% principal-protected investment product that potentially returns 5000% on your initial investment. You won't even need to risk your initial principal investment, that's 100% guaranteed by the bank. I'll even let you pick the bank you want to invest with - whatever AAA rated ultra-snobby financial institution you read about in the FT.

What's the catch?

How come you think there's a catch? 😀 Here's how I did it - First, I placed your initial capital in a Fixed Deposit (or bond, EMTN, MTN or ABCP issuance program... based on your preference re documentation). With the interest/ yield, I bought as many lottery tickets as I could.

The catch is of course your chances of actually getting that return on your investment - in this case it's your chance of winning the lottery. (Replace lottery tix with various derivatives, the pricing of which are tied to the probability you will get that return).

A ship in the harbour is safe.... but that's not what ships were built for.. Yet neither do ships go out to sea without checking the weather report. What makes it a.... "derivative investment" instead of a "voyeuristic trip to your friendly neighbourhood Mark 6 outlet" is the extent to which you try to improve your odds of payout by reading the research. You rely on research. And ratings agencies. W-aait..

Your initial return is 100% guaranteed. After all, they don't call it AAA for nuffin', Muffin. (And Brutus Is An Honourable Man 😀 )

So which is scarier, "junk" bonds, the super-duper risky stuff, or AAA mega-investment-grade?

Welcome to the world of what happens when Aileen has too much caffeine - because lemme tell you how AAA is the scariest thing onna planet.

(No, not even blaming the rating agencies much - as mentioned earlier, if you think in terms of derivatives, then by default by the time "everyone" collectively agrees something is a bargain (or conversely a terrible mistake), you are already too late to take real advantage of it (or hedge against the disaster - the pricing for hedging that "terrible mistake" is basically the actual cost of making that mistake today, present valued upfront)...

There is some value in this view - if you generally think in this way, you would not see value in what is attractive right now - you would perpetually see value in flaws and imperfections and would instead be looking for an ability to improve... The world has enough people who vie for the immediately attractive/ high achieving, they will already be very well taken care of...

(What's an easy sports analogy - coach has two players, one whose skills have been honed and sharpened, another who has never been trained. If they're producing close to the same results, which would you pick? I'd pick the slightly worse-performing, never been trained one - yup because with the right training think where the diamond in the rough could go. When you add a massive competitive push for results on a regular basis and with a rigid time frame however, no one has the time to polish a bloody.... rock that you also have to convince everyone else is actually a diamond :D)

A-nyway, lemme get back to my I Hate AAA Rant. So AAA is an Absolute Safest Investment. Many more AAA investors are pensioners or in some other way the Extremely Risk Averse than those who take on say, non-principal protected equity derivatives where you can potentially lose everything you put in. The majority of people who were told something was AAA would happily sink wayyy more cash in it than if they had been told something was incredibly risky. 

Safe is worst than boring, it runs a much higher risk of being fraudulent. Know what I love about junk? No one pretends to be junkIn an email to investors, eccentric fund manager Dr Burry once described how his profile on had read, "I am a medical student with only one eye, an awkward social manner, and USD 145,000 in student loans". His future wife wrote back, "You're just what I'm looking for." She meant Honest. 

Fake AAA is the @sshole who makes you buy them flowers and put out because they think they so damned hot you be dying to be seen on their arm at prom tell your bosses how much of your investment portfolio has their name innit. Think Enron. Entitlement is lethal. (But adrenaline legal)

Since risk and reward are correlated, you get very little reward for the (apparent) very little risk you are taking. If you create a structure with these things in the pot, you have very little yield to work with. It's not even just about getting more return, there is no meat with which to buy real protection, which you are really going to need if you bought Junk in AAA Sheep's Clothing. Nor can I buy very many lottery tickets at all buy any derivatives with a decent probability of payout for yield.

The risky are like salt. They make your entire dish tastier, more interesting. At the same time, everyone knows you are not meant to make your entire meal salt, and no one would expect you to. (Think: How much of our investment and spending is coloured by what others think.)

At the end of the day, whatever your market, whatever your recipe, whatever your favourite Nerf weapon, choice of location for a home, structured investment product, anything in life, you will find you cannot afford everything in the package. You want the heavy, battery powered Nerf gun? You will have to give up mobility and be a sitting duck in your Nerf Battles. But oh, let 'em come, you got the most rapid shooting thing in the bunch. You.... can't stand sitting still and want action? Can't carry a big, ungainly piece of equipment around, everyone else gonna see you from a mile away.

Sure you like some salt, sugar, curry, bananas, chocolate and the extra cheesy Doritos things. Now try putting everything in one dish 😀

We used to watch House Hunting reality tv programs - the biggest standout is never the structure of the building, not even that much whether it's old or new (more because of the wiring and other stuff related to safety than the aesthetic - as I always tell HN, you want to look pretty? Sure! That is the easiest***, lowest hanging fruit. The inside however, that's not so easy to hack..) Structure and decor you can tear down and rebuild easy, especially when you're living relatively in the middle of nowhere). The thing no one can hack - is location. 

AND the scariest bit is still yet to come...

So all that is AAA may not be gold. What happens if you then leverage - magnify - it. Which is how Dr Richard Thaler of behavioural economics and Selena Gomez come to illustrate how synthetic CDOs could inflate an initial USD 50mio mortgage bond product into potentially USD 1bio AND because of the "Dark Market" you never knew exactly how much that was, nor the conditions or documentations.  

(Hot Hand Fallacy however can be qualified with muscle memory. I mean, if you're talking sports analogy... Not such a fallacy because muscle memory is real, I mean...)

Now, what's the other thing we have left to assumption? When you get a "guaranteed" product, you probably assumed that guarantee was solid. If AAA can fail however (Ok, stop screaming) - if AAA can fail, even after your hard-fought battle to make the right investment call, think - your counterpart may not be able to pay you your winnings.

Rabbithole. Iceberg. 

This is why so many dealing room people, for all their logical.... math-ness, brashness, alpha-ness.... are superstitious. Religious. Almost 2 decades ago, in the dealing room in HSBC Singapore, I remember our then-head of the dealing room saying we had had a good year and - non-Christians please bear with him a moment while he leads the Christians in a prayer of thanksgiving.

You can financial-model til the cows come home, at some point you will realise the extent to which you are in control of nothing. (Go back and read the many ways in which one can blow holes in the way in which we assess market risk and ratings. Or anything, really.) They once said about the Titanic - unsinkable. Go back and see how they were raving in those days about that Marvel of New Technology (at the time) that was supposed to be Iceberg--proof. I remember hearing people quipping about "Iceberg Theory" - all these highly sensitive navigational instruments, just as the default probability calculators I was once sent to cut my teeth on pick up the tiniest of movements in risk - o.o5% increase in default risk, that kinda thing. But you hit a big enough Iceberg and it's all going down anyway.

So you've seen the proverbial It's-Cool-To-Sell-Scary-Mortgages, daredevil-jumping-between-tall-buildings videos. What happens next?


(Couldn't find a shorter one - skip to minute 2.5 for the ending. The not boring, but horrifying numbers:)

"For every 1% unemployment goes up, 40,000 people die..." Quora discussion here. Words are nothing without numbers. The reverse is also true. And at the end of it all, except for those two youths dancing around right after someone agrees to finally trade with them, even the few people who saw it coming and profitted immensely were not proud of it. No one was happy.



There's this scene in the movie where Brad Pitt helps the youths unwind their positions and take profit. He does so while on vacation, dumping some USD 200 mio in securities via wifi connection from a pub in Exmouth, Devon, "which smells like sheep."

"We have good wifi" - pic from

After that, The Powder Monkey pub where Pitt's character Rickett (Ben Hockett in real life) offloaded the massive trade from 3,600 miles away liked to publicise how solid their wifi connection was 🙂

The difference between D'you Smell The Money Jared Vennett (Ryan Gosling) and the irresponsible, predatory mortgage brokers is rather like that of fictitious character Mike Wagner, COO and right hand to Bobby Axelrod, and the "sushi plebes" he yells at in the clip below (sorry bout the language - one thing they ALL have in common, the horrible language 😀 ), while dining with a Performance Coach (lika Psyche Evaluation Guy) he's considering hiring to keep his traders in top form and mentally healthy.. (Axelrod is loosely based on real life hedge fund manager Steve Cohen - on a further aside, David Levien, one of the creators of the show, has estimated "at least 50" Wall Streeters have said a character in Billions is based on them):

(And then rather predictably "Wags" goes on a huge rant all the way down the sushi counter at the plebe "disrespecting" the sushi by among others speaking loudly on his cellphone 😀 well at least he remembered to lower back down his voice speaking to the chefs haha)

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THE BIG SHORT (Part 1: Mispricing. Do you really see what you think you see?)

"It ain't what you don't know that gets you in trouble, it's what you know that isn't so."  - Mark Twain, but also a bunch of other humorists. 

Incredibly apt opening for the movie. I feel the need to step up my own game <digs deep>: Those who dance are considered insane by those who cannot hear the music. 

pic frm Libertarian Party of Nevada

To "short sell" in trading is to sell something you don't yet own. Roughly, it's a means of financing, like leverage, or borrowing money in order to invest for a bigger return than you could otherwise get, and it allows you to take on a much bigger position.  

You are betting that when you have to pay up your debt - "cover the short," ie actually buy the thing you've sold before you owned it in order to make good on the sale, it'll now be much cheaper. Instead of Buy Low Sell High, this is Sell High First, And Sell Much More Than You Have Money In Your Pocket To Buy, Buy Low Later (Hopefully!) It's considered riskier (d-uh) and only for "sophisticated" investors, governed by various restrictions put in place to rein in the trigger-happy cowboys. You "short" when you believe something is priced too high, it's where the phrase "don't sell yourself short" comes from.  

A few people (financial journalist Michael Lewis estimates about 20) profited from betting against the US housing market, by seeing what no one else did. OR rather, what no one else could believe they were seeing. 20 people, out of the hundreds of thousands who didn't see it. What was different about those 20 people?

I have a constant fascination with mispricing or rather, differences in opinion, of what something should cost. It's in practically everything. No, don't just think stocks, bonds, derivatives of. Think What Those Companies Produce - movies, clothing, toothpaste.... bottled water? Clean air? Like in HN's one-time favourite movie, The Lorax - how clean air is sold by the people who keep pollution high.

(OK. Apparently, this was sometime-banned because it portrayed the logging industry in negative light. But... what about that awesome bit where O'Hare keeps the air polluted and trees non-existent to maintain the price of his bottled clean air?? This is so exciting, these things happen in corporate life and politics all the time, just not with pink furry trees) pic from UltracloudHD

So a prevailing theme is People Creating The Need/Problem So They Can Sell The Fix. (Bonus Question: Which superhero movie out now has a similar storyline?) It's easy to be the Hero with a Fix when the problem was one you created in the first place.. (Mind. Blown.)

So anyway. The price of something, how valuable something is, how risky something is, the value and risk we place on something, is irrevocably tied to our personalities - and we all know what head cases we can be 🙂

I've said flippantly (from over a decade spread out in 7 bank dealing rooms, thanks to 3 mergers - 2 of 'em hostile, 5 reporting line changes in 3 years during the one that was not hostile) that lotsa dealing room professionals would've been "flagged" for things like ADHD, OCD, etc etc during their Early Learning Years, had they been evaluated by today's benchmarks. Now go watch the main characters in Big Short 😀

Ryan Gosling, playing Mr D'you-Smell-The-Mon-ey investment bank Salesperson Extraordinaire Jared Vennett, appears to be the most "normal" (if arrogant and unapologetically self-serving). ONE sales guy, out of the thousands and thousands out there, who saw the market about to tank and created his own commissions opportunity (not... fake problem to fake-fix). He also offloaded enough risk from his bank employer's books so he could hold the rest of his client trade positions long enough for the market to turn in his clients' favour, legitimately. "Yes, I'm going to make an obscene amount of money from selling you this, but you won't care because you're going to make a huge amount of money too." But no one would call him a hero. With a fix.


Make way, Jimmy, dis da REAL Bond Man: Jared Vennet (Greg Lippmann in real life) with his Jenga Blocks sales pitch. This the scene where a wrong number has led to Vennet (who works at Deutsche Bank) meeting this little hedge fund. Vennett knows he's about to present a highly unpopular sales pitch. He's also coming in having faced ridicule and contempt for his idea. Clock also the Asian Maths Specialist Who "Doesn't Speak English". (Seriously, even if Vennett's Jenga preso bores you, stick around for the 2 mins 45 seconds mark in the video below when he trots out the Asian Person 😀 )

(I just think no one may be aiming for second place, BUT Second in Maths Competition With Interpersonal Skill Enough To Make That Meeting- Sell That Trade m-ight be worth more in life and salaries IF First in Maths is barely human anymore 😛 Also, of course the Chinese dude has a right to be offended at the racism..... but why not just use it to his advantage to close the deal haha)

As for the hardcore traders, they're mostly nerds with various tics - Brad Pitt's character in the movie is germ freaky and obsessive-compulsive, 2 hedgies have had devastating life tragedies they never talk about, 1 other hedgie is Special Needs AND lost an eye to cancer during his childhood... And then there are the 2 youth very patiently trading out of their dad's basement, having grown the USD 110,000 startup money their dad gave them into USD 12 mio via the very humble strategy of buying cheap* options - losing very little at a time if they are wrong, but making much, much more, on the very few times they are right... It's a similar frame of mind that helps them identify and short the housing market as featured in the movie; they then turned ~USD 15 mio into ~USD 120 mio - BUT they almost never even made it into the market in the first place, because they were so green and didn't know what documentation needed to be in place to access the market.)

*"Cheap" because at time of purchase the market gave those conditions very low probability of occurring. (Mispricing!!) As more and more participants believe those conditions might happen, the options increase in value. So a general rule in financial derivatives is if you always go with what the majority believes (probability of what you are betting on occurring being the driving factor in pricing), your trade will always be "expensive," not "cheap". (Not... that some people don't choose "expensive" anyway - but at least you need to know it's expensive, and WHY you are choosing it.)

While The Big Short is based on true life, most characters requested some discretion - the only character using his real name is the "eccentric" fund manager Michael Burry - who has said openly he likely had a mild form of Asperger's which was not diagnosed in his own childhood, a realisation he came upon after his own son has now been diagnosed with the same...

I've been told that people with Asperger's "lack empathy" - Christian Bale, despite also playing Batman, of all things, is known for being a very dedicated method actor** - in this movie he plays Burry with absolute perfection, including the scenes showing him having the stomach to sit and wait through the terrifying calm before the market tanks exactly like he predicted expected, while holding a massive, massive short position (Just... barely. Producer Adam McKay says Burry still developed stomach problems from the position.)

AND - get this - with his boss and investors screaming at him about the position, Dr Burry locks in investor funds so they can't take their money out before he is proven right.

If you didn't have Asperger's and your fund manager did this with huge amounts of your money, you would go batsh*t. 

**Bale has been known to put so much dedication and research into his roles that when playing former US Vice President Dick Cheney, well-known for his heart problems, his knowledge of heart attack symptoms in discussion while filming saved his director's life.

Now, another (vaguely entertaining) think - how many (albeit undiagnosed) OCD, ADHD, etc etc grownup professionals are likely to end up in say, the education field? As opposed to those who make a living in say, trading? How many educators would make "good" traders? Would we want them to? If we looked at everyone through the same eyes though, we might fail to see some value, we might miss ... opportunity. And that's an awful waste.

The real Dr Burry has said in interviews that he felt no fear taking on the massive sell-short position, despite usually not trading in that way at allbecause in that instant he was absolutely certain. 

The fund Burry was managing made ~USD 725 mio from the trades featured in the movie (Burry's own share being USD 100 mio). Within about a year ~USD 730 mio had been withdrawn from the fund. No one was happy. Dr Burry calmly says, "There were people who made tens of millions off this (trade) and were still pretty upset." 

How many Michael Burrys would've thrived in the education field? With little kids. Would we want them to? If we looked at everyone through the same eyes, we might fail to see some value, we might miss ... opportunity. And - why yes, that's an awful waste. 🙂

Most sophisticated investors weren't looking carefully enough at what they were buying. How could they, you say? Because what they were buying was thousands and thousands of home loans that had been repackaged. Because "WHO reads thousands and thousands of loan terms and conditions?" Because "WHO doesn't pay their home loan/mortgage?" Because no matter how smart we get with the things we make, the wonderful AND terrible truth is, the man behind the curtain is still we are still human.

As for the non-sophisticated investors - people ended up not having only one mortgage. Because the terms of the loans were either not explained clearly, or else misrepresented altogether. Some people had five mortgages. Y'know, that thing about borrowing in order to magnify your investment position - magnify the risk, magnify the return...

The late great Anthony Bourdain uses Fish Stew Analogy (yes I know this scene is also at the end of the Jared Vennett Salespitch video) to explain "asset repackaging:"

"No Fish Toe!" (Private joke ;D )

Most people didn't check how old that fish was, they assumed when it went into the stew it was good enough. However Dr Burry's first request of his fresh new hire with the shiny impressive Business School degree is to pull information on the thousands of mortgage loans that are dumped into the asset repackaging cookpot. This is met with raised eyebrows from both subordinates and superiors, because "No one reads them." (Indeed, you would see in the movie that even to pull the information garners raised eyebrows from his freshie hire - and freshie hire is not even the one reading it, Dr Burry intended to read the loan terms himself.)

See, instead of glitzy parties, or car shopping (both of which he can more than afford), Dr Burry wants to read what others find "unreadable". I. Know. Why would anyone prefer to read thousands of loan contracts over fighting to be the It Guy or Girl at a party? Because we are all different. Shouldn't that just be awesome?? 

If you are someone who likes staying in, earphones blasting music only you can understand, to read thousands of loan contracts, aren't you grateful for the fruitcakes who like to party so you don't have to? 😀

This is how Burry discovers what two year olds know instinctively - that fish don't have toes (except maybe in highly polluted areas). That you can't "un-rotten" something by putting it in a pot (though you can legitimately create a great stew out of fairly good fish that is simply not sushi-grade). It's not rocket science, it's common sense, that fish don't have toes. That people with shaky financial situations simply should not take out mortgages for 5 homes. (It's NOT "free money"!!) It wasn't the recipe. It was what everyone did with the recipe.

I used to describe the first Asset Backed Commercial Paper (similar to CDO) structure I was involved in as a freshie grad as "Art". I still think so, and none of those structures blew up. They were handled by people who knew to practice restraint - when there was no fish available, they waited to make the stew. And those structures are still around today. It is not the structure itself that blows things up. (This the one thing I think the movie should've made a little clearer - but then the movie is about the structures containing US Housing Market loans.)

I have memories of former bosses who used to complain that they didn't have enough proverbial fish to make stew with and couldn't accept more investors' money into the structure. (No they were not happy turning down investors' money - who would be??) But no, they didn't start putting starfish and sea snakes in it just to make up the stew 😀 I just never realised how significant it was, seeing them do that. Now I think it's important to observe there are people out there who practice restraint when that is what is needed.

Then there was the former boss who advocated psyche evaluations for his RMs and had few other rules, just 2 big ones - 1) do some thing, (not too difficult because many "RMs" were semi-retired investment bank traders or self-made wealthy investors, who traded their own portfolios or those of their friends - that place was like an amalgamation of home offices where everyone shared floor space and opinions about everything from the markets to food to tv series and 2) no compliance/ regulatory issues ever. (So, obviously no crazy fish stews 😀 )

You got fired if you broke either of those two rules. Other than that RMs were flopping about in Juicys and house slippers with their in-case-of-meeting power suits and killer shoes stored neatly in their cubicles... which often also sported DVD players and massage chairs. It was about self regulation. 

The place no longer exists today, bought by an aggressive investment bank in one of the most well-known failed takeovers ever. Huh. Bet they hadn't had their psyche evaluations. <eyeroll>

Shoulda just left us alone, we'd all probably still be there. Getting screamed at by Compliance (well, it's almost part of their job description, we go too long without them saying anything we start to wonder if they are zzzz 😀 ), screaming inane songs on the violently rocking ferry out for fresh seafood.. though that last was... mostly our Taiwan team. Our Taiwan team were wild, loud, and proud of it - their craggy boss once fake strip danced at the company dinner while his subordinates threw money at him - that was actually my final round "interview". Not surprising I guess, they wanted to see if I could "fit in". Over a decade ago. 20-something me, eager to get a job - I guess I could throw money at a 50-something fully dressed Asian male to fit in, get a job...

End tangent. And post.

ps: Go back and look at that last again. Senior male boss in banking & finance industry - Asian, late 50s, mocking the banker stereotype on the dance floor, his "Sweet Young Thing" pretty female assistants slipping him folded dollar bills.   

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Live By The Sword……..

Ok time for more play...

Inspired by the renewed interest in various weaponry floating around Rockstar now, from medieval European armour to the more exotic Asian stuff, that trend of fairly harmless (if you consider fidget spinners also fairly harmless) replicas of otherwise illegal exotic weapons. Think Balisongs (Rockstar has one off Amazon that unfolds into a haircomb 😀 ), Karambit, and I learned a new one recently - "Kunai" ...

Not too long ago we realised how serious even grownups get about this when we subscribed to the History Channel, which airs a reality program known as Knight Fight:

(Personally I think the actual fights I happened to watch looked less "violent and bloody" than WWF wrestling (albeit the knight fight site likes to advertise it's "bloody") - because the armour they're wearing is so tough and heavy the "knights" mostly lumber about, run into each other, and batter and break things with their swords or shields 😀 So occasionally, that's also each other (but no one got very hurt in the couple prelim rounds we watched, they just fell over a lot 😀 ...)

For many of the participants both the fights and the creation of weaponry are a very serious sport and hobby... which is when we give a shout out to the Society for Creative Anachronism. As in, something out of place in this time - like the Flintstones sending email, or medieval knights crashing about today, instead of say, playing the video game on their laptops. (We're probably just one App away from designing the stuff on computer though 🙂 )

Marine reservist Andre Sinou, who owns the largest medieval-armour manufacturing company that is a part of the SCA, managed to turn a hobby into a growing business. He's also one of the judges on Knight Fight (pic from Men's Journal)

Most interesting thing (of many) I didn't know, being fairly limited to the romanticised Knights of the Roundtable young-adult reader versions: We may think of knights as chivalrous today, but they were actually heavily armed thugs prone to violence. Professor Richard Kaeuper, author of various books on medieval chivalry, describes how the "code of honourable behaviour" extended mostly among the noble classes - but not to others. They were not “honourable” to those who were not nobles. The style of warfare in the 14th and 15th Century... laying waste to the countryside, terrorising locals.. was "...In a way... like mafia tactics. ‘You think (your king) can protect you? He can’t. Our king would protect you’." (No d-uh, you are the one sabo-ing everyone else's stuff huh..) History Channel article here.

Ok, so let chivalry be dead but let's run into each other with armour on, that's always fun. AND we can keep Colin Firth's line in this one:

"Manners Maketh The Man." I liked Kingsman better than Bond (sacrilege!) but it carries a strong R rating for violence (pic from Read The Spirit)

Samuel Jackson is an evil tech nerd tycoon who gives out cellphone sim cards promising free internet connectivity... and then at the right time he activates a frequency that affects your neurological waves, removing your inhibitions towards violence so you end up killing or being killed by other affected people around you (hence the R rating). In other words, Jackson's "Richmond Valentine" has the same idea as Thanos in Endgame - the systematic culling of the population due to increasing scarcity of the world's (or universe's) resources. Only, instead of a giant gauntlet with gems, he hands out infected sim cards. (View your cellphone with suspicion right. Now. All the time I'm watching the Huawei Reality Show I'm wondering why none of those politicians put on the glasses and suit and-and worked out and got the haircut, and....... And yes, the Kingsmen all have knight codenames - Arthur, Lancelot, Galahad...)

Another popular program on the History Channel is Forged In Fire: Knife Or Death, where Bladesmiths Hairy And Beefy (most of 'em anyway, but there are a few women) compete to craft the best weapon. Contestants get thrown curve balls like scrapping metal off old cars in the heats, and then in the final they need to make a historically correct period weapon.

pic from

(In case you're wondering what on earth people do with weapons-making skill - many of the contestants make cutlery for a living..)

(pics from Jamie Oliver- My Cuisine and
It wasn't too long ago when Park n Shop had the Jamie Oliver knife collection up for sticker redemptions and then you'd see the cashiers calculating pages and pages of the things... Ever thought who makes those knives? 🙂 Think carving blades for Thanksgiving turkey, and I'm pretty sure sushi knives would otherwise make scary deadly weapons..

Edged-weapons specialist, U.S. military contractor, martial arts instructor and knife designer American-born Philippino Doug Marcaida has an armed forces personnel pick up the newly-forged weapon and hack at boar carcasses, coconuts, ice blocks, or a mannequin that has dummy organs (and fake blood ready to ooze on cue - caveat!) and then almost always delivers the much-meme-ed line:

Phrase That Launches A Thousand Memes (from the Doug Marcaida Meme Generator)

Told ya Photoshop is really fun (for real though, my kingdom with the wabbit innit for a season where they have these guys craft the weapons of Asgard) - pic from

Except apparently because this still counts as a "family show" (I said, apparently), what Doug is really saying is:

Meh. (pic from The Plot To Blow Up The Sun twitter)

This one's probably lotsa mums' favourite:

"Surrender Your Weapon." That part is absolutely real. Even winners of the USD 10,000 prize for best piece at the end of the episode are not allowed to carry their weapons out of the studio because of the size of the blades 😀

More Forged In Fire trivia here.

According to Scholagladiatoria, Youtuber whose interests lie in European weaponry, movie producers often deliberately give their lead characters ridiculous-looking things just so they stand out onscreen. Most famous weapon inaccuracies:

Braveheart apparently has another claim to fame - one of the largest number of "silly things" carried around in "battle" like Mel Gibsons outsized sword (pic from

His army is carrying the correct weapon, but they decided that was not good enough for Gerard Butler - as lead character and heart throbber he shalt carry something wonky 😀 (from


AND with that, I saved the best for last - Boxwars: The Art of Destruction. This the medieval-inspired "sport" that has teams across Europe, Australia, the US and Japan constructing full ranges of battlegear using nothing but reclaimed cardboard and packing supplies.
Give the kids their video games, us grownups want the cardboard boxes. 

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