>> http://www.vanityfair.com/business/features/2010/04/wall-street-exce
>> r...

> Here's a quote

> --

> On May 19, 2005, Mike Burry did his first subprime-mortgage deals.
> He bought $60 million of credit-default swaps from Deutsche Bank—$10
> million each on six different bonds. “The reference securities,”
> these were called. You didn’t buy insurance on the entire
> subprime-mortgage- bond market but on a particular bond, and Burry
> had devoted himself to finding exactly the right ones to bet
> against. He likely became the only investor to do the sort of
> old-fashioned bank credit analysis on the home loans that should
> have been done before they were made. He was the opposite of an
> old-fashioned banker, however. He was looking not for the best loans
> to make but the worst loans—so that he could bet against them. He
> analyzed the relative importance of the loan-to- value ratios of the
> home loans, of second liens on the homes, of the location of the
> homes, of the absence of loan documentation and proof of income of
> the borrower, and a dozen or so other factors to determine the
> likelihood that a home loan made in America circa 2005 would go bad.
> Then he went looking for the bonds backed by the worst of the loans.