In 2008, the housing and stock markets crashed, starting a cascading effect spanning the globe, punishing both savers and investors. You may have seen your savings take a hit during this time. Would you have done anything different had you received a warning? Would you have treated a warning like that seriously?
Some may answer that if the person giving the warning was highly credible, then they would have acted. Enter Michael Burry, who predicted the 2008 crash and made a fortune when it happened. He is now giving all of us a very clear warning and has proven with his actions that he believes in his message.
Michael Burry is an expert on predicting market crashes and profiting from them
Michael’s story is so compelling that it was immortalized in the movie ‘The Big Short.’ A movie detailing how Michael discovered not only the subprime loan scandal, but the complacency of the government and regulators who allowed this to happen under their very noses.
He was a physician that built his financial investment career and vast fortune on recognizing when markets are overvalued and placing bets that markets would crash accordingly. When analyzing the markets, Michael was using only facts and data, not investor emotions. Just look at his track record. Since the inception of his company, Scion Capital, Michael has beaten the market every year. In 2001, although the S&P 500 fell 11.88%, Michael’s company was up 55%. This continued even in 2003 when the stock market rose by almost 29%, Scion Capital was up by 50%. By 2004 he was actively turning away new investor’s money.
Part of his strategy was looking at how overvalued tech stocks were and shorting them (betting against them). He used this exact same strategy to foresee the 2007 overvalued housing market and created a fortune for himself and his investors when it crashed as shown in the movie ‘The Big Short.’ By 2008, Michael had personally netted over $100 million, made his investors over $700 million, and his company recorded returns of almost 490% from 2000-2008.
So, Michael Burry has built immense wealth, a reputation, and a perfect record of success in recognizing overvalued markets and profiting from their collapse. That is his business, and something he knows how to do exceptionally well. In addition to financial success, he received a lot of praise from the investment community. However, there was one criticism: he was repeatedly accused of not giving warnings to the American people of the impending disaster and instead simply profiting from it. Michael took this to heart. For years, he kept saying that he had warned people but that no one listened. But now with the attention that his success provided, he has recently put himself on a crusade of warnings about our current market.
The Michael Burry “winter is coming” 2022 Stock Market warnings
Ten years later, Burry has been issuing warning after warning to the public. Here are some of his tweets.
Burry is putting his money where his mouth is
Michael Burry is giving us a very clear idea of what he thinks is coming. But what has he done about it for himself and his investors?
Scion Capital’s financial postings from 31 May 2022, were received as an earthquake by the investment community, as they show that the entire $200M company portfolio has been liquidated. These holdings included staple investments which exist in almost every investor’s portfolio such as Meta Platforms (parent company of Facebook), Bristol-Myers, and Apple. Only one stock remained – GEO Group, a private prison operator. It is hard to imagine a more dystopian future pointed at by this portfolio where only prisons will flourish! This may go in direct line with his tweet regarding how “consumers choose violence…”
Michael Burry was right once when no one believed he could be. In fact, he was mocked and criticized over what he predicted would happen in 2008. He has now come to the same prediction and has acted on it by liquidating his portfolio.
If he is right, will a market collapse affect your own savings? Now that you are aware of his warnings and actions, are you going to do something about it? This may be the time to look to diversify and mitigate potential stock market losses.