The Big Short

by

Michael Lewis

Teachers and parents! Struggling with distance learning? Our Teacher Edition on The Big Short can help.
Shorting a stock is the opposite of going long on it. Instead of buying low to sell high, the trader makes a bet that a stock’s value will go down. This is generally considered a risky investing strategy, but because the Big Short traders correctly predicted the crash in the subprime mortgage market, they were able to make a lot of money off credit default swaps (which are a type of short position).

Short Quotes in The Big Short

The The Big Short quotes below are all either spoken by Short or refer to Short. 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 1 Quotes

By the time Household’s CEO, Bill Aldinger, collected his $100 million, Eisman was on his way to becoming the financial market’s first socialist. “When you’re a conservative Republican, you never think people are making money by ripping other people off,” he said. His mind was now fully open to the possibility. “I now realized there was an entire industry, called consumer finance, that basically existed to rip people off.”

Related Characters: Michael Lewis (speaker), Steve Eisman (speaker), Michael Lewis, Valerie Feigen
Related Symbols: Bonds
Page Number: 20
Explanation and Analysis:
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 7 Quotes

It made no sense: The subprime CDO market was ticking along as it had before, and yet the big Wall Street firms suddenly had no use for the investors who had been supplying the machine with raw material—the investors who wanted to buy credit default swaps. “Ostensibly other people were going long, but we were not allowed to go short,” said Charlie.

Related Characters: Michael Lewis (speaker), Charlie Ledley and Jamie Mai (speaker), Ben Hockett
Related Symbols: Bonds
Page Number: 163
Explanation and Analysis:
Chapter 9 Quotes

Howie Hubler had grown up in New Jersey and played football at Montclair State College. Everyone who met him noticed his thick football neck and his great huge head and his overbearing manner, which was interpreted as both admirably direct and a mask. He was loud and headstrong and bullying.

Related Characters: Michael Lewis (speaker), Howie Hubler , Michael Burry
Page Number: 200
Explanation and Analysis:
Chapter 10 Quotes

Now the metaphor was two men in a boat, tied together by a rope, fighting to the death. One man kills the other, hurls his inert body over the side-only to discover himself being yanked over the side. “Being short in 2007 and making money from it was fun, because we were short bad guys,” said Steve Eisman. “In 2008 it was the entire financial system that was at risk. We were still short. But you don’t want the system to crash. It’s sort of like the flood’s about to happen and you’re Noah. You’re on the ark. Yeah, you’re okay. But you are not happy looking out at the flood. That’s not a happy moment for Noah.”

Related Characters: Michael Lewis (speaker), Steve Eisman (speaker)
Page Number: 227
Explanation and Analysis:

It wasn’t Eisman who upset the tone in the room, but some kid in the back. He looked to be in his early twenties, and he was, like everyone else, punching on his BlackBerry the whole time Miller and Eisman spoke. “Mr. Miller,” he said. “From the time you started talking, Bear Stearns stock has fallen more than twenty points. Would you buy more now?”

Miller looked stunned. “He clearly had no idea what had happened,” said Vinny. “He just said, ‘Yeah, sure, I’d buy more here.’”

After that, the men in the room rushed for the exits, apparently to sell their shares in Bear Stearns. By the time Alan Greenspan arrived to speak, there was hardly anyone who cared to hear what he had to say. The audience was gone. By Monday, Bear Stearns was of course gone, too, sold to J.P. Morgan for $2 a share.”

Page Number: 235
Explanation and Analysis:
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The Big Short PDF

Short Term Timeline in The Big Short

The timeline below shows where the term Short 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
...to blow up at some point, and that it’s possible to make a fortune on shorting it (betting that the value will go down). Eisman has an epiphany: he realizes that... (full context)
Chapter 2
Outsiders vs. Conformists  Theme Icon
Needless Complexity Theme Icon
...time. He performs a lot of research with one goal: to find out how to short subprime mortgage bonds. (full context)
Outsiders vs. Conformists  Theme Icon
The Problems with Capitalism  Theme Icon
Needless Complexity Theme Icon
Burry wants to short the subprime market, but the problem is that there’s no direct way to do so.... (full context)
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
...bragging about how he was about to make “oceans” of money off $1 billion in shorts on subprime mortgages. (full context)
Chapter 3
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
...actually be in favor of his gamble, and that it might be good to be short. (full context)
Outsiders vs. Conformists  Theme Icon
The Problems with Capitalism  Theme Icon
...wonder if he has narcissistic personality disorder. He tries to sell other industry players on shorts like his, but they largely refuse him. When subprime mortgage bonds rise, decreasing the value... (full context)
Chapter 4
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
...his bosses at Deutsche Bank to explain himself. They compromise: Lippmann can keep his expensive shorts if he can prove there are other investors who might take them off his hands.... (full context)
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
...the housing market. They find “empty neighborhoods built with subprime loans.” The best targets for shorts (i.e., “the bonds ultimately backed by the mortgages most likely to default”) are primarily in... (full context)
Chapter 6
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
...idea suggested to them by Lippmann. Lippmann has arranged it so that investors who are shorting bonds will be seated at tables with investors who are long on bonds. (full context)
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
Wing Chau tells Eisman, “I love guys like you who short my market. Without you I don’t have anything to buy.” Eisman finally gets it. As... (full context)
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
...grabs Lippmann, points to Chau and says, “whatever that guy is buying, I want to short it.” Eisman isn’t joking, and he ends up buying credit default swaps specifically on Wing... (full context)
Outsiders vs. Conformists  Theme Icon
Wall Street’s Culture of Overconfidence Theme Icon
The Problems with Capitalism  Theme Icon
Pessimism vs. Optimism Theme Icon
...to do so, they have to pretend they are interested in buying bonds instead of shorting them. Deutsche Bank, who arranged the meetings, is keeping an eye on Eisman. (full context)
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
After leaving Las Vegas, Eisman, Danny, and Vinny increase their subprime short position from $300 million to $550 million, overwhelming their portfolio of $500 million that they... (full context)
Chapter 7
Outsiders vs. Conformists  Theme Icon
Wall Street’s Culture of Overconfidence Theme Icon
The Problems with Capitalism  Theme Icon
Pessimism vs. Optimism Theme Icon
...big banks are theoretically going long on the bonds, they are hesitant to sell more short positions. Charlie thinks the big firms might be slowly becoming aware of the impending disaster. (full context)
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
...stay that way. Eisman and his team are finally making money. They take out new short positions on the rating agencies. Eisman then learns that Merrill Lynch owns a large proportion... (full context)
Chapter 10
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
Eisman, however, still sees his short position as part of a moral crusade against big Wall Street firms. By March 14,... (full context)
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
...they transition back to being regular stock market investors. They still have lots of traditional shorts on financial institutions, which are all falling in value, earning FrontPoint even more money. Danny... (full context)