Burry decided to short the mortgage market, intending to profit from its collapse.

Judged as of 2011-04-05, about 2005–2007. True: records show that Burry/Scion took a short position against the US mortgage market (for example by buying credit default swaps on subprime mortgage-backed securities), with the aim of profiting if it collapsed. Mostly true: he took the short position, but a minor detail (such as the exact instrument or the timing of the decision) differs. Mostly false: he bought protection mainly as a hedge, or the position was against something other than the mortgage market. False: no such short position was taken.

Set before the research began.

1. E1 Betting on the Blind Side Vanity Fair · 1 March 2010

   “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.”

2. E2 서브프라임 공매도 평가손 속의 확신 — Michael Burry valuebeast.co.kr (unofficial translation of Scion Capital's Q3 2006 investor letter) · 5 October 2006 Own record

   “Yet our investment in these mortgage shorts was and is a rational investment shorting the absolute worst quality among borrowers and their mortgages during the most extreme credit bubble ever seen in the housing industry.”

3. E3 Proposed Financial Reform Does Not Tout the Start Up Lawrence University economics blog · 6 April 2010 Own record

   “That is, I purchased credit default swaps — a type of insurance — on billions of dollars worth of both subprime mortgage-backed securities and the bonds of many of the financial companies that would be devastated when the real estate bubble burst.”

E1 is an independent account published by Vanity Fair. It reports that on May 19, 2005, Burry bought $60 million of credit-default swaps from Deutsche Bank on subprime mortgage bonds. Scion's own Q3 2006 investor letter (E2) calls these positions "mortgage shorts" against the worst-quality borrowers in a credit bubble, and a blog post quoting Burry (E3) says he bought CDS on subprime MBS and on bonds of financial companies that would be devastated when the real estate bubble burst. Together these show he took a short position against the mortgage market in order to profit from its collapse, not as a hedge.