Like Michael Burry predicted the 2008 collapse and made $1.3 billion

In the world of finance, few names evoke the same combination of contrarian brilliance and visionary foresight as Michael Burry. While Wall Street celebrated the apparent successes of the housing boom, this self-taught investor and trained physician was already digging into the core of a corrupt system.

The doctor who read the data when the market was blind

In the mid-2000s, when big bank executives celebrated easy profits, Michael Burry was increasingly scrutinizing the American mortgage market. His scientific background allowed him to see beyond the reassuring narratives circulating on Wall Street. Mortgage-backed securities (CDOs) were considered safe, almost infallible investments. But Burry noticed something others ignored: beneath the surface of these sophisticated instruments lay thousands of subprime mortgages granted to borrowers who would never be able to repay them.

It was 2005-2006. The speculative bubble was inflating more and more, fueled by financial engineering that no one fully understood. Burry realized that the system was not solid but fragile. A simple pressure could cause everything to collapse.

The CDS derivatives: the weapon to fight the bubble

Michael Burry didn’t just identify the problem. He decided to act, knowing well that his position was contrarian compared to the entire market. He approached major financial players — Goldman Sachs, Deutsche Bank — and devised a bold strategy: he created non-standard derivatives called Credit Default Swaps (CDS) to make massive short bets on the housing market.

For his investment fund, Scion Capital, he wagered over a billion dollars. It was a colossal bet, deliberately calculated. The fund’s investors began to doubt. Two years of consecutive losses. Pressures increased. Many considered him a mad visionary, a contrarian who had completely misunderstood the market.

The moment of truth: when the system collapsed

Then came 2008. The American housing market crumbled. The CDOs that had been marketed as risk-free investments proved toxic, worthless. The entire banking system wavered. And in that chaos, Michael Burry found himself on the right side of the bet. Very much on the right side.

While banks were rescued with public money and many investors lost everything, Scion Capital posted extraordinary profits: over $1.3 billion in total. Michael Burry personally made about $100 million for himself.

Burry’s lesson for financial markets

Michael Burry’s story is not just a tale of spectacular financial success. It’s a demonstration of the value of rigorous research, independent thinking, and the ability to challenge consensus when the numbers tell you to. In a system where most follow the herd, Burry chose to read the same data everyone had access to, but to draw radically different conclusions.

Even today, his case remains a school case study for anyone wanting to understand how speculative bubbles work and why contrarian investors often see what others fail to perceive. Michael Burry’s story continues to inspire traders and analysts seeking to replicate his approach: meticulousness, independence, courage.