Only such a calm approach, putting aside the glitz and exaggeration of Hollywood commercials, precisely expresses the profoundness of the industry: the most profitable transactions can only be found in the most opaque markets. And the superb acting skills of these heavyweight acting schools fully express the strong irony contained in the scripts of the screenwriters, flat and true.
The film took place in the New York headquarters of a large investment institution. It is not specified which company is fictitious, but it can have a history of 107 years. After large-scale layoffs in the fixed income department, there are still 60 traders. There should be only investment banks or a large hedge fund.
Time should be the early days of the 2007 subprime mortgage crisis, and this institution has already laid off large-scale staff. The risk control director (the gay designer in devils wear prada) who was fired gave an unfinished valuation model to a junior trader. Then a series of overnight emergency meetings and the fire sale (clearance) of the next day, both Because of the projection of this model: a large number of mbs (mortgage-backed securities) positions on the company’s balance sheet (commonly known as book) will result in losses exceeding the company’s total market value due to market fluctuations and the retreat of the U.S. real estate market-the music is abt to stop.. .
how to do it? The finishing touch is at the big boss meeting at 4 o’clock in the morning, the big boss’s sentence "There are three ways to make a living in this business. Be first. Be smarter. Or Cheat."
The most ironic aspect of the movie is the moment when the big boss said we don't cheat, but he wanted to be the first to sell, and then his trading head strongly opposed it. Isn't it a cheat to the buyer to sell the securities that you know will be worthless at 60% to 90% of the face value?
Even more ruthless, the big boss will continue to lay off many of them on the day after the traders are required to clear their positions. But the smartest is to stay. Because the next year will be very profitable, smart traders are needed to buy back bonds that have been sold lowly by market panic. Many institutions bought a large number of mbs that were seriously underestimated and were fundamentally better after 2009, including the big short Paulson at that time.
If it were me, I might have done the same thing. But maybe not, because there is simply no way to be so decisive and ruthless. There is no praise or criticism, the market is like this. Once you enter, you really can't help yourself. In fact, it is not in its place, and there is really only a small experience.
Those who reach the md level are either very arrogant, or very cheerful, self-deprecating, easy-going, not the elite of the elite, or the undead Xiaoqiang, to climb there.
Of course there are also some unreal things. . . Highly doubt the possibility of completing the clearance in one morning. . . They sell things that are difficult to value. . . And basically no investment bank had time to clear its stocks in a timely manner in 2008. Lehman did not sell much.
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Great! It's like a symphony. A novel. Every time I look at it, there is a deeper understanding and enlightenment.
Since a long time ago, the finance industry has been like this. It can make a lot of money and attract the best people: engineers, PhDs from MIT.
As soon as Seth and Peter came out, well, it was like those juniors I knew. Sam, a typical trading head, MD level. Jared Cohen, the senior banker played by Simon Baker, the male protagonist of The Mentalist, whose performance is often called "silent is better than sound."
Another curiosity is that few people seem to be able to spend 34 years in an investment bank like Sam. Or his trading head Will stays like that for 10 years. Everyone dances once every 2 to 5 years. I have never seen anyone who has been in a bank/fund for more than 10 years.
ps: The firm's logo is very similar to oaktree capital. But oaktree does not do mbs...
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