FADE IN:
SEEING THINGS
“I was in a medical profession. I was trained to do no harm. So when I saw harm coming to the financial system, my instinct was to diagnose it.” — Michael Burry
ONE
THE GLASS EYE
INT. CHILDREN'S HOSPITAL — SAN JOSE, CALIFORNIA — DAY — 1978
A sterile hospital room. A YOUNG BOY (2) lies in a hospital bed, one eye bandaged. His parents stand nearby, ashen-faced. A DOCTOR speaks to them in low tones.
DOCTOR
The retinoblastoma was caught early. We removed the eye successfully. He'll need a prosthetic, but his other eye is healthy. He'll see fine. Just... differently.
CLOSE ON: The boy's remaining eye, open and alert, already watching everything with an intensity that is startling in a two-year-old.
BURRY (V.O.) (breaking the fourth wall)
I lost my left eye to cancer when I was two. They gave me a glass eye. It never quite fit. People could always tell something was off. I learned very early that people don't look at you the same way when your eyes don't match. So I stopped looking at people. And I started looking at numbers. Numbers don't care about your eyes.
INT. STANFORD MEDICAL CENTER — ON-CALL ROOM — NIGHT — 2000
A tiny on-call room. MICHAEL BURRY (28), in wrinkled scrubs, sits on the bed with a laptop. He's supposed to be sleeping between neurology shifts. Instead, he's writing posts on a financial message board, analyzing stocks with obsessive precision.
His posts are detailed, footnoted, and startlingly prescient. He recommends obscure stocks that nobody has heard of. Within months, every pick goes up.
FELLOW RESIDENT
(peeking in)
Burry, we have a consult in the ER. Possible stroke.
BURRY
(not looking up)
Five minutes.
FELLOW RESIDENT
It's a stroke, Michael. Time is brain.
Burry closes the laptop, grabs his white coat, and runs.
Michael Burry's financial message board posts attracted the attention of professional investors. Joel Greenblatt, a legendary value investor, offered to seed his hedge fund.
INT. BURRY'S APARTMENT — SAN JOSE — NIGHT — 2000
A cramped apartment. Medical textbooks on one shelf, financial textbooks on the other. Burry sits at his desk, phone to his ear. He's speaking to THE MENTOR, a renowned value investor.
THE MENTOR
(on phone)
Your posts are the best financial analysis I've seen from anyone, anywhere. Professional or amateur. You have an unusual way of seeing things, Michael.
BURRY
I read the filings. Nobody reads the filings. Everyone reads the headlines, the analyst reports, the CNBC chyrons. Nobody reads the actual SEC filings. That's where the truth is. In the footnotes.
THE MENTOR
I want to give you money to manage. A million dollars to start.
BURRY
I'm a neurology resident.
THE MENTOR
You're a neurology resident who happens to be the best stock picker I've ever seen. The medicine will still be there. This opportunity won't.
Burry looks at his medical degree on the wall. Then at the laptop showing his investment returns: up 242% in the dot-com crash while the S&P fell 11%.
BURRY
I'll need to set up a fund. Scion Capital. After my favorite book — The Scions of Shannara.
THE MENTOR
(pause)
...You're naming your hedge fund after a fantasy novel?
BURRY
Yes. Is that a problem?
INT. SCION CAPITAL OFFICE — CUPERTINO, CA — DAY — 2004
A modest office. No marble lobby, no mahogany desks. Just Burry, THE ANALYST, and towers of paper. Burry is reading something unusual for a stock picker: individual mortgage loan documents. Thousands of them.
THE ANALYST
Why are you reading individual mortgage applications? We're an equity fund.
BURRY
Because something is wrong. The mortgage-backed securities market is two trillion dollars. And nobody — nobody — is reading the underlying loans. They're just looking at the ratings. Triple-A. Investment grade. Safe.
THE ANALYST
They're rated triple-A by Moody's and S&P. You're saying the rating agencies are wrong?
BURRY
I'm saying the rating agencies aren't reading the loans either. Look at this. This loan was made to a strawberry picker in Bakersfield making fourteen thousand a year. He got a seven-hundred-thousand-dollar adjustable-rate mortgage. No income verification. No down payment. And this loan is inside a triple-A rated security.
He holds up the document. His one good eye burns with certainty.
BURRY
The entire housing market is a house of cards. And when these adjustable rates reset in 2007, the cards are going to fall.
CUT TO:
TWO
THE BET
INT. GOLDMAN SACHS TRADING FLOOR — NEW YORK — DAY — 2005
A massive trading floor. THE GOLDMAN SACHS TRADER, slick and confident, sits across from Burry at a small conference table. Burry is sweating slightly — he hates these meetings, hates the social performance required.
BURRY
I want to buy credit default swaps on subprime mortgage-backed securities. I want to short the housing market.
The Goldman trader stares at him. Then laughs.
THE GOLDMAN SACHS TRADER
You want to bet against the American housing market. The most stable asset class in the history of the country.
BURRY
I've read the underlying loans. They're garbage. When the teaser rates expire and the monthly payments double, defaults will cascade. The securities will collapse.
THE GOLDMAN SACHS TRADER
Dr. Burry, with all due respect, housing prices have never fallen nationally. Never. Not once. Not in the Great Depression.
BURRY
That's because we've never had a nationwide subprime lending bubble before. The absence of a precedent is not the absence of risk.
THE GOLDMAN SACHS TRADER
(leaning back)
You know what? I'll sell you the swaps. Happily. We'll collect your premiums every month while housing prices keep going up. It's free money for us.
BURRY
Thank you.
They shake hands. The Goldman trader is grinning. Burry is not.
INT. SCION CAPITAL — CUPERTINO — DAY — 2006
Burry's office. The position is now enormous: over a billion dollars in credit default swaps. The premiums are bleeding the fund. His phone won't stop ringing. He ignores it.
THE INVESTOR WHO SUED appears at his door. She is furious.
THE INVESTOR WHO SUED
Michael, I invested fifty million dollars with you to pick stocks. Not to make some insane bet against the housing market. My portfolio is down twenty percent because of the premiums you're paying on these swaps.
BURRY
(not turning around)
The trade will work. The math is clear.
THE INVESTOR WHO SUED
The math has been “clear” for eighteen months. Meanwhile, my money is disappearing.
BURRY
The adjustable rates reset in the first quarter of 2007. When they do, defaults will spike. When defaults spike, the securities collapse. When the securities collapse, our swaps pay off. It's not a question of if. It's when.
THE INVESTOR WHO SUED
I want my money back. I'm suing you if I have to.
BURRY
(finally turning)
You can sue me. But I'm not unwinding the position. The position is right. The market is wrong. And the market will figure that out. Eventually.
INT. BURRY'S HOME OFFICE — CUPERTINO — NIGHT — LATE 2006
Burry sits alone in the dark. Death metal plays at low volume. His computer shows the fund's performance: down significantly for the year. Investor redemption requests pile up in his inbox. Threatening legal letters from attorneys.
He opens a new browser tab and starts reading more mortgage data. His glass eye catches the monitor light at an odd angle. He doesn't notice. He never does.
BURRY (V.O.) (breaking the fourth wall)
They thought I was crazy. My own investors threatened to sue me. They demanded I unwind the position. Some of them said I had Asperger's — as if that was an insult, as if seeing patterns that other people miss is a disease. Maybe it is. Maybe seeing what nobody else sees is the loneliest disease there is.
INT. BEAR STEARNS — NEW YORK — DAY — FEBRUARY 2007
THE BEAR STEARNS EXEC stands before a room of managing directors. Behind him: charts showing Bear Stearns' exposure to subprime mortgages. The charts are terrifying if you know how to read them. Nobody in the room does.
THE BEAR STEARNS EXEC
Our subprime exposure is manageable. The models show that even in a severe downturn, losses are contained to the lowest tranches. The senior securities are safe.
INTERCUT WITH: Burry in his office, reading the same data, seeing a completely different picture.
BURRY
(V.O.)
They built models that assumed housing prices would keep rising. That's not a model. That's a prayer.
INT. SCION CAPITAL — DAY — AUGUST 2007
Burry watches his screens. Subprime defaults are spiking. The ABX index — a measure of subprime mortgage bond values — is collapsing. His credit default swaps are starting to pay off. Not fully. Not yet. But the direction is unmistakable.
THE ANALYST
(watching screens)
It's happening. Michael, it's happening.
BURRY
(quietly)
I know.
THE ANALYST
Don't you feel... I don't know, vindicated?
BURRY
No. I feel sick. People are losing their homes. The economy is going to collapse. Millions of people are going to suffer. I was right. I wish I wasn't.
CUT TO:
THREE
THE UNRAVELING
INT. SCION CAPITAL — DAY — SEPTEMBER 2008
September 15, 2008. Lehman Brothers files for bankruptcy. The global financial system begins to collapse.
Burry sits in his office watching CNBC. Lehman Brothers is dead. AIG is being bailed out. Bear Stearns is gone. The entire financial system is seizing. His credit default swaps are paying off at unprecedented rates.
His phone rings. He answers.
THE INVESTOR WHO SUED
(on phone, subdued)
Michael. I... I owe you an apology.
BURRY
You don't owe me anything. Your money is safe. More than safe. You're up significantly.
THE INVESTOR WHO SUED
How much?
BURRY
For the fund, overall — the swaps have generated approximately seven hundred million dollars in profit. Your share is substantial.
Silence on the phone.
THE INVESTOR WHO SUED
I tried to sue you.
BURRY
I know. You weren't the only one.
INT. SCION CAPITAL — DAY — 2008
Burry sits at his desk, writing a letter to his investors. The final tally: Scion Capital returned 489% from inception to 2008 (net of fees), compared to 3% for the S&P 500 over the same period. His personal profit from the subprime trade: $100 million.
BURRY
(V.O., reading his letter)
I am closing Scion Capital. The fund has achieved its objectives. I no longer wish to manage other people's money. The experience of being right and being punished for it — of watching people suffer while the institutions that caused the suffering were bailed out — has convinced me that the system is broken in ways that capital markets cannot fix.
He signs the letter. Puts it in an envelope. Looks around the office one last time. Then he walks out and locks the door behind him.
INT. BURRY'S HOME — SARATOGA, CA — DAY — 2010
Burry sits in his home office, surrounded by guitars and books. He's no longer running a fund. He manages his own money. He plays drums. He watches his son. He reads.
On his computer: a Twitter login page. He creates an account. Username: @michaeljburry. He types his first tweet.
Michael Burry joined Twitter. He would become one of the most closely watched accounts in finance — cryptic, prophetic, and perpetually alarming.
INT. BURRY'S HOME OFFICE — NIGHT — 2021
Burry at his desk. Multiple monitors show market data. He types a tweet: “This is the greatest speculative bubble of all time in all things. By two orders of magnitude.”
He posts it. Then deletes it thirty minutes later. Then posts another. Then deletes that too. This is his pattern — prophetic utterances followed by retreat, as if the act of warning the world exhausts him.
BURRY
(to himself)
They won't listen. They never listen. Not until it's too late. Then they'll ask: why didn't anyone warn us? And I'll be sitting here, deleting tweets.
INT. BURRY'S HOME — STUDY — DAY
Burry sits in a comfortable chair, reading a book on monetary policy. His son (teenager) appears in the doorway.
SON
Dad, someone at school said you predicted the financial crisis and you're a genius.
BURRY
I didn't predict anything. I read the data. The data predicted the crisis. I just read it.
SON
So you're not a genius?
BURRY
(small smile)
I'm a guy with one eye who reads footnotes. That's not genius. That's just thoroughness. Thoroughness is the most underrated quality in the world. Everyone wants to be a genius. Nobody wants to read the footnotes.
His son considers this. Then sits down in the chair across from him.
SON
Can you teach me to read footnotes?
Burry looks at his son. For the first time in the film, his expression softens completely.
BURRY
Get a chair. I'll show you.
FADE TO BLACK.
Michael Burry's credit default swap trade during the 2008 financial crisis generated approximately $700 million in profit for Scion Capital's investors and $100 million for Burry personally. He closed Scion Capital in 2008 and now manages his own family office, Scion Asset Management. His story was told in Michael Lewis's book “The Big Short” and the subsequent film, in which he was portrayed by Christian Bale. He still reads footnotes. He still deletes tweets. He was later diagnosed with Asperger's syndrome, which he credits with his ability to focus on data that others overlook.
THE END