The Big Short: Inside the Doomsday Machine

Dr. Burry leaves medicine to practice investing; he sets up the Scion fund to finance his bets against the subprime mortgage market. His fund does extremely well at first, then falters in the immediate run-up to the 2008 crash, as his credit default swaps leak payments before they pay off. Burry is tough-minded, a loner, and believes he has Asperger’s Syndrome, which alienates him from people. Indeed, he has trouble getting along with his investors, some of whom want to sue him when he persists in holding on to his CDSs. In the end, he is proven right, and his fund pays off handsomely.

Founders of Cornwall Capital Management, Mai and Ledley invest in underpriced options in markets that they predict will suddenly become volatile. With derivatives trader Ben Hockett, they take a keen interest in the devolving subprime market and purchase credit default swaps against the likelihood that the subprimes will go under. Their theory pays off, and their initial investment of $110,000 grows a thousand-fold to $110 million by the end of 2008.

Yet another loud and brash bond trader, Lippmann garners interest from others who hear his warnings about subprime bonds, but something in his fast-paced delivery engenders suspicion. Nonetheless, he is able to convince the FrontPoint group to bet against the bonds, with excellent results.

Vinny works with Eisman at FrontPoint; he helps ferret out the nasty secrets behind subprime bonds and CDOs, and he assists in the bets against the bad securities. He also runs cover for Eisner, who tends to be rude in public to investment bankers he doesn’t respect.

As FrontPoint Partner’s head trader, Danny knows Eisner from their days at Oppenheimer. As part of the team that shorts the bond market, Danny expects a big downturn but is unprepared for the size of it and suffers health effects.