Saturday, February 17, 2018

Review: The Big Short

The Big Short: Inside the Doomsday MachineThe Big Short: Inside the Doomsday Machine by Michael Lewis
My rating: 5 of 5 stars

Fantastic book!

An-insider-turned-into-critical-observant Lewis, having worked at the Wall Street before, uncovers the story of the financial crisis of 2007-2008. This crisis originated in the subprime mortgage industry in the US - but has eventually not left untouched any country on Earth.

Lewis tells the story through those few who not only saw the crisis coming, but also actively bet on it. That is, they put their (and their investors') money and reputation on this bet. And this is the beauty of this book - picking some real people actively preparing for the financial Armageddon and by that unfolding the story of the very core of the rotten financial instruments that the Wall Street geniuses have come up with. It is both psychological thriller and socioeconomic analysis at the same time - not many authors have the gift of keeping reader very engaged and providing analysis of complex topics at the same time.

One the book's main messages for me is that the more complex the system becomes and the more chains of command it consists of, the less transparent and more prone to fail it becomes.

And more concretely - for investors - if you are not sure you understand what you invest in, seriously consider not doing that, even though short-term returns feel appealing.