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Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

blogs.wsj.com

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Re: Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

#41

Post by jquery »

farmerbuzz wrote: post #35
gruseom wrote: post #20

Earlier quoted context omitted.

I hardly disagree about the WSJ in general but I read the end of this article differently. The author's final question is a good one: why on earth did she take a job working for the very people whose irresponsibility her research exposed? Her answer, assuming it's sincere and not quoted out of context, is indeed naive: she's doing it to change the culture of Wall Street. Well, I agree with what I imagine the author's…

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man." -George Bernard Shaw

As much as I used to love this quote, I now see it as a non-sequitur.

Re: Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

#42

Post by gruseom »

jquery wrote: post #41
farmerbuzz wrote: post #35

Earlier quoted context omitted.

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man." -George Bernard Shaw

As much as I used to love this quote, I now see it as a non-sequitur.

Interesting you should say that. I wrote a comment last night (and then decided not to post it) that went like this:

That's one of those lines, like the opening sentence of Anna Karenina, that is written so authoritatively that you just take it for granted when you read it, but when you stop and think, there's no reason to believe is true.

(The reason I didn't post it is because I don't accept that the quote, even if true, invalidates what I said about naive people getting sucked into the beast. Disputing whether the quote is true makes it seem like I'm conceding that point, which I ain't. I'm the last person to defend the "reasonable man".)

Edit: Shaw was great though. "Animals are my friends and I don't eat my friends" is Wilde-worthy.

Re: Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

#43

Post by megablast »

bd_at_rivenhill wrote: post #39
megablast wrote: post #37

Earlier quoted context omitted.

There are a couple of companies that already do this for the banks. They get all the information on longs and short trades throughout the day, from all the big investment firms, and produce a market snaphshot. One of these companies is called Dataexplorers. You can pay money to get this data now. I am not sure how this would stop anything?

Dataexplorers appears to be focused on the securities lending business, which is a tiny segment of the market compared to what the parent is proposing. Also, I see nowhere on the site where they claim to "get all the information on longs and short trades throughout the day, from all the big investment firms, and produce a market snapshot", can you please provide a reference to the place where this claim, or a similar…

I used to work for them. We would recieve a huge list of the millions of trades that the big investment houses did, every single day. They only show a market snapshot, and try to make it impossible to determine what any individual company was doing - that was very important, for obvious reasons.

Re: Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

#44

Post by jquery »

gruseom wrote: post #42
jquery wrote: post #41

Earlier quoted context omitted.

As much as I used to love this quote, I now see it as a non-sequitur.

Interesting you should say that. I wrote a comment last night (and then decided not to post it) that went like this: That's one of those lines, like the opening sentence of Anna Karenina, that is written so authoritatively that you just take it for granted when you read it, but when you stop and think, there's no reason to believe is true. (The reason I didn't post it is because I don't accept that the quote, even if…

Thanks for the great reply. Love that last quote especially. :)

Re: Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

#45

Post by T_S_ »

bd_at_rivenhill wrote: post #40
T_S_ wrote: post #33

Here's how to turn the Big Short into a bunch of little shorts and save us all a lot of trouble in the future: Require the banks to report each and every line item that they are long and short. A line item is simply there aggregate position in any security, loan or derivative. The banks already have this information, obviously. All they need to do is publish it--daily. In the past this would have been "infeasible". N…

This suggestion would be the equivalent of requiring that all software firms provide all of their source code for free public viewing. The information about the aggregate positions that a bank holds for its own account can be used by a trading firm to make tremendous amounts of money at the bank's expense. In fact, Goldman was basically accused of doing this to Long Term Capital management in the book "When Genius Fa…

Not exactly. It would require them to release the terms of every deal. The methodology to evaluate these would not be required. In many sectors of the markets such services are alrady provided to the banks by vendors so the bank would merely have disclose the name of the security and just a few other bits.

And yes, this would have a profound effect on proprietary trading. That's the whole point. It would disperse prop trading to smaller entities not subject to disclosure.

Re: Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead

#46

Post by T_S_ »

megablast wrote: post #37
T_S_ wrote: post #33

Here's how to turn the Big Short into a bunch of little shorts and save us all a lot of trouble in the future: Require the banks to report each and every line item that they are long and short. A line item is simply there aggregate position in any security, loan or derivative. The banks already have this information, obviously. All they need to do is publish it--daily. In the past this would have been "infeasible". N…

There are a couple of companies that already do this for the banks. They get all the information on longs and short trades throughout the day, from all the big investment firms, and produce a market snaphshot. One of these companies is called Dataexplorers. You can pay money to get this data now. I am not sure how this would stop anything?

Banks take risk through their positions. I am arguing that they should disclose what they own to the public--not disclose aggregated risk to a sleepy regulator.

Banks would take less risk if required to do so.

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