In 2008, the 'Big Short' mastermind Michael Burry made more than $700M.

Who is Michael Burry?

Michael Burry is best known for shorting the mortgage bond market in 2007. Before the Great Recession, the legendary investor’s firm took a stake in GameStop and argued the company was being undervalued in 2019. Learn more about Burry’s historical impact on markets here.

Hear what Michael Burry thinks about the possibility of an AI bubble

Since his success shorting subprime mortgage-backed securities in 2008, Burry's positions have often become influential, sparking conversations on platforms like X. In 2025, Burry drew attention for betting against Nvidia and Palantir for being overvalued companies.

The 2008 financial system unraveled in a wave of speculation

Michael Lewis—author of the bestselling "The Big Short"—explains how a wave of speculation (among other factors) drove the 2008 collapse, from lenders issuing risky mortgages to Wall Street turning them into fragile securities. He also highlights the few outsiders who recognized the bubble and bet against it before the crash.

The movie adaptation of ‘The Big Short’ provided a visual for the 2008 housing bubble

A scene from "The Big Short" visualizes how Wall Street bundled shaky mortgages into complex housing bonds and sold credit default swaps on top of them—showing, step by step, how the structure of the 2008 housing bubble was vulnerable to collapse.

The director of 'The Big Short' is still angry about 2008

Adam McKay adapted Michael Lewis's book "The Big Short" into a hit film about how the 2008 housing market crash began. Now, many years later, the two reflect on the film and the events that brought it about.

Subprime lending practices, which fueled the housing bubble, surged after 2000.

Before the Great Recession, lax requirements to get a mortgage resulted in mass defaults that left nearly 19 million homes vacant.

Watch Margot Robbie explain subprime mortgages—risky loans given to homebuyers with low credit scores or no income verification.

BlackRock played an integral role in the Federal Reserve's response to the Great Recession, managing about $30B of hard-to-sell Bear Stearns assets on behalf of the New York Fed.

To continue selling mortgages, agencies that determine how risky a loan is gave high ratings to homebuyers regardless of their actual risk portfolio.

In 2007, Bridgewater Associates, the world's largest hedge fund, warned of an impending financial crisis.

‘The Giant Pool of Money’ remains one of the most acclaimed accounts of the 2008 housing bubble

This Peabody Award–winning "This American Life" episode traces how cheap global money, subprime lending, and Wall Street engineering inflated the housing bubble. Through vivid reporting and real voices, it became one of the defining works of 2000s financial journalism.

In 2012, Bill Ackman's hedge fund, Pershing Square, took a $1B short position against supplement company Herbalife after discovering that 82% of the company's distributors never made a profit, calling it a true pyramid scheme.

Porsche briefly made Volkswagen the most valuable company in the world in 2008

In the wake of the 2008 global financial crisis, hedge funds began placing short positions on German automaker Volkswagen. Around the same time, Porsche began acquiring a majority stake in Volkswagen, which decreased the amount of available shares, or the "stock float." Porsche then announced that it owned more than 74% of the company, prompting short sellers to realize they had placed more short positions than were logistically possible given that less than 6% of the company's shares were available to trade. In what is largely recognized as the biggest short squeeze in history, Porsche made $10B, and hedge funds lost more than $30B.

In March 2008, Bear Stearns was the first major bank to collapse in the Great Recession—leading to panic across the entire global financial system.

What happens when a hedge fund grows too big, too fast?

Dmitry Balyasny, who heads what has become one of the top US hedge fund firms, got a crash course in finance as a teenager, when he started trading stocks—and started losing money. Balyasny went on to lose a whole lot more money. But, this time, it wasn’t his to lose. To find out more about his firm’s remarkable comeback, read this article.

Ray Dalio considers betting against the US debt load in 1982 among his biggest failures

In the early days of his hedge fund, Bridgewater Associates, Ray Dalio calculated that the US had accumulated more debt than it was possible to repay. He took short positions in the market that backfired when the Federal Reserve cut interest rates and avoided a global economic collapse. Dalio lost everything and even had to borrow $4K from his dad—but often describes this experience as one of the most pivotal moments in his career.

Before Lehman Brothers filed for bankruptcy in 2008 with more than $600B in debt, the Federal Reserve tried to orchestrate a private deal to save the then-fourth-largest investment bank in the US.

Pioneered by JPMorgan, credit default swaps are a form of financial derivatives that act as insurance policies for banks issuing assets created with risky loans.

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The financial crisis in 2008 had a major impact on many 401(k) plans

Amid the 2008 financial crisis, stocks and bonds cratered as the broader market floundered due to the subprime mortgage crisis. Investors with so-called "target-date" funds—which shift allocations based on the maturation of a fund—shared in the slump, with some funds declining by 20% or more just a year or two away from maturation.

Tesla short sellers benefited from the company's poor performance in 2025

Tesla was widely considered the most-shorted stock until 2024, despite consistent short-seller losses. Between 2016 and 2020, short sellers reportedly lost more than $11B as Tesla's stock price continued climbing. However, long-held short positions began paying out in 2025 as Musk's foray into politics and his eventual feud with President Trump hurt Tesla's stock performance. In 2025, Tesla short sellers made more than $10B.

Largely considered to be the inspiration for Gordon Gekko in the movie 'Wall Street,' Ivan Boesky was one of the most high-profile white-collar criminals and faced a $100M fine for insider trading in 1986.

Shorting is a high-risk and expensive investment strategy that hedge funds specialize in

Most investors buy stocks with the expectation that those stocks will be worth more tomorrow than they are today. Short selling, known as “shorting,” a stock is the opposite: The investor is betting the stock will drop in value.

After an estimated $8B in customer funds were lost through a cryptocurrency scheme likened to a Ponzi scheme, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison.

Sovereign wealth funds in the Middle East and Asia surged after the 2008 financial crisis.

How one supplement company cost a short seller $1B

Pershing Square, a hedge fund founded and run by Bill Ackman, put short positions on Herbalife in 2012, because it believed the company was a pyramid scheme. Ackman's longtime rival and legendary investor Carl Icahn began buying Herbalife shares, causing the stock price to rise—ultimately hurting Pershing Square's short position.

The 2024 Synapse collapse took $90M of people’s life savings with it

In 2024, a banking middleman called Synapse declared bankruptcy. Unfortunately, it also locked roughly 100,000 Americans out of their own money, which prompted a class action lawsuit.

Investment banking giant Lehman Brothers filed for bankruptcy in September 2008 when it had $619B in debt, making it the largest bankruptcy ever in the US

Nearly all of its 26,000 employees immediately lost their jobs. But in London, a few hundred remained tucked away, working for another decade to wind down the bank’s European business.

Borrowers were increasingly defaulting on private credit loans as of early 2026

Risks in private credit investing include the industry's lack of transparency and the ability of businesses to borrow more than a bank might allow against their debt. Some borrowers in early 2026, for instance, likely did not expect interest rates to be so high for so long, which could be contributing to an uptick in defaults.

Commonly referred to as the 'bank bailout,' the Troubled Asset Relief Program disbursed $443B in an attempt to keep the financial system solvent.

Famed American investor Jesse Livermore made millions when the stock market crashed in 1929

Livermore made his first major short against rail company Union Pacific in 1906, coincidentally before an earthquake in San Francisco, which ultimately tanked share prices. During a financial panic the next year, JP Morgan reportedly asked Livermore to increase his long-term investments to restore hope and restabilize the market—which Livermore did. However, Livermore began betting against the market in 1929, sensing that stocks were too hot, and was one of the few people to benefit from the 1929 stock crash.

The story of a bitcoin loophole that gave one man millions

James Parker discovered a glitch in an Australian cryptocurrency exchange that would allow him to cash in credits worth over $20M and make big gifts to his friends. Like most loopholes, the authorities found out, but not before his life was transformed. The first in a six-part series.

American International Group, one of the largest insurance companies in the world, received $182B from the federal government—the largest of any bailout in the wake of the Great Recession.

A landmark hedge fund court case once reshaped high finance

Hedge fund traders tied to insider trading by probing prosecutors are relatively rare. When billionaire hedge fund legend Steve Cohen, founder of SAC Capital, pleaded guilty to trading on inside information, Wall Street trembled. The outcome of the case remains a cautionary tale for traders today.

The lifecycle of a financial bubble often follows a predictable pattern

Economist Hyman Minsky originated what became a five-stage model of an economic bubble: a new “displacement,” a rapid boom, euphoric speculation, early profit-taking by insiders, and finally panic selling. From Japan’s 1980s real-estate surge to the 2008 crash, the pattern repeats across eras and assets.

Hear why one short seller thinks short selling is now more important than ever.

Watch Selena Gomez explain collateralized debt obligations in a clip from 'The Big Short.'

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The dot-com stock bubble taught Howard Marks about markets

Annual investment letters from Howard Marks, the billionaire cofounder of top distressed debt shop Oaktree Capital Management, are required reading on Wall Street. The prolific writer and investor explains the distinction between the folly of trying to time the market and the necessity of paying attention to market cycles. The difference makes all the difference in returns.

Since the 1990s, banks have sold some of the credit risk of their accounts to external investors, known as SRTs, or synthetic risk transfers

This means if the account defaults, the outside investors assume most of the risk in return for some regular payments, freeing up the bank's ledger. It is a form of insurance used by banks to allow them to free up capital. In 2024, nearly $100B worth of SRT notes were sold.

A short squeeze happens when short sellers increase stock prices by buying shares back quickly

When short sellers realize their positions may be incorrect—usually triggered by increasing share prices—they often try to quickly buy back their shares in order to minimize their total losses. When this happens on a large scale, that buying activity can drastically increase to represent the seemingly high demand for that stock. The result is called a "short squeeze," which refers to short sellers literally being squeezed out of their positions by rising prices.

How one man placed the first short against the Dutch East India Company

Isaac Le Maire, a Dutch businessman and cofounder of the Dutch East India Company, is said to be history's first short seller, betting against the Dutch East India Company's stock price. Le Maire, who had been fired from the spice trading company over an unclear financial dispute, began spreading false rumours about the company to encourage people to sell their stock in order to tank its value.

In the aftermath of the 2008 financial crisis, the Fed began a program of quantitative easing

This program injected trillions of dollars of new money into financial markets to stimulate the economy. The move catalyzed an 11-year bull run and was repeated during the pandemic. Experts argue such power could worsen wealth inequality and contribute to bubbles in housing and finance.

Historically, borrowing money from other people to purchase property was common until private financing companies—primarily building and loan associations—stepped in to offer mortgages to buyers.

How a Reddit thread drove GameStop's stock price up and gutted the pockets of short sellers

In 2021, many hedge funds felt like GameStop was overvalued and began placing short positions. However, users in the "r/WallStreetBets" subreddit felt like the hedge funds were too aggressive in their short positions and rallied together to purchase large amounts of GameStop stock, pushing the stock price up. As the stock price rose, hedge funds began buying back their shares to cover their short positions, which also began pushing the stock price up in what's called a "short squeeze."

Warren Buffett turned a struggling textile mill into Berkshire Hathaway

With Class A shares trading at over $700K per share, Berkshire Hathaway's high stock price reflects Buffett's decades of long-term investing, major acquisitions, and a philosophy that has reshaped modern finance.

Some experts and investors think short selling—a strategy in which investors bet that a stock will drop in value—helps keep the market healthy.

Retail investors are getting burned by long/short strategies

In the US, many retail investors lack the SEC-mandated status (a high enough net worth, income, and other factors) to directly invest in hedge funds. The regulator considers hedge funds too risky for the masses. Hedge fund-like strategies have emerged as a workaround, despite potential pitfalls.

The 1929 stock market crash is a defining example of a financial bubble burst

Fueled by margin speculation and intense optimism, stock prices soared to unsustainable levels before collapsing in late October—erasing billions in market value within days.

A star investment banker was fired, launching a decade-long court fight

Star bankers are the core of an investment banking firm's business, so when Perella Weinberg let their restructuring guru Mike Kramer go in 2015, he sued, launching a ten-year legal fight.

How ‘vulture’ hedge funds make money

Some hedge funds specialize in snapping up distressed assets, like failing newspaper chains, and further stripping down their operational expenses in a bid to make a profit from the initial capital outlay. Delve into how one secretive firm known for the practice operates—and what’s at stake for the broader economy.