As per his findings, a housing bubble was being formed and the adjustable-rate mortgages that have been used to build these securities would eventually start defaulting. Michael Burry, working at Scion Capital studies the mortgages that are been bundled into these securities to check upon their credibility.

During 2005, a hedge fund manager named Dr. The demand for these securities soared and commercial banks started issuing fresh subprime level mortgages to fulfill the demand for these products. The investment banks started buying several home mortgages from commercial banks and packaged them into single bond-like security which came to be known as Mortgage-Backed Securities.

The demand for these MBS spread like wildfire with every investor running to own a couple of them. The movie starts by introducing Lewis Ranieri, an executive working at Solomon Brother, a person responsible for the popularisation of Mortgage-Backed Securities (MBS) in the late 1970s. Charlie Geller & Jamie Shipley, Founders at Brownfield Capital.Mark Baum, Hedge fund Manager at FrontPoint Partners.Jared Vennett, Executive at Deutsche Bank.Michael Burry, Hedge fund manager at Scion Capital.The movie gives a very good insight into the functioning of the biggest investment banks and events that led to a huge financial crisis in 2008 affecting the entire world economy and leaving millions of people homeless. It shows how professionals working at large hedge funds and investment banks made fortunes after the collapse of the housing bubble. The Big Short (2015) is an American financial drama film based on the famous book “The Big Short: Inside the Doomsday Machine by Michael Lewis” portraying how few financial industry professionals predicted the buildup of the real estate bubble before the crisis of 2008. This article written by Akshit Gupta (ESSEC Business School, Master in Management, 2022) analyzes The Big Short movie.

The big short showing