‘Big Short’ hedge funder says he thinks we’re headed for a ‘run-of-the-mill’ recession—but the bigger ‘paradigm shift’ is really on his mind

Steve Eisman of Neuberger Berman Group listens during a Bloomberg Television interview in New York, U.S., on Friday, March 31, 2017. (Credit: Christopher Goodney—Bloomberg/Getty Images)

Tech and growth-focused stocks have dominated markets for over a decade, but a “paradigm shift” is coming as the Federal Reserve raises interest rates to fight inflation, according to Steve Eisman, senior portfolio manager at the Neuberger Berman Group. Eisman rose to fame for his successful bet against subprime mortgages in the lead up to the Great Financial Crisis (GFC) of 2008, which was depicted in Michael Lewis’s 2010 book, The Big Short, and subsequent movie of the same name, in which a character resembling him was played by Steve Carell.

“Markets have long periods of paradigms where certain groups are leaders,” the hedge funder told Bloomberg in an episode of the Odd Lots podcast Monday. “Sometimes those paradigms change violently, and sometimes those paradigms change over time, because people don’t give up their paradigms easily. And I think we’re going through a period, possibly, like that again.” Eisman pointed to Thomas Kuhn’s 1962 book, The Structure of Scientific Revolutions, as evidence that markets may be undergoing a gradual, yet volatile paradigm shift.