A one-eyed doctor turned hedge fund manager spotted the bubble years early

Lewis centers much of the book on Michael Burry, a former neurologist with a glass eye and self-described social difficulties, who ran a small hedge fund and, through painstaking independent research, concluded years before the crash that subprime mortgage bonds were destined to fail en masse. Burry's method involved actually reading through prospectuses most investors skipped, discovering that many mortgage pools contained a rising share of adjustable-rate loans set to reset to much higher payments, loans issued to borrowers who plainly couldn't afford them once rates increased. He pioneered a way to bet against these bonds using credit default swaps, a financial instrument barely used for this purpose before he pushed banks to create contracts letting him short subprime mortgage debt directly. Lewis frames Burry's social distance from Wall Street's consensus-driven culture as an asset rather than a liability, since it left him uninfluenced by the groupthink infecting everyone around him. Takeaway: sometimes being an outsider who reads the fine print beats being an insider who trusts the consensus.