Customer Quote by Michael Burry
“Credit-default swaps remedied the problem of open-ended risk for me. If I bought a credit-default swap, my downside was defined and certain, and the upside was many multiples of it.”
About This Quote
Source Book: The Big Short by Michael Lewis, 2010 (quoted in interview)
Credit‑default swaps let investors cap potential losses while keeping upside potential, turning uncertain risk into a defined gamble.
In simple terms: Swaps set a clear downside and high upside.
Key Takeaway
Use tools that limit loss while preserving gain.
Themes
finance
risk management
investment
derivatives
strategy
Mood
cautious
analytical
strategic
Type
financial
educational
When to use this quote
- Portfolio construction
- risk mitigation
- insurance design
- speculative trading
- financial planning
Key Concepts
Hedging
Asymmetric payoff
Risk transfer
Questions to Reflect On
- Are you comfortable with the trade‑off between simplicity and protection?
- What safeguards can you add?
A Different Perspective
Swaps can be complex and may create hidden systemic risk.
![“I do believe CDSs [credit default swaps] have been miscast, much as poor workmen tend to blame their tools.” quote by Blythe Masters](https://sms4smile.com/quotes/img-quotes/bc4/blythe-masters-19003_believe_i-do-believe-cdss-credit-default-swaps-h_2461427.jpg)
