Real Money On Wall Street Whos Makin It Song
On Wall Street Magazine Brokers
Real Money On Wall Street Who's Making It Home

This article is an excerpt from the Shortform summary of 'The Big Short' by Michael Lewis. Shortform has the world's best summaries of books you should be reading.

Like this article? Sign up for a free trial here.

Insider Helps Feds Take Down Mob on Wall Street. 28, 2004 - Lou Pasciuto was a street smart kid working at a gas station New York City's Staten Island who moved across the harbor to Wall.
February 03, 2012. One of the most common attack lines from the President of the United States is the fat cats in Wall Street are destroying America. Democrats have attacked Mitt Romney and the GOP in general as being in the pockets of Wall Street. But who is really the biggest recipient of Wall Street money? Answer: Barack Obama!

Are the characters in the film The Big Short based on real people? Which characters?

There are a lot of people on Wall Street that make extraordinary amounts of money, but are dead broke. What happened was that they had one year in which they made $300K/year assumed that this was normal, and then when the end up making $200K/year, their finances fall apart. Wall Street makes capitalism work—with the support of government regulations—by moving money efficiently to its most productive uses. To facilitate a secondary market for existing owners of stocks and bonds to find parties willing to buy their securities so they can raise cash.

We’ll cover the main players in The Big Short that are based on real people. Learn why the real people who shorted the housing market are just as compelling as the characters based on them.

The Big Short’s Real People

Mark Baum (Steve Carell)

The character of Mark Baum is based on Steve Eisman. Steve Eisman is an investor best known for having shorted the housing market and profiting from the 2007-2008 financial crisis.

Steve Eisman made a name for himself on Wall Street. Originally an attorney, he switched gears relatively early in his career to become an analyst at Oppenheimer, a financial advisement firm.

Steve Eisman rapidly developed a reputation as a brash truth-teller, unwilling to offer up the praise and platitudes that so many financial and banking leaders expected to hear. Wall Street, he saw, was awash in flattery, in which brokers, analysts, and customers told the financial class what it wanted to hear, even when it wasn’t true. Steve Eisman tended to buck conventional wisdom. He was unafraid of telling the truth about the underwhelming performances of the companies he was tasked with analyzing—and telling it loudly.

On one occasion, Steve Eisman delivered a speech at a luncheon in which he lambasted the head of a major U.S. brokerage house (who happened to be in the audience), claiming that this man knew nothing about the business he led. Another time, Eisman crumpled up the financial statements of a Japanese real estate firm and told the CEO that they were “toilet paper.” With his often-unkempt appearance and unrestrained personality, he cut a unique figure among the smartly dressed and cautiously reserved Wall Street set.

But he was also guided by a strong moral compass and began to realize just how much of Wall Street’s business model was based on deceiving the clients whose interests it supposedly existed to serve while gouging working-class Americans out of their homes and savings. He saw these injustices even more acutely after his infant son, Max, passed away in a tragic accident (in the film, it’s the character’s brother who passes away). He saw that bad things could happen to anyone, anywhere, without any warning. This new ability to imagine a worst-case scenario amid a culture of unbridled (and ultimately, unfounded) optimism was to serve Steve Eisman well as the financial sector began to lose all sense of rationality during the 2000s.

Eisman saw that the market did not punish bad actors. The incentives had not worked the way they were supposed to. His political views began to shift too, as he started his transformation from a free-market, Reaganite Republican to a progressive, populist, almost socialist Democrat. He now saw the true ethos of the system: “Fuck the poor.”

In early 2006, Deutsche employee Greg Lippmann went to Steve Eisman’s office with a proposal to bet against the subprime mortgage market. Despite his skepticism, Steve Eisman did the trade with Lippmann. The logic was sound. It was spending $2 million to make $100 million.

(Shortform note: Steve Eisman’s fund, FrontPoint, is believed to have more than doubled in value from $700 million to $1.5 billion through its bet against the housing market.)

Michael Burry (Christian Bale)

The character Michael Burry is based on the real Michael Burry. Dr. Michael Burry is a medical doctor by training and an investor and hedge fund manager who predicted and profited from the 2008 subprime mortgage crisis.

Dr. Michael Burry was, along with Steve Eisman, skeptical (to say the least) about the confidence with which Wall Street sold mortgage-backed securities. Burry was another outsider to finance, who’d come to Wall Street with an unconventional background and unique life story.

He had lost his eye at the age of two, when it was removed during surgery for a rare form of cancer. Dr. Michael Burry wore a glass eye to replace the one he’d lost. Burry later would observe that this caused him to see the world differently, both literally and figuratively. Perhaps out of self-consciousness, he had trouble with interpersonal relations and thought of himself as something of a loner. To compensate for his social struggles (he would learn much later in life that he suffered from Asberger’s syndrome, a disorder on the autism spectrum), he learned to analyze data with a rigorous eye to detail, seeing patterns that no one else could see.

Michael Burry was a medical doctor by training, who discovered a knack for investing and stock-picking when he was in medical school in the 1990s after studying the teachings of the legendary investor Warren Buffett. In his spare time (which, as a medical student, was rare) he started a blog on value investing that quickly became a favorite among traders and investment bankers—all of whom were amazed by his aptitude as a newcomer to investing and by the fact that he was doing this while attending medical school. As a value investor, Dr. Michael Burry specialized in identifying companies that could be acquired for less than their liquidation value—that is, finding companies that the market was undervaluing. This form of investing was a natural fit for the analytical and unconventional Burry, who saw things that others could not.

The success of his blog established Dr. Michael Burry as an acknowledged authority on value investing. Eventually, he quit medical school to pursue a career in finance. Joel Greenblatt of Gotham Capital offered Burry a million dollars to start his own fund, Scion Capital.

But what made Dr. Michael Burry so successful? How was he able to consistently beat the market by such wide margins? It turns out, he wasn’t really doing anything special. There was no insider trading. He didn’t have secret information or special technology that anyone else on Wall Street didn’t have access to.

He was doing nothing more than buying stocks and analyzing companies’ financial statements. But simply analyzing statements set him apart. No one else was bothering to do the hard, tedious work of actually studying up on the companies they were investing in.

Dr. Michael Burry saw a rare opportunity in the subprime housing bond market, once again where no one else was looking. But this was a twist on his usual approach. Instead of looking for assets that were undervalued, he was going to target the subprime market because of his conviction that it was extraordinarily overvalued. He was going to short the housing market.

Dr. Michael Burry cashed in his chips on August 31. His profits were over $720 million.

Jared Vennett (Ryan Gosling)

The character of Jared Vennett is based on real person Greg Lippmann. Greg Lippmann is a hedge fund manager and the former head of asset-backed securities trading at Deutsche Bank.

By February 2006, many of the savviest players on Wall Street had their eyes on Dr. Burry’s big bet a

Real Money On Wall Street Whos Makin It