$1.7 B Short

And was spectacularly wrong at the beginning of this year when he made his “Sell.” Tweet.

These guys don’t have any prophetic insight.

 

As they say, it’s tough to beat Vegas. If all the indicators were clearly pointing toward crash, then there would be no value in shorting, as the everyone would have already pulled their money out.

 

I don’t think so, as that is too long-term

 

I did read that his fund’s annualized gains over the last three years is over 50%. Not a prophet, but good for some profit.

 

Oh for sure. I got offered a job once analyzing market indicators for a small hedge. This stuff has always been interesting

 

Burry is on the spectrum with obsessive compulsive tendencies, and he has desire, ability, and stamina beyond most people to read and interpret detailed financial data.

That said, it seems one thing to pore over mortgage contracts within mortgage-backed securities to determine that those AAA rated investments were in fact junk, vs researching broadly and deeply enough to back a decision betting against most of the U.S. equity market as a whole, which is effectively what this bet is.

He very well could have identified some critical weakness that will crash the entire U.S. market when it goes belly up. I'd bet on him before most other financial gurus.

 

To add a second commentary, this is an interesting topic to discuss, but no one should use what Burry is doing as an indicator of what to do with their own money.

The fact is, no one should invest money into stocks if they plan to use/need that cash within a 5 (or even 10) year timeframe.

 

Super interesting. Believing that I can see a reality invisible to everyone else is a trait I’ll simply never possess. Hence why I’ve never really bet.

The psychologist Daniel Kahneman tells a story where he was brought in to analyze performance in an investment firm. In a meeting, he asked them what they thought was the mean correlation of an individual’s performance from one year to the next. One of them smiled as said it’s pretty low isn’t it? Kahneman was like, I’ll say, delivering a freakishly low correlation, like 0.017. When Kahneman was later getting dropped off at the airport one of the investors said to him, I’ve done a lot of good for this company, and you can’t take that away from me. Kahneman said to himself, I thought I already had.

 

Fellas we are on the cusp of deciding again whether it will be Biden or Trump as our President (again). You can see why he thinks we are in a free fall. I certainly do.

 

Walmart.. which is like 90% of the US economy .. is going to grow 4-5% this year and just killed it during the quarter.

https://www.cnbc.com/2023/08/17/walmart-wmt-earnings-q2-2024.html

In a CNBC interview, Chief Financial Officer John David Rainey said Walmart saw “modest improvement” in sales of big-ticket and discretionary items like electronics and home goods during the quarter. Sales of those products have been weaker for more than a year as Americans spend more on necessities like food.

He said he feels better about spending patterns than he did three months ago. Yet he described the consumer as “choiceful or discerning.” He said seasonal moments, such as the Fourth of July holiday and back-to-school, have helped drive sales.

 

Industrial sales are not looking good right now, and have not been looking good for about 10-11 months.

 

The few bigger plays I've ever made have paid off. And neither was really driven much by the numbers, just kind of a macro thought process. I bought XM Satellite radio very early on, and got out near the top. They were just industry leaders and I thought it was going to take off. And I bought a bunch of Ford when it was dirt cheap after the bailouts.

 

trading US equity mkts in hopes of making abnormal gains is like someone trying to make money playing poker by seeking out the toughest table in the casino. Folks who make money trading do it in informationally less efficient markets. An old friend crushed as an oil trader for 20 years...basically arbitraging refinery rates & pipeline capacity rates. Folks do this with cargo plane & ship capacity trading. Heck, I recently met a guy who flips whiskey as a side hustle. & I know folks who do this with vintage & not so vintage* musical equip. * Two-Rock amps sell new for about 80% of their true mkt price. Oh, 1 of my favs was the kid from I think Thailand....he became a millionaire by having his fam ship textbooks from Thailand to the US which he sold for big profits.

 

Reading a book right now, Ugly Americans (Ben Mezrich), which is in this sphere. Interesting to see how arbitrage plays out in markets globally. Very enthralling true story. Same author that wrote the Facebook movie and Bringing down the House about the MIT blackjack team.

 

I have a buddy who is always buying and selling mainly amps and speakers. He says he makes money on every sale. I always thought he is like all the winners in Vegas.

 

Very nicely done, sir.

But don’t forget Kahneman’s lesson. Your correlation of success can’t be that much higher than the pros!

 

It’s frustrating how many headlines incorrectly portray what happened. Consider this one from CNN:

Michael Burry, of ‘Big Short’ fame, just bet $1.6 billion on a stock market crash

He did not bet $1.6 billion. All he bet was the price of the options, which are only a fraction of the value of the underlying security. I know it makes for a more enticing headline, but I wish these news articles would be more accurate.

 

Trying to explain options to smart people is hard. Trying to easily explain it to the masses is probably impossible.