WHILE regulars at the Powder Monkey quietly sipped their pints, the young American sat jabbering on his phone and tapping away on a laptop.
He had been at the pub in Exmouth, Devon, since 2pm and stayed until closing time — but he did not drink much.
He was too busy trading with US banks 3,600 miles away, flogging £150million worth of financial products ahead of the 2008 global crash.
Not that Wall Street hedge fund guru Ben Hockett was particularly fond of English ale. He had been directed to the pub by his Brit brother-in-law, who told him it was the only place in the quiet seaside town with reliable wi-fi.
And as Oscar-nominated Hollywood film The Big Short makes clear, when it is time to make a fortune, there is not a minute to waste.
The movie tells the astonishing story of trader Ben Rickert — played by Brad Pitt and based on Hockett, who had been visiting his wife’s family in Devon before the crash.
Within four afternoons in the Monkey, Hockett had turned his firm Cornwall Capital’s £700,000 investment into a £55million profit.
The Big Short, out on Friday, is based on the best-selling book of the same title by former Wall Street man Michael Lewis.
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In the financial world a “short” is like a bet that a stock or bond will drop in value. If you can then insure against that drop, when it happens you get
a mega-payout. Also starring Christian Bale, Ryan Gosling and Steve Carell, the film follows a small group who made more than £12BILLION betting that the American housing market would implode.
After those frantic days trading in the pub, Hockett even warned his brother-in-law that the UK banking system could seize up due to the coming
US crash.
He says in Lewis’s book: “I’d come home at midnight and try to talk to my brother-in-law about the children’s future. I told them to keep some cash on hand. But it was hard to explain. I can’t really talk to them about it. They’re English.”
In the film, Hockett’s character is joined by hedge fund manager Michael Burry, played by Bale, Jared Vennett, based on real-life bond salesman Greg Lippmann and played by Gosling, and Mark Baum, based on fund manager Steve Eisman and played by Carell.
In the early 2000s Hockett was a successful trader for financial giant
Deutsche Bank in Japan before moving to California and joining Cornwall
Capital.
He would not have had the opportunity to make his fortune had it not been for
financial genius Burry, who created the concept of insurance payouts if
mortgages bombed. Then between ten and 20 other hedge funds, such as
Cornwall, took the chance to bet against banks — who foolishly thought they
would never lose.
Bale has been nominated for a best supporting actor Oscar for his performance
as social misfit and heavy metal fan Burry, who says in the book that his
“nature is not to have friends”. As a child he used to wash banknotes to
make them look like new.
That limited social life meant the twice-married investor had the time to study the stock markets, although he admits: “My drive to be productive
probably cost me my first marriage.”
In the end he made £70million for himself — and half a billion for his investors.
Disillusioned, he shut his hedge fund in 2008 and now lives a simple life — for a multi-millionaire — with wife Anh-Thi in Saratoga, California.
Nowadays he invests in water.
Hockett is a “prepper” — someone who prepares for an apocalypse by stocking food and other supplies — and lives in a remote part of California. He has taken his family “offline”, shunning the net and removing all pictures from it.
Brad Pitt, who co-produced the movie, was determined to put it on the big screen. He says: “The fact that no one was held accountable after this mass, mass failure drives me crazy. I want this story told.
“This entitlement that you can make money off the backs of others without being responsible for what it’s doing to them or what it could do to them drives me crazy.”
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