Michael Burry

Burry is a pure fundamental analyst. He reads the actual documents.

Not the analyst summary. Not the ratings agency report.

The actual prospectus, the loan files, the footnotes. For the Big Short trade, he read thousands of individual mortgage loan documents.

Nobody else was doing that. Analysts were looking at aggregate statistics.

The aggregate statistics looked fine. The individual loans were a disaster.

His basic method: find something everyone is ignoring, do the work to understand why it''s mispriced, take a position, and wait. The waiting is the hard part.

He was short the housing market for two years before it collapsed. During those two years his investors were losing money on paper and threatening legal action.

He locked redemptions to prevent forced liquidation. He was right and it cost him two years of misery to prove it.

John Paulson

Before the housing trade, Paulson was an event-driven investor — he looked for catalysts like mergers and acquisitions where a target company''s stock was trading below the likely acquisition price. It''s a consistent, lower-risk strategy.

The housing trade was different in scale but not in concept: he identified a massive mispricing, figured out the cheapest way to get exposure to it, and waited.

After 2008, his investing became less disciplined. Gold made sense as an inflation hedge in theory.

Valeant looked like a Berkshire-style roll-up at first. Both became expensive failures.

The same willingness to make large concentrated bets that built his fortune also drove the losses.

Michael Burry

Read the documents. That is basically the whole philosophy.

Not the summary. Not the analyst report.

The actual documents. Most investors don''t do this because it''s tedious and slow and it requires a tolerance for complexity that most people don''t want to develop.

His second rule: be willing to be lonely. His housing short was a deeply contrarian position that most finance professionals thought was ridiculous.

He didn''t need their validation. He needed the math to work.

His third: factor in time when sizing a position. The housing market stayed wrong for two years.

Size your position so you can survive being right too early.

John Paulson

He''s an event-driven value investor at heart. He looks for definable catalysts — a merger, a restructuring, a market dislocation — that will close the gap between price and value.

The housing trade was the largest version of that pattern he ever found. His mistake post-2008 was applying concentrated conviction to macro bets — gold and Valeant — where the catalysts were less defined and the timelines less certain than the event-driven situations he''d spent his career on.

Michael Burry

He concentrates heavily. When he has a thesis, he puts a large portion of the fund into it.

He also used leverage on the housing trade — borrowing to buy credit default swaps amplified both the wait and the eventual payoff. His risk tolerance is high in the sense that he can hold a losing position for years if the fundamental analysis is intact.

It is low in the sense that he won''t touch anything he doesn''t deeply understand. He doesn''t trade momentum or narratives.

If the math doesn''t work, he''s not interested.

John Paulson

He''s a high-conviction, concentrated investor. The housing trade required enormous conviction held for two years while the position was technically losing money on paper.

He held and he was right. The problem is that the same trait — sustained conviction in a large concentrated position — produced very different results in gold and Valeant.

The housing trade had a clear, verifiable catalyst. The subsequent bets were more reliant on macro predictions that didn''t materialise on the expected timeline.

Michael Burry

He lives in Saratoga, California. He is notoriously private — he has opened and deleted social media accounts multiple times after his market commentary attracted more attention than he wanted.

He occasionally posts about market risks and then goes quiet for months. He has a son with Asperger''s syndrome, and the experience led him to recognise similar traits in himself and pursue his own autism diagnosis as an adult.

He doesn''t do conferences. He doesn''t do interviews.

He files his quarterly 13F and lets the positions speak.

John Paulson

He lives in New York and has been one of the larger buyers of prime Manhattan and Hamptons real estate over the years. He donated $400 million to Harvard in 2015 — the largest donation in Harvard''s history at the time.

The school was renamed the Harvard John A. Paulson School of Engineering and Applied Sciences, and later renamed back after student controversy over the donor.

He has given significantly to healthcare research. His personal life became public during a contentious divorce from his first wife.

Michael Burry

The housing trade. In 2005, Burry read thousands of subprime mortgage loan documents and concluded the US housing market was built on loans that would eventually default in large numbers.

He persuaded Goldman Sachs and Deutsche Bank to sell him credit default swaps on mortgage-backed securities — essentially insurance that paid out when the mortgages defaulted. The banks thought he was wrong.

They were happy to take his premiums. In 2007–2008 the mortgages defaulted.

His investors made $700 million. Burry personally made about $100 million.

The banks that sold him the swaps needed government bailouts to survive.

John Paulson

2007. The housing trade.

He bought credit default swaps on subprime mortgage-backed securities — insurance that paid out when the mortgages defaulted. Total fund profits: $15 billion.

His personal take: approximately $4 billion. At the time, it was the largest single-year gain in hedge fund history.

His investors were very happy. He was on the cover of every financial publication.

It''s still the benchmark everyone uses when talking about the best trades ever made.

Michael Burry

The trade nearly destroyed him before it paid off. He locked investor redemptions to prevent forced liquidation of his position — probably the right call, but it created a legal and emotional nightmare that he''s described as one of the worst periods of his life.

He also closed Scion to outside investors after winning, which in hindsight was leaving behind an institutional money management career after one of the greatest trades in history. He''s never explained that decision fully.

It may have been the right one. It may not have been.

John Paulson

Gold. He launched a gold-denominated share class starting around 2009.

His thesis: central bank stimulus would create inflation and gold would rise. He was early and then wrong.

Gold peaked in 2011 and fell for years. His gold fund lost over 60%.

Then Valeant. He took a large position in Valeant Pharmaceuticals when it looked like a brilliant roll-up strategy.

When Valeant''s pricing practices came under scrutiny in 2015, the stock collapsed. He lost roughly $4 billion across his funds.

It''s a remarkable story: the man who made the greatest trade in history then proceeded to give back billions of it.

Michael Burry

Michael Burry was born in San Jose, California in 1971. He lost his left eye to retinoblastoma as a child and has worn a prosthetic eye since.

He studied economics at UCLA and then went to Vanderbilt University School of Medicine. During his medical residency at Stanford, he posted detailed stock analysis on investor message boards between midnight and 3 AM.

The quality was consistently good enough that people in finance started paying attention.

He left his residency in 2000 — one year from finishing — to start Scion Capital with $1.1 million in loans from his family. No finance credentials.

Just a public track record and conviction. In his first full year, the S&P 500 fell 11.9%.

Scion returned 55%. From 2001 to 2008, Scion returned over 489% against the S&P 500's 3%.

Then he made the trade.

John Paulson

John Paulson grew up in Queens, New York. He studied finance at NYU and got his MBA from Harvard Business School in 1980, graduating as a Baker Scholar — top 5% of his class.

He worked in mergers and acquisitions at Bear Stearns and then at Gruss & Co., a merger arbitrage firm. He started Paulson & Co.

in 1994 with $2 million. The fund grew steadily through merger arbitrage and event-driven investing.

By 2006 it managed about $6 billion.

Then, in 2005, a young analyst named Paolo Pellegrini walked into his office with an analysis of the US housing market. The numbers showed that house prices had grown far beyond historical norms, supported by loans that couldn''t survive any meaningful increase in defaults.

Paulson spent months verifying the analysis. He then spent 2006 convincing banks to sell him credit default swaps on mortgage-backed securities.

The banks thought he was wrong. In 2007, the mortgages defaulted.

His fund made $15 billion. He personally made approximately $4 billion.

That''s roughly $11 million per day.

Michael Burry

Scion Capital ran from 2000 to 2008. He closed it to outside investors after the Big Short trade — partly because managing money for clients who were screaming at him to reverse a position he knew was right was a genuinely miserable experience, and partly because he didn't need to anymore.

He relaunched as Scion Asset Management, a personal vehicle he still runs today. His current investing is more conventional — value picks, occasional activist positions, portfolio bets that get attention when his 13F filings come out.

He bought GameStop before Reddit did. He shorted Tesla.

He has positioned in water rights and farmland. He tends to be early, which is both his gift and his problem.

John Paulson

Paulson & Co. is the fund he started in 1994.

After the housing trade it peaked at $38 billion in assets under management — one of the largest hedge funds in the world. Then came the losses.

He made a large bet on gold starting around 2009, believing that central bank stimulus would cause inflation. The inflation didn''t arrive for years.

His gold fund lost over 60% of its value. He also took a large position in Valeant Pharmaceuticals as a platform acquirer in healthcare — a strategy that collapsed when Valeant''s pricing and accounting practices came under regulatory scrutiny in 2015–2016.

He lost roughly $4 billion across his funds on Valeant.

By 2019 assets were down to approximately $9 billion. He returned outside capital to investors in 2020 and converted Paulson & Co.

to a family office managing his own money.

Michael Burry

BA in Economics, UCLA. MD, Vanderbilt University School of Medicine, 1999.

He completed three years of his medical residency at Stanford before leaving to start Scion Capital. He is technically a licensed physician who never practiced.

John Paulson

NYU Stern School of Business, BS summa cum laude, 1978. Harvard Business School, MBA, 1980, Baker Scholar — top 5% of his class.

He worked in M&A at Bear Stearns and at Gruss & Co. before starting his own fund.