The Big Short Book Review

I just finished reading Michael Lewis' latest book The Big Short. The book delves into the lives of 3 groups of small time money managers that were able to see the coming collapse of the subprime mortgage bond market and profited hugely from it.

In typical Michael Lewis fashion, this book tells a compelling tale of their world and does a good job explaining the very complex nature of sub prime mortgage bonds, CDOs, and credit default swaps. The primarily blame for what happened was pegged on the rating agencies (Moodys, S&P) and the systematic incentives setup at the investment banks.

In hindsight could I as a small time investor done something to capitalize on this? I don't really think so. Im mean we knew we were in a housing bubble but we really just didn't know how long the bubble would last. In 2005 I feel like I knew that housing prices were increasing at unsustainable rates. However if the time is right to buy a home, its time to buy. I think the primary thing I did was not really invest in the financial institutions that were - I could have shorted the the stocks, but no ones really knows how long a bubble can last without 20/20 hindsight.

The book is an easy read and a compelling tale that gives insight into those that ended up profiting from the financial crisis.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
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