The Big Short Ending Explained: Oh, So That's Why We're All F*cked (2024)

The Big Short does a great job of making complex financial topics accessible to viewers, but the movie’s ending still leaves a few aspects of its true story unclear. Based on Michael Lewis’s book of the same name about the 2008 financial crisis, Adam McKay's 2015 film highlights how some key figures in the world of finance were able to profit from the housing market crash. Following an ensemble cast comprised of Christian Bale, Ryan Gosling, Steve Carrell, Brad Pitt, John Magaro, and Finn Wittrock, The Big Short shows how the main characters predicted the crash, and it depicts the fallout of their predictions coming to fruition.

Going into The Big Short’s ending, the U.S. economy is doomed as the 2008 financial crisis becomes inevitable. Though the film's real-life (and some loosely fictionalized) main characters are all able to profit from the crash due to their bets against the market, the victory is bittersweet as they realize the misery that befalls the real people who are affected. The Big Short’s ending contrasts the success of its main characters, the underbelly of the broken economic system, and how the crash impacted U.S. citizens, all while providing a warning for the future.

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"Bespoke Tranche Opportunity": The Big Short's Epilogue & Warning Explained

After depicting the collapse that led to the 2008 financial crisis, The Big Short includes an epilogue that covers the fates of the main characters as well as teasing another potential exploitation of the system like what investors did in 2007. According to the epilogue, banks began selling billions in a new investment vehicle called “bespoke tranche opportunities” in 2015, which The Big Short claims are basically the same as the infamous CDOs. This detail is included as a warning that few, if any, lessons were learned from what happened in 2008, and that history could repeat itself again, this time with the bespoke tranche opportunities.

The Big Short’s Financial Concepts Explained

The Big Short follows several key figures who were able to predict and profit off of a crash in the housing market. As such, there are several complex financial terms that are thrown around in the movie by its main characters, which are humorously explained by Margot Robbie earlier in the movie. Though incredibly complicated, these financial concepts are crucial to understanding the events that led up to the 2008 financial crisis, which finally sets in during the film's ending after over two hours of anticipation.

Mortgage Bonds

A mortgage bond is a kind of bond that represents a pool of mortgages bundled into one security, which is then sold to investors. These underlying bonds receive a rating from a credit rating agency based on how “creditworthy” they are, or how likely it is that they will pay back the money. In the past, these mortgage bonds had been incredibly lucrative, but when banks began to run out of mortgages to put into the mortgage bonds, they began filling the bonds with riskier, “subprime” mortgages, despite still rating them highly. The fact that these mortgage bonds were filled with subprime mortgages is what Christian Bale’s Michael Burry discovered.

Collateralized Debt Obligations (CDOs)

Another crucial financial element in The Big Short is collateralized debt obligations (CDO). In the finance world, CDOs are complex securities that are created by bundling together various forms of debt — in the case of The Big Short, mortgages — into one product. The film's main characters, namely Michael Burry, Jared Vannett, and Mark Baum, realize that the CDOs are filled with subprime mortgages that are likely to default, which would cause their value to collapse. Betting against these CDOs is how the characters end up profiting at the end of The Big Short.

"Shorting" The Market

One main way that The Big Short’s characters are able to profit off of the anticipated collapse of mortgage bonds and CDOs is through “shorting” the market. This is when an investor borrows a security from a broker and immediately sells it with the hope of the security’s price decreasing, which would allow them to buy it back at a lower price, give it back to the broker, and keep the difference as their profit. This is how the main characters profited by betting against the CDOs, and the idea of “shorting” the market is ultimately where the title of the movie comes from.

Credit Default Swap

In The Big Short, credit default swaps are insurance contracts that protect against the default of specific financial products, like mortgage bonds or CDOs. After discovering the instability of the mortgage bonds and CDOs leading up to the 2008 financial crisis, The Big Short’s main characters all bet against them by purchasing credit default swaps. These credit default swaps are bought under the assumption that those underlying subprime mortgages will default. When they ultimately do default at the end of the movie, the main characters receive the payout from the credit default swaps, which is how they end up accruing such a massive profit.

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Why Mark Baum Refused To Sell For So Long

Throughout the end of The Big Short, it’s emphasized that Steve Carrell’s Mark Baum continually refuses to sell his position despite the fact that others around his team are already selling. Even when the collapse of the economy is imminent, Baum holds off on selling until the very last moment of the movie. Baum was one of the main characters who was aware of what was going to happen and who would profit massively from the crash, so it initially seems confusing that he refused to sell. However, the reason he held off on selling for so long can be seen when considering the values integral to Mark Baum’s character.

The Big Short establishes Mark Baum’s distrust of the system and cynical nature when it came to his job and the people around him, and the 2008 financial crisis exposed to him that the system was even worse than he originally thought. Upon realizing how the crash would affect real people, Baum was disgusted with the careless actions of his contemporaries in profiting off of others’ miseries. In Baum’s eyes, if he sold his position, then he would be no better than those other people, whom he considered “crooks.” Not selling until the last moment is how Baum attempted to retain his morality, which it was unfortunately too late for.

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Why Michael Burry Closed His Hedge Fund

Although The Big Short presents Michael Burry as the first person to realize the truth about the faulty mortgage bonds and bet against them, he ultimately closes his hedge fund at the end of the movie. Burry’s decision to close the fund is initially odd considering his heavy involvement in betting against the market against the wishes of his investors. However, some of his rationale for this decision can be gleaned from the email he drafts at the end of the movie.

According to Michael Burry’s email, during the lead-up to the crash, he became burdened by the pressure and backlash caused by his actions, exemplified by his claim that “All the people I respected won’t talk to me anymore except through lawyers.” Additionally, Burry has begun to have difficulty reconciling his actions with the impact that the crash that he was betting on would have on real people. The backlash Burry had been receiving as well as the realization that he was profiting off of the despair of real people is ultimately what leads him to close down the hedge fund.

Related: What Happened To Michael Burry After The Big Short In Real Life

The Big Short’s Interjected Images Of Real People Explained

Throughout The Big Short, the movie intersperses its scenes with still images of real people. In the rest of the movie, these still images have several functions, such as grounding audiences in the time period of the movie or showing what was happening in the rest of the world while this impending crisis was happening on Wall Street. However, the appearance of these images ramps up significantly toward the conclusion of the movie, giving The Big Short’s ending a frenetic yet depressing feeling. Though these images could feel random or distracting in The Big Short, the increase of the images at the end actually has an important meaning.

Given The Big Short tells the story of the onset of the 2008 financial crisis from the points of view of investors, the emphasis is often put on the CDOs and making profits off of them. However, doing this divorces audiences from the actual humans that the collapse of the bonds impacts, which is the sudden realization that both Michael Burry and Mark Baum eventually have. Therefore, these interjected images of real people at the end of The Big Short serve as reminders of the impact of the collapse and financial crisis: the real people who lost their jobs and homes as a result of The Big Short’s events.

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Why Kareem Serageldin Was The Only Trader Sent To Jail For The 2008 Financial Crisis

A narration from Ryan Gosling’s Jared Vennett at the end of The Big Short reveals that despite the widespread knowledge of wrongdoing by banks and investors in the lead-up to the 2008 financial crisis, only one person, Kareem Serageldin, was imprisoned for his actions. Serageldin hid several millions in mortgage bond losses for Credit Suisse, which Vennett notes is “something most of the big banks did on a good day during the crisis.” If Vennett’s claim that other big banks were doing the same criminal acts as Serageldin during the crisis, it seems bizarre that he was the only one to suffer the consequences.

The reason that Kareem Serageldin was the only trader to be imprisoned for his criminal actions reveals the nefarious nature of Wall Street. As Mark Baum predicted, the banks took taxpayers’ money to reimburse themselves, used real people as scapegoats, and lobbied against big reform. Additionally, the Department of Justice’s focus on reaching settlements rather than prison sentences meant few had real punishments for their actions. This meant that people were not getting punished for their actions and there were no meaningful changes put in place, so many people who facilitated the crisis got out unscathed, except Serageldin.

What Happened To The Real Characters After The Big Short's Ending

During The Big Short’s epilogue, the fates of several of the characters after the 2008 financial crisis are revealed. The Big Short states that Mark Baum became incredibly gracious after the 2008 financial crisis, which contrasts with his acerbic persona during the movie. In real life, Mark Baum’s inspiration, Steve Eisman, ended up leaving FrontPoint Partners in 2011 and now serves as a managing director and portfolio manager for the Eisman Group. According to The Big Short, Baum’s staff members continue operating their fund in Manhattan.

The Brownfield Capital team has a fairly bittersweet experience after The Big Short. Jamie Shipley and Charlie Geller attempted to sue the ratings agencies to no success. In the epilogue, it’s revealed that the two investors eventually parted ways, with Jamie still running Brownfield and Charlie moving to Charlotte to start a family. Brad Pitt’s Ben Rickert returned to enjoying his peaceful retirement after the crash, making his ending one of the few overtly happy ones.

While it’s known that Michael Burry closed his hedge fund at the end of The Big Short, it’s also revealed that he has been audited several times by the IRS as well as questioned by the FBI. In 2013, Burry reopened his hedge fund, now called Scion Asset Management. According to the movie’s epilogue, the little investing that Burry still does is focused on water. In August 2023, it was reported that Burry’s hedge fund had placed bets on a U.S. stock market crash, meaning the history shown in The Big Short could potentially repeat itself.