Moreover, he suggested the coming downturn could rival the financial crisis in magnitude and devastation. Burry bet against Apple, virtually liquidated his portfolio for a period, and hinted he may be short the market. The market plunged again Friday, with the Dow closing down 600 points, the Nasdaq dropping 2.4% and the S&P off 6% from its recent all-time high. Essentially, a lower-than-expected price inflation in the United States could strengthen the odds of a Federal Reserve’s pivot on interest rates. In addition, he has $738.8m (£582m) in options against the Invesco QQQ Trust ETF – a fund on the Nasdaq comprising high-profile tech firms including Apple, Microsoft and Tesla. In January, he tweeted the word “Sell” to his 1.4 million followers, but then in March he wrote “I was wrong to say sell”.
Subscribe to Independent Premium to bookmark this article
Mr Burry appears to have been expecting a market collapse for much of the year. “You will get it back, even though you shorted Tesla, you bastard,” Musk tweeted in April about Burry’s blue checkmark on Twitter, adding a crying-with-laughter emoji. The investor may be feeling vindicated, as Tesla stock has plunged nearly 70% from its peak last November. He cautioned they might run short of money by the end of 2022, causing consumer spending to slump, corporate earnings to suffer, and economic growth to weaken. Michael Burry, the prescient investor of “The Big Short” fame, issued a slew of dire predictions in 2022.
2Trader who predicted 2008 crisis bets $1.6bn on 2023 market crash
‘The Big Short’ was initially a bestselling book by Michael Lewis before it was adapted into the film, which also starred Steve Carell, Ryan Gosling and Brad Pitt. Mr Burry bought $866m (£679m) in put options against a fund that tracks the S&P 500, and $739m (£580m) in put options against a fund that tracks the Nasdaq 100.
- Burry flagged the risk of post-reopening inflation as early as April 2020, and has repeatedly criticized the Fed for overstimulating markets and acting too slowly to curb price increases.
- The fund manager of “The Big Short” fame shared a screenshot of a S&P 500 chart, showing the benchmark stock-market index has tumbled 18% from its December peak, despite several blistering rallies this year.
- Burry bet against Apple, virtually liquidated his portfolio for a period, and hinted he may be short the market.
- They must be lodged with the regulator within 45 days of the close of the previous quarter, which was September 30.
Trader who predicted 2008 crisis bets $1.6bn on 2023 market crash
An investor who was featured in the film The Big Short after he correctly bet on the housing market collapse in 2008 has now predicted that a Wall Street crash will take place by the end of this year. Burry’s portfolio has scaled down significantly with the retirement of the QQQ and SPY bets and now sits at about $99mn, near the $107mn of Scion reported holdings on March 30, according to the filings. The position against SOXX represents nearly half of Scion’s portfolio as of the most recent filing. Michael Burry shocked Wall Street this week by revealing he placed wagers with a notional value of $1.6 billion against the S&P 500 and Nasdaq-100 last quarter. But one veteran analyst thinks his apparent bet on a stock-market crash is a losing one.
Wall Street predicts Tesla stock price for next 12 months
Chaikin dismissed the idea that Burry’s portfolio update spooked retail traders into selling stocks this week. “He’s going to be wrong like Mike Wilson was wrong,” Marc Chaikin, the founder and CEO of Chaikin Analytics, told Benzinga this week. He was referring to Morgan Stanley’s chief US equity strategist, who was caught off-guard by the historic rally in stocks this year and issued a mea culpa in late July. While Mr Burry, who founded Scion Asset Management, appears to have placed a large proportion of his assets at risk, it is not clear what his fund paid for the “put options”. Mr Burry’s bet on a market downturn amounts to more than 90% of his firm’s portfolio, CNN reports. Burry flagged the risk of post-reopening inflation as early as April 2020, and has repeatedly criticized the Fed for overstimulating markets and acting too slowly to curb price increases.
Trader who predicted 2008 financial crisis bets $1.6bn on stock market crash by end of 2023
Chaikin also brushed off Burry as just the latest market doomsayer, and suggested his only notable achievement was predicting and profiting from the 2008 housing crash. The contrarian bet was chronicled in the book “The Big Short,” and actor Christian Bale portrayed Burry in the movie adaptation, which made Burry a household name. While he partially restocked Scion’s portfolio in the third quarter, Burry rushed to disabuse his followers of any notion he’s optimistic about the market outlook. Strong starts to 2023 have allowed the $416bn SPY to climb 16.4 per cent and sent the $207bn QQQ up 42.3 per cent year-to-date, according to Morningstar. But over the third quarter of the year, the ETFs declined 3.2 per cent and 2.8 per cent, respectively. This indicates that Burry’s bets may well have paid off because second quarter 13F filings show the bets were in place at the end of that quarter.
Like Burry, he warned of an “unprecedentedly dangerous mix” of hugely overpriced assets, commodity-price shocks, and a Federal Reserve intent on curbing inflation by cooling the economy. The fund manager of “The Big Short” fame shared a screenshot of a S&P 500 chart, showing the benchmark stock-market index has tumbled 18% from its December peak, despite several blistering rallies this year. Such options give the right to sell shares at a fixed price in future, and are typically bought to express a bearish or defensive view. Michael Burry, who founded Scion Asset Management, appears to have placed a large proportion of the fund’s assets at risk. Burry also predicted inventory gluts for retailers, layoffs for white-collar workers, higher long-term inflation, and a years-long recession.
Moreover, he cautioned that stubborn inflation might prevent the Federal Reserve from bailing out markets, and said observing the downturn felt like watching a plane crash. The Scion chief also laid out why stocks were bound to fall based on historical trends, called out “silliness” and unwarranted optimism in markets, and complained about people’s refusal to listen to him. Burry diagnosed a spectacular bubble in asset prices and predicted an epic crash in 2021. He doubled down on his doomsaying in the first half of 2022, warning the S&P 500 was heavily overvalued and could halve in value to around 1,900 points. The Scion Asset Management chief warned of a dramatic decline in stocks, and forecasted a slump in consumer spending and company earnings would spark a painful recession.
Security Exchange Commission filings released on Monday show that he has taken out negative options on the S&P 500 and the Nasdaq 100 – both of which are representative of the US economy at large. Michael Burry, played by Christian Bale in the 2015 film directed by Adam McKay, is reported to have bet more than $1.6bn (£1.25bn) on the event happening in 2023. Simply sign up to the Exchange traded funds myFT Digest — delivered directly to your inbox. Despite having a nominal value of around $1.6 billion, Michael Burry “only spent around $26.5 million to build” this position, according to Chandhoke’s first report in August. Particularly, Burry invested $18 million on 20,000 SPY put options and about $8.5 million on 20,000 QQQ puts. There’s also a Burryology subreddit with 17,000 members that’s dedicated to studying Burry and tracking his trades.
Burry’s options could just be hedges, and will have cost him a fraction of that amount. But they are still “very large” positions given the rest of Scion’s portfolio was only worth $111 million, Gerry Fowler, head of European equity strategy and global derivative strategy at UBS, told Insider. The investor’s Scion Asset Management held bearish put options on 200,000 shares of both the SPDR S&P 500 ETF Trust and Invesco QQQ Trust — index funds that track the S&P 500 and Nasdaq-100 respectively — on June 30. His fund, Scion Asset Management, was shown to have bought large stakes in put options against both stock-market indexes. Burry’s investment strategy is closely followed by investors due to the fame he continues to enjoy following the coverage of his success at the time of the subprime crisis and subsequent dramatisation of his role in The Big Short.
Mr Burry became famous for his market movements in the mid-2000s, when he bet against the housing market during events that led to the worldwide recession. Mr Burry is reported by CNN to be using more than 90 per cent of his portfolio to bet on the market downturn. SOXX is up about 42 per cent since January 1 and about 7 per cent since September 30, according to data from Morningstar. Interestingly, this most recent decision suggests Michael Burry saw a strong invalidation for his previous thesis that motivated the short position in August. The invalidation must be strong enough to justify 40% of realized losses over a $26.5 million purchase.
Next, he dumped all but one of his holdings in the second quarter, slashing his portfolio’s value from $165 million to about $3 million and stoking fears that a market crash was around the corner. The investor set alarm bells ringing in August, when he revealed that he virtually liquidated his US stock portfolio in the second quarter of this year. Scion, which owned 11 stocks worth $165 million at the end of March, only held a $3.3 million position in a single stock three months later.
Michael Burry, the hedge fund boss featured in The Big Short, in which he was played by Christian Bale, held negative options on both the S&P 500 and Nasdaq 100 at the end of the second quarter, securities fillings show. The changes to Scion’s portfolio were revealed in 13F filings, which are mandatory reports to the Securities and Exchange Commission by managers with assets of at least $100mn. They must be lodged with the regulator within 45 days of the close of the previous quarter, which was September 30. The Federal Reserve previously considered the CPI a leading indicator when making interest rate decisions. However, the legendary investor’s most recent ‘big short’ accumulated estimated losses of 40% since its opening in August 2023. Gurgavin Chandhoke, CEO and founder of uINVST, reported the position’s closure and estimated results on November 14.
Michael Burry reportedly closed a ‘big short’ trade worth $1.6 billion in nominal value against the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ). Burry was featured in “The Big Short” movie, with a massive win against the housing market in 2008. A man who famously made a fortune by predicting the collapse of the US housing market in 2008 now appears to be suggesting that two major stock markets will tumble in value. The investor placed an unexpected bet against 800,000 Apple shares in the first quarter.
The vast majority of stocks are trading with gains on this second day of the week, and traders are now waiting for Michael Burry’s next move, as this sentiment shift could trigger a bull market for the coming months. Jeremy Grantham, another doomsaying investor and market historian, also shrugged off the recent upturn in stocks as a bear market rally, in a new research note titled “Entering the Superbubble’s Final Act.” The Scion Asset Management chief’s stance seems to be that the market boom is over, stocks are headed downward, and any rallies will prove short-lived. Burry suggested in May that the S&P 500 could drop as low as 1,900 points, or another 53%, over the next few years, based on how past crashes have played out. Moreover, he has dismissed the rebounds in stocks this year as bear-market rallies or “dead cat bounces” — temporary reprieves along the road to inevitable disaster. Michael Burry sounded the alarm on the “greatest speculative bubble of all time in all things” last summer, and cautioned investors buying into the hype that they were headed for for the “mother of all crashes.”