The Big Short

by

Michael Lewis

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A hedge fund is a firm that engages in relatively risky trading strategies in order to hopefully beat the market and make money for clients. FrontPoint Partners, Scion Capital, and Cornwall Capital—the three major firms profiled in the book—are all hedge funds.

Hedge fund Quotes in The Big Short

The The Big Short quotes below are all either spoken by Hedge fund or refer to Hedge fund. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
Outsiders vs. Conformists  Theme Icon
). Note: all page numbers and citation info for the quotes below refer to the W.W. Norton edition of The Big Short published in 2010.
Chapter 2 Quotes

A lot of hedge fund managers spend time chitchatting with their investors and treated their quarterly letters to them as a formality. Burry disliked talking to people face-to-face and thought of these letters as the single most important thing he did to let his investors know what he was up to. In his quarterly letters he coined a phrase to describe what he thought was happening: “the extension of credit by instrument.” That is, a lot of people couldn’t actually afford to pay their mortgages the old-fashioned way, and so the lenders were dreaming up new instruments to justify handing them new money.

Related Characters: Michael Lewis (speaker), Michael Burry
Related Symbols: Bonds
Page Number: 28
Explanation and Analysis:
Chapter 5 Quotes

Every new business is inherently implausible, but Jamie Mai and Charlie Ledley’s idea, in early 2003, for a money management firm bordered on the absurd: a pair of thirty-year-old men with a Schwab account containing $110,000 occupy a shed in the back of a friend’s house in Berkeley, California, and dub themselves Cornwall Capital Management. Neither of them had any reason to believe he had any talent for investing. Both had worked briefly for the New York private equity firm Golub Associates as grunts chained to their desks, but neither had made actual investment decisions.

Page Number: 108
Explanation and Analysis:
Chapter 6 Quotes

The trouble, as ever, was finding Wall Street firms willing to deal with them. Their one source of supply, Bear Stearns, suddenly seemed more interested in shooting than in trading with them. Every other firm treated them as a joke. Cornhole Capital. But here, in Las Vegas, luck found them.

Page Number: 149
Explanation and Analysis:
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Hedge fund Term Timeline in The Big Short

The timeline below shows where the term Hedge fund appears in The Big Short. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 1
Outsiders vs. Conformists  Theme Icon
Wall Street’s Culture of Overconfidence Theme Icon
The Problems with Capitalism  Theme Icon
Pessimism vs. Optimism Theme Icon
Needless Complexity Theme Icon
...leading skeptic on Wall Street. He leaves his job for a new one at the hedge fund Chilton Investment, where he continues to analyze companies. By 2002, there are no public subprime... (full context)
Outsiders vs. Conformists  Theme Icon
The Problems with Capitalism  Theme Icon
Pessimism vs. Optimism Theme Icon
...Frustrated that his current job doesn’t let him manage money, he sets up his own hedge fund at FrontPoint Partners, which is owned by Morgan Stanley (although Morgan Stanley doesn’t provide investment... (full context)
Chapter 2
Outsiders vs. Conformists  Theme Icon
The Problems with Capitalism  Theme Icon
...an unusual approach to managing Scion. Instead of taking two percent of assets, like most hedge fund managers do, he only charges investors expenses. Basically, the only way for him to make... (full context)
Chapter 3
Outsiders vs. Conformists  Theme Icon
The Problems with Capitalism  Theme Icon
Pessimism vs. Optimism Theme Icon
In February 2006, Greg Lippmann shows up in the conference room of Steve Eisman’s hedge fund , where Vincent Daniel is also present. They treat Lippmann with suspicion, but Lippmann is... (full context)
Chapter 7
Outsiders vs. Conformists  Theme Icon
The Problems with Capitalism  Theme Icon
Needless Complexity Theme Icon
Meanwhile, Eisman is feeling limited by the fact that his hedge fund is part of Morgan Stanley and that the risk management people don’t understand what he’s... (full context)
Chapter 8
Outsiders vs. Conformists  Theme Icon
Wall Street’s Culture of Overconfidence Theme Icon
The Problems with Capitalism  Theme Icon
Pessimism vs. Optimism Theme Icon
Needless Complexity Theme Icon
On June 14, two important subprime mortgage bond hedge funds owned by Bear Sterns crash, and a publicly traded index of triple-B bonds goes down.... (full context)