Character Analysis
Charles Ledley and Jamie Mai are the outsiders of The Big Short. If you don't believe us, then just check out this wonderful description, courtesy of author Michael Lewis:
Both were viewed by contemporaries as sweet-natured, disorganized, inquisitive, bright but lacking obvious direction—the kind of guys who might turn up to their fifteenth high school reunions with surprising facial hair and a complicated life story. (5.7)
Sounds like two dudes we'd like to hang with. Want to know what they don't sound like, though? Two millionaires with better financial foresight than every banker on Wall Street.
Appearances can be deceiving, peeps.
Risky Business
Much of the credit for Ledley and Mai's success goes to their killer investment strategy. Basically, they monitor strange, obscure commodities and predict when those commodities will suddenly change in price. One day it might be diesel fuel; the next it might be pork belly. Despite their utter lack of financial experience, Ledley and Mai make a ton of money with this method.
This analytic focus leads them to bet against the AAA-rated levels of subprime mortgage bonds, a strategy that earns them the highest rate of return in all of The Big Short. Remember, heading into the subprime crisis, ratings agencies were giving subprime mortgages AAA-ratings when they were actually way worse. Ledley and Mai take advantage of this knowledge by betting exclusively against AAA-rated bonds, knowing that these mortgages will go bad just as quickly as the rest of them.
No one else is bold enough to try this technique, but it pays off wonderfully.
Started From the Bottom
Still, these guys are the least motivated by money of pretty much everyone in the book. For example, one of Ledley's old college professors is shocked to discover that his former student predicted the economic downturn, saying that he was never "'driven by money in any obvious way'" (10.55). Similarly, both men try numerous times to exact justice on the perpetrators of the crisis, contacting the SEC, notifying reporters, and even trying to sue the ratings agencies. None of it works, of course.
But it's the thought that counts, Shmoopers. Although they're the most unlikely pair of investment gurus you ever will meet, Charles Ledley and Jamie Mai prove themselves to be stand-up guys who are sincere about their desire to help others.