Comments by "Magic Beans" (@Magic_beans_) on "Investment Analyst Explains: The Big Short" video.

  1. For sure, it’s an old concept. “Lipstick on a pig” and whatnot.
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  2. To some extent yes, and originally it was. You had bits of thousands of mortgages from people all over the country. A downturn in certain cities or industries might spark some defaults, but it would take something big to cause people everywhere to default all at once. The diversification decayed ovee time because risk-averse investors stuck to the higher-rated tiers and the banks made “seafood stew” with the rest. Also of course the quality of the incoming mortgages was getting worse once the easy loans had already been made. That’s where the rating agencies failed to do their jobs.
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  3. He’s doing movie summaries, and that wasn’t in the movie. The naked shorting hypothesis came about months later in places like Superstonk. The movie already took some liberties to make Wall Street the villains. They imply as heavily as they can without outright accusing that Griffin told Tenev to disable buying and that he lied under oath.
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