--- title: "Meaning & Key Takeaway of: Credit-default swaps remedied the problem…" description: "\"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 up..." image: "https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png" --- # Credit-default swaps remedied the problem of open-ended… ![“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.” quote by Michael Burry](https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png) [Download](https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png) [Open image](https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png) > “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.” [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. 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. ★ ★ ★ ★ ★ No ratings yet [Customer](https://sms4smile.com/quotes/about/customer/) [Default Swap](https://sms4smile.com/quotes/about/default-swap-784171/) [Default Swaps](https://sms4smile.com/quotes/about/default-swaps-542392/) [Ended Risk](https://sms4smile.com/quotes/about/ended-risk-3437083/) [Many](https://sms4smile.com/quotes/about/many/) [Me](https://sms4smile.com/quotes/about/me/) [Open-ended](https://sms4smile.com/quotes/about/open-ended/) [Problem](https://sms4smile.com/quotes/about/problem/) [Risk](https://sms4smile.com/quotes/about/risk/) [Swap Downside](https://sms4smile.com/quotes/about/swap-downside-3437084/) [Swaps Remedied](https://sms4smile.com/quotes/about/swaps-remedied-3437082/) ## Related quotes > [“There was more than one way to think about Mike Burry’s purchase of a billion dollars in credit default swaps. The first was as…](https://sms4smile.com/quotes/michael-lewis/there-was-more-than-one-way-to-think-about-mike-burry-s-purchase-of-a/) [Michael Lewis](https://sms4smile.com/quotes/author/michael-lewis/) > [Credit default swap gives you something to do. You can buy some credit default swaps from them to protect yourself against the bankruptcy of…](https://sms4smile.com/quotes/robert-f-engle/credit-default-swap-gives-you-something-to-do-you-can-buy-some-credit/) [Robert F. Engle](https://sms4smile.com/quotes/author/robert-f-engle/) > [“A credit default swap was confusing mainly because it wasn’t really a swap at all. It was an insurance policy, typically on a corporate…](https://sms4smile.com/quotes/michael-lewis/a-credit-default-swap-was-confusing-mainly-because-it-wasn-t-really-a-2/) [Michael Lewis](https://sms4smile.com/quotes/author/michael-lewis/) > [A credit default swap was confusing mainly because it wasn't really a swap at all. It was an insurance policy, typically on a corporate…](https://sms4smile.com/quotes/michael-lewis/a-credit-default-swap-was-confusing-mainly-because-it-wasn-t-really-a/) [Michael Lewis](https://sms4smile.com/quotes/author/michael-lewis/) > [Credit default swap is basically just an agreement that I have with you, where I sell you insurance on some bond you own. If…](https://sms4smile.com/quotes/charles-duhigg/credit-default-swap-is-basically-just-an-agreement-that-i-have-with/) [Charles Duhigg](https://sms4smile.com/quotes/author/charles-duhigg/) > [I'm no financial expert. I scarcely know what a coin is. Ask me to explain what a credit default swap is, and I'll emit…](https://sms4smile.com/quotes/charlie-brooker/i-m-no-financial-expert-i-scarcely-know-what-a-coin-is-ask-me-to/) [Charlie Brooker](https://sms4smile.com/quotes/author/charlie-brooker/) > [Credit-default swaps, I think, have serious problems associated with them.](https://sms4smile.com/quotes/alan-greenspan/credit-default-swaps-i-think-have-serious-problems-associated-with/) [Alan Greenspan](https://sms4smile.com/quotes/author/alan-greenspan/) > [ I do believe CDSs \[credit default swaps\] have been miscast, much as poor workmen tend to blame their tools. ](https://sms4smile.com/quotes/blythe-masters/i-do-believe-cdss-credit-default-swaps-have-been-miscast-much-as-poor/) [Blythe Masters](https://sms4smile.com/quotes/author/blythe-masters/) > [I think the credit default swaps can take the place of the rating agencies who really have missed the ball in this procedure and…](https://sms4smile.com/quotes/robert-f-engle/i-think-the-credit-default-swaps-can-take-the-place-of-the-rating/) [Robert F. Engle](https://sms4smile.com/quotes/author/robert-f-engle/) > [Main Street investors, who cannot trade credit default swaps, should not be tempted to trade an instrument with the same risk profile simply because…](https://sms4smile.com/quotes/daniel-l-doctoroff/main-street-investors-who-cannot-trade-credit-default-swaps-should/) [Daniel L. Doctoroff](https://sms4smile.com/quotes/author/daniel-l-doctoroff/) > [So what is the role that credit default swaps can play in an economy? Well my feeling is that if these things actually will…](https://sms4smile.com/quotes/robert-f-engle/so-what-is-the-role-that-credit-default-swaps-can-play-in-an-economy/) [Robert F. Engle](https://sms4smile.com/quotes/author/robert-f-engle/) > [Countries are not like financial markets. Social change cannot be executed as swiftly as credit-default swaps. You cannot sell short on social commitments and…](https://sms4smile.com/quotes/george-papandreou/countries-are-not-like-financial-markets-social-change-cannot-be/) [George Papandreou](https://sms4smile.com/quotes/author/george-papandreou/) > [As the financial experts all over the world use machines to unwind Gordian knots of financial arrangements so complex that only machines can make…](https://sms4smile.com/quotes/richard-dooling/as-the-financial-experts-all-over-the-world-use-machines-to-unwind/) [Richard Dooling](https://sms4smile.com/quotes/author/richard-dooling/) > [I mean, we've always had gold bugs, but now we sort of realize that Treasure Bills might be in the same category. And we…](https://sms4smile.com/quotes/robert-f-engle/i-mean-we-ve-always-had-gold-bugs-but-now-we-sort-of-realize-that/) [Robert F. Engle](https://sms4smile.com/quotes/author/robert-f-engle/) > [If you pay attention to where your exposures are, you might tend up buying credit default swaps against a variety of people that you…](https://sms4smile.com/quotes/robert-f-engle/if-you-pay-attention-to-where-your-exposures-are-you-might-tend-up/) [Robert F. Engle](https://sms4smile.com/quotes/author/robert-f-engle/) ## More by Michael Burry > [I started trading stocks, options and futures while I was at UCLA, using my earnings from working summers at the old IBM plant on…](https://sms4smile.com/quotes/michael-burry/i-started-trading-stocks-options-and-futures-while-i-was-at-ucla/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [At one point, I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham but,…](https://sms4smile.com/quotes/michael-burry/at-one-point-i-recognized-that-warren-buffett-though-he-had-every/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [In June 2005, mortgage rates were at 40-year lows, and risk premiums on mortgage securities were at all-time lows. Once the banks migrated to…](https://sms4smile.com/quotes/michael-burry/in-june-2005-mortgage-rates-were-at-40-year-lows-and-risk-premiums-on/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [It is ludicrous to believe that asset bubbles can only be recognized in hindsight.](https://sms4smile.com/quotes/michael-burry/it-is-ludicrous-to-believe-that-asset-bubbles-can-only-be-recognized/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [Fresh, clean water cannot be taken for granted. And it is not - water is political, and litigious. Transporting water is impractical for both…](https://sms4smile.com/quotes/michael-burry/fresh-clean-water-cannot-be-taken-for-granted-and-it-is-not-water-is/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [Everything I do in investment is just very different.](https://sms4smile.com/quotes/michael-burry/everything-i-do-in-investment-is-just-very-different/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [Throughout the universe of public and private funds, managers are measured quarterly against one index or another, defined by statistics, and corralled into this…](https://sms4smile.com/quotes/michael-burry/throughout-the-universe-of-public-and-private-funds-managers-are/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [One of the risks for anybody in the lending business is that being conservative can harm your competitiveness.](https://sms4smile.com/quotes/michael-burry/one-of-the-risks-for-anybody-in-the-lending-business-is-that-being/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [If you are going to be a great investor, you have to fit the style to who you are.](https://sms4smile.com/quotes/michael-burry/if-you-are-going-to-be-a-great-investor-you-have-to-fit-the-style-to/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [The late 90s almost forced me to identify myself as a value investor, because I thought what everybody else was doing was insane.](https://sms4smile.com/quotes/michael-burry/the-late-90s-almost-forced-me-to-identify-myself-as-a-value-investor/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [What you want to watch are the lenders, not the borrowers. The borrowers will always be willing to take a great deal for themselves.…](https://sms4smile.com/quotes/michael-burry/what-you-want-to-watch-are-the-lenders-not-the-borrowers-the/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [However, if one has been playing the buy-and-hold game with quality securities, one has been exposed to a substantial amount of market risk because…](https://sms4smile.com/quotes/michael-burry/however-if-one-has-been-playing-the-buy-and-hold-game-with-quality/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [My positioning with my investors was always, I need three to five years.](https://sms4smile.com/quotes/michael-burry/my-positioning-with-my-investors-was-always-i-need-three-to-five-years/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate…](https://sms4smile.com/quotes/michael-burry/i-had-begun-to-worry-about-the-housing-market-back-in-2003-when/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) > [My natural state is an outsider. I've always felt outside the group, and I've always been analyzing the group.](https://sms4smile.com/quotes/michael-burry/my-natural-state-is-an-outsider-i-ve-always-felt-outside-the-group/) [Michael Burry](https://sms4smile.com/quotes/author/michael-burry/) [Explore all 50 Michael Burry quotes ](https://sms4smile.com/quotes/author/michael-burry/) ## More Customer quotes > [“Start a business, not a startup”](https://sms4smile.com/quotes/anonymous/start-a-business-not-a-startup/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [Amongst the financial Twitterati, the term 'muppets' has come to describe any client used and abused by some financial predator. I've adopted the term…](https://sms4smile.com/quotes/barry-ritholtz/amongst-the-financial-twitterati-the-term-muppets-has-come-to/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Many early-stage entrepreneurs make one simple mistake: Describing this 'big picture' in vague concepts and words.](https://sms4smile.com/quotes/sunil-nagaraj/many-early-stage-entrepreneurs-make-one-simple-mistake-describing/) [Sunil Nagaraj](https://sms4smile.com/quotes/author/sunil-nagaraj/) > [The purpose of this book is to supply, in the form suitable for laymen, guidance in the adoption and execution of an investment policy.](https://sms4smile.com/quotes/benjamin-graham/the-purpose-of-this-book-is-to-supply-in-the-form-suitable-for-laymen/) [Benjamin Graham](https://sms4smile.com/quotes/author/benjamin-graham/) > [Don't think OF the market. Think AS the market.](https://sms4smile.com/quotes/michael-fishman/don-t-think-of-the-market-think-as-the-market/) [Michael Fishman](https://sms4smile.com/quotes/author/michael-fishman/) > [If Wall Street crashes, does Main Street follow? Not necessarily.](https://sms4smile.com/quotes/ben-bernanke/if-wall-street-crashes-does-main-street-follow-not-necessarily/) [Ben Bernanke](https://sms4smile.com/quotes/author/ben-bernanke/) > [The exact details of how you practice value investing will vary investor to investor, but the fundamental principle of scouring the world, looking for…](https://sms4smile.com/quotes/whitney-tilson/the-exact-details-of-how-you-practice-value-investing-will-vary/) [Whitney Tilson](https://sms4smile.com/quotes/author/whitney-tilson/) > [The best way to hold customers is to constantly figure out how to give them more for less.](https://sms4smile.com/quotes/philip-kotler/the-best-way-to-hold-customers-is-to-constantly-figure-out-how-to/) [Philip Kotler](https://sms4smile.com/quotes/author/philip-kotler/) > [Perhaps the most important reason to be skeptical of government inflation numbers is that the government, like a fox campaigning to guard a hen…](https://sms4smile.com/quotes/peter-schiff/perhaps-the-most-important-reason-to-be-skeptical-of-government/) [Peter Schiff](https://sms4smile.com/quotes/author/peter-schiff/) > [When the dollar collapses, it's not doing it in a vacuum. If the dollar loses value, it's doing so relative to some other currency.…](https://sms4smile.com/quotes/peter-schiff/when-the-dollar-collapses-it-s-not-doing-it-in-a-vacuum-if-the-dollar/) [Peter Schiff](https://sms4smile.com/quotes/author/peter-schiff/) > [Corporations invest in sophisticated CRM, or Customer Relationship Management, programs to effectively oversee their relationship with their customers at every point during the buying…](https://sms4smile.com/quotes/marc-ostrofsky/corporations-invest-in-sophisticated-crm-or-customer-relationship/) [Marc Ostrofsky](https://sms4smile.com/quotes/author/marc-ostrofsky/) > [I believe confusion is good. Worldwide market leaders gain when there is confusion in the market.](https://sms4smile.com/quotes/subhash-chandra/i-believe-confusion-is-good-worldwide-market-leaders-gain-when-there/) [Subhash Chandra](https://sms4smile.com/quotes/author/subhash-chandra/) > [Damn inflation, full speed ahead,' Greenspan has said in both action and word. I think an investor should believe him and invest accordingly.](https://sms4smile.com/quotes/bill-gross/damn-inflation-full-speed-ahead-greenspan-has-said-in-both-action-and/) [Bill Gross](https://sms4smile.com/quotes/author/bill-gross/) > [“When companies get big, they devote most of their care and feeding to the business that got them big. This is as it should…](https://sms4smile.com/quotes/eric-schmidt/when-companies-get-big-they-devote-most-of-their-care-and-feeding-to/) [Eric Schmidt](https://sms4smile.com/quotes/author/eric-schmidt/) > [“Salesmanship is usually the art of making it the prospect’s problem, the salesperson’s need or desire to earn money.”](https://sms4smile.com/quotes/mokokoma-mokhonoana/salesmanship-is-usually-the-art-of-making-it-the-prospect-s-problem/) [Mokokoma Mokhonoana](https://sms4smile.com/quotes/author/mokokoma-mokhonoana/) [Browse all 9,257 Customer quotes ](https://sms4smile.com/quotes/about/customer/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "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.", "creator": { "@type": "Person", "name": "Michael Burry" }, "isPartOf": { "@id": "https://sms4smile.com/quotes/#website" }, "url": "https://sms4smile.com/quotes/michael-burry/credit-default-swaps-remedied-the-problem-of-open-ended-risk-for-me/", "about": { "@type": "Thing", "name": "Customer" }, "@id": "https://sms4smile.com/quotes/michael-burry/credit-default-swaps-remedied-the-problem-of-open-ended-risk-for-me/#quotation", "image": { "@type": "ImageObject", "@id": "https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png", "contentUrl": "https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png", "url": "https://sms4smile.com/quotes/i/474/michael-burry-13350_customer_credit-default-swaps-remedied-the-proble_1177159.png", "width": 1080, "height": 1080, "caption": "“Credit-default swaps remedied the problem of open-ended risk for me. If I bought a credit-default swap, my…” — Michael Burry", "creditText": "SMS4Smile Quotes", "creator": { "@id": "https://sms4smile.com/quotes/#organization" } } }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://sms4smile.com/" }, { "@type": "ListItem", "position": 2, "name": "Quotes", "item": "https://sms4smile.com/quotes/" }, { "@type": "ListItem", "position": 3, "name": "Michael Burry", "item": "https://sms4smile.com/quotes/author/michael-burry/" }, { "@type": "ListItem", "position": 4, "name": "Credit-default swaps remedied the problem of...", "item": "https://sms4smile.com/quotes/michael-burry/credit-default-swaps-remedied-the-problem-of-open-ended-risk-for-me/" } ], "@id": "https://sms4smile.com/quotes/michael-burry/credit-default-swaps-remedied-the-problem-of-open-ended-risk-for-me/#breadcrumb" }, { "@type": "WebSite", "@id": "https://sms4smile.com/quotes/#website", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "publisher": { "@id": "https://sms4smile.com/quotes/#organization" } }, { "@type": "Organization", "@id": "https://sms4smile.com/quotes/#organization", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "logo": { "@type": "ImageObject", "url": "https://sms4smile.com/quotes/wp-content/themes/sq/assets/icons/icon-512.png", "width": 512, "height": 512 } } ] } ```