Michael Burry's investment predictions

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funkervogt
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Michael Burry's investment predictions

Post by funkervogt »

Michael Burry is a financial investor who became famous by predicting the 2008 U.S. housing market collapse years in advance, and making huge returns for his clients by shorting the market (if you haven't seen it, watch the awesome film The Big Short, which depicts him and those events). He's kept his profile low since then, but periodically makes public predictions about various markets, usually or always negative.

In June 2021 on Reddit, someone analyzed the accuracy of Burry's finance-related predictions since 2017, and showed them to be mostly wrong:


The predictions were:

“I just did the math. Every bit of my logic is telling me the global financial system is going to collapse.”

Burry’s next prediction was in Sep 2019 where he said that index funds are the next market bubble and are comparable to subprime CDOs. He said that index fund inflows are now distorting prices for stocks and bonds in the same way that CDO purchases did for subprime mortgages more than a decade ago. He said the flows will reverse at some point, and “it will be ugly” when they do.

Burry’s next target was on Tesla where he said that Tesla’s stock price is ridiculous and that it would collapse like the housing stock bubble.

He reiterated again on Feb’21 that the market is dancing on a knife’s edge and he is being ignored again. He felt the boom in day traders due to the meme stock mania and the increasing cash flow to the index trackers would cause a massive bubble.

“$BTC [Bitcoin] is a speculative bubble that poses more risk than opportunity despite most of the proponents being correct in their arguments for why it is relevant at this point in history.”

"People always ask me what is going on in the markets. It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude."

While the Reddit analysis was right in June 2021 and Burry looked like a mediocre prognosticator, the global economy has slowed over the last year, and he's looking worryingly accurate today. The S&P 500 has declined 100 points since then along with the stock portfolios of countless people, Tesla stock is higher ($603 to $709 per share), but has declined from it's all-time high of $1,229 last November, Bitcoin is also lower than it was a year ago ($33,416 to $29,827) after peaking at $68,000 last November as well.

Just yesterday, Burry made a new prediction that, due to inflation, the end of COVID-related government stimulus programs, and high consumer spending, Americans are on track to exhaust their personal savings between September and December.
https://markets.businessinsider.com/new ... ion-2022-6

Such an event would be very bad for the U.S. economy. People would be forced to reduce their spending, which would lead to layoffs and business bankruptcies. The housing market would, if anything, cool off since fewer people would have spare money to buy houses. Consumers won't be able to borrow money to make up the difference since interest rates will be high thanks to the Fed trying to halt inflation. Another round of government direct stimulus checks to average people would clash with the goal of curbing inflation, and might not be possible (either economically or politically).

All of this will be happening in the weeks leading up to the November elections, and will surely impact the outcomes.

https://money.com/savings-boom-over-inflation/

I'm not a "Burry-bot" or something, but I think he should be listened to.
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