Oscar-nominated film, “The Big Short” (now on its second week in Metro Manila theaters) manages to explain the events that led to the 2007-2008 global financial crisis, considered the worst in recent history since The Great Depression in the 1930s.
But more than its well-praised screenplay and a powerhouse cast of actors – Christian Bale (nominated for Oscar Best Supporting Actor for this film), Steve Carrell, Ryan Gosling, and Brad Pitt – the film, indeed have such business, entrepreneurial lessons to impart, read on:
1. Stand your ground.
Hedge fund manager Michael Burry (played by Bale) found a way to profit from the unstable US housing market, which troubles started in 2005. Even when Burry was met with hostility by investors, he never gave up on what he believed in. By the end of the movie, he earned 489% from the investment he made via credit default swap, which is designed to transfer the credit exposure of fixed income products between two or more parties.
Burry profiting from such a crisis is an example of how to stick to your guns, especially if you did your homework to prove your point. The naysayers would all come back running once the company hits off.
2. Be open-minded.
Banker Jared Vennett (played by Gosling) learned about Burry’s crazy move and started betting against the housing market himself. While doing so, he also invited hedge fund manager Mark Baum (played by Carell) in the play, but the latter was hesitant. Two years since Vennett knocked on Baum’s offices, his suspicions came true and Baum earned millions as the economy collapsed.
This may be opposite to the first lesson cited, but as entrepreneurs, all opportunities should be heard, and then, studied thoroughly. If Baum skipped the proposal and let his doubt consume him, his firm could have missed one of the best deals of their lives.
3. Research. Research. Research.
Baum’s hesitation only passed when he himself went to Miami, Florida, checked houses in the suburbs, and found them empty. Turns out, the housing sector’s crumble was already starting, yet no one seems to notice. If he had not done that, he would have not joined the train.
Doing research, while arduous, has always been important. No success comes without hard work and any entrepreneur must learn to involve himself in every step to familiarize with the basics. After all, a good leader knows how to be hands-on.
4. Know when to ask for help.
Backyard investors Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock) also learned what Vennett has been doing and decided to try their chances in credit swapping too. However, they were too inexperienced to make deals with the big banks, so they tapped retired banker and close neighbor Ben Rickert (Pitt) to do the talking. The retired banker found the young investors a deal with the big banks, also profiting from the crisis through credit default swap, raking in more profits than Vennett and Baum.
Entrepreneurs are the first ones that should know – building a network is good for business. The young guns would not even have landed a meeting with those top guns if they did not build a close relationship with their next-door neighbor. So keep those contacts and do not burn bridges as much as possible.
5. Keep your values intact.
By the end of the movie, Geller and Shipley tried to warn the media about the crisis but no one listened to them until it was too late. Even Baum did not want to sell the swaps he made in the first place, until his teammates insisted.
The business realm can be a playground for vultures, but those with entrepreneurial mindset can always choose to remain unchanged by money, and veer away from greed. Although it sounds moralistic, but having a conscience would help you sleep better at night.
"The Big Short" trailer from Paramount Pictures' YouTube channel