The best-selling book and movie The Big Short tells the inside story of how Dr. Michael Burry made a huge fortune for his hedge fund clients by betting against the real estate market… and how those clients ultimately didn’t appreciate him despite a HUGE profit.  And I may be the only person in America who thinks so, but I think the clients were right and Dr. Burry was wrong.  I’m Bryan Ellis.  I’ll tell you why right now in Episode 191.----Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you!Have you ever read the book “The Big Short” by Michael Lewis?  If not, it’s a great read… and I really enjoyed the movie too, which is solidly over 2 hours long and felt like it was over in a flash.So I totally recommend the book and the movie… it’s a really fascinating explanation of what led up to the mortgage meltdown, and how it really was just a function of greed and carelessness.Part of the story involves Dr. Michael Burry.  He trained as a neurologist and got the degree and was a resident, but clearly his passion was in the financial world.  He had a website in the late 1990’s where he posted information about his stock picks and analysis leading to those picks.  His picks were so successful that he got the attention of some major financial players like Vanguard investments and the prominent investor Joel Greenblatt of Gotham Capital.To condense the story a bit, Burry quits medicine, starts a hedge fund called Scion Capital using some inherited capital, and continues to excel.  His first year brought a profit of 55%.  Soon, he had over $500 million under management and was turning money away.  But near the beginning, he attracted a large investment from Gotham Capital, who was Burry’s founding investor.Dr. Burry was clearly a brilliant man… clearly the reason Gotham was willing to give him millions of dollars for value-based stock investing.But Dr. Burry spread his focus a bit.  He recognized that there was a problem, and the problem was that the booming real estate market was built on a house of cards called EASY MONEY… that millions of people were being given loans they couldn’t afford for more than just a year or two during the low introductory teaser rates.  Dr. Burry recognized that there would be a huge wave of defaults soon after those teaser rates expired.Dr. Burry’s analysis turned out to be right… very, very right.  So in 2005 – while real estate was still raging hot – Dr. Burry convinced Goldman Sachs to sell him credit default swaps against loans that Burry saw as risky.  Goldman thought Burry was a sucker, sold him the swaps, and 2 years later, Burry had profited by more than $700 MILLION dollars, making his investors – including Gotham Capital – a huge, huge fortune.Curiously, Dr. Burry quit managing money after that experience.  He made a huge fortune, and doubtlessly could continue to do so as a money manager, because he absolutely has an eye for both risk and value… a rare thing, for sure.But here’s the thing… between the time Burry bought those swaps in 2005 and cashed them in for a huge profit in 2007, some bad things happened.  At first, the real estate market didn’t decline right away, and so those swaps lost value… very quickly.  Then to compound the problem, Goldman and the other brokerages who were responsible for pricing those swaps didn’t exactly do so in an honest way.  In fact, they aggressively took advantage of the situation by pegging the value of subprime mortgages as being far higher than any reasonable person would believe, thus causing the value of Burry’s swaps – which were really just a form of insurance – to sink in value, even though the opposite should have been happening.Burry held on, and in 2007 made a huge profit.  But in 2006… things didn’t look good.  For the first time, Burry’s fund was losing money… and a LOT of it… and worst yet, he was losing money on an investment – credit default swaps – that was outside of Dr. Burry’s core competency, whi