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Maria Bartiromo’s Wall Street - Friday, March 1
Border crisis, Inflation, Burrito
Michael James Burry, an American investor and hedge fund manager, gained recognition as a prominent financial figure for his precise prediction of the 2008 stock market crash. His fame was amplified by the 2015 film "The Big Short," where he was portrayed by Christian Bale.
Michael Burry’s early life
Burry was born and raised in San Jose, California. He faced a significant life challenge at the age of 2, when he was diagnosed with retinoblastoma, leading to the loss of his left eye. Since then, he has worn a prosthetic eye.
He graduated from the University of California in Los Angeles, where he earned a bachelor's degree in economics. He then moved on to attain an M.D. from Vanderbilt University School of Medicine. His residency, specializing in neurology, was completed at Stanford Hospital and Clinics.
Michael Burry's successful prediction of the 2008 stock market crash was recognized in the 2015 film "The Big Short." (Astrid Stawiarz/Getty Images / Getty Images)
Michael Burry’s investment career
Starting out as a hobby, Burry quickly made a name for himself in the investing space. His active participation in online forums, coupled with the insights he shared on his blog, positioned him as a respected voice in the investment community. His strategies and insights were unique from others in the field. A quote attributed to Burry says, "Everything I do in investment is just very different."
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In 2000, Burry made a significant move by launching Scion Capital, his own investment fund. The fund's initial capital boost of $1 million came from Joel Greenblatt of Gotham Capital, who was an avid reader of Burry's blog.
From its inception, Scion Capital was a success. Unlike the S&P 500, which suffered an 11% decline in 2001, Burry's fund gave its investors a return of 55%. Capitalizing on the dot-com bubble, Burry strategically shorted overvalued tech stocks, further enhancing his reputation as an astute investor.
"The Big Short"
The film "The Big Short" chronicled Burry’s successful 2008 stock market crash prediction. As the founder of Scion Capital, he foresaw the impending collapse of the housing bubble in the late 2000s, a calamity that significantly impacted the economy.
The investor and hedge fund manager took the opportunity to capitalize on his foresight. Aware of the volatile state of the housing market, he strategically shorted mortgage-backed securities.
Actor Christian Bale won Best Actor in a Comedy award for playing Michael Burry in "The Big Short" during the 21st Annual Critics' Choice Awards. (Kevin Winter/Getty Images / Getty Images)
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This move resulted in substantial financial gains - $700 million for his investors and $100 million personally, before he chose to shut down Scion Capital.
Burry's success in predicting the stock market crash is largely credited to his unique focus on lenders rather than borrowers. "What you want to watch are the lenders, not the borrowers," he said. "The borrowers will always be willing to take a great deal for themselves. It’s up to the lenders to show restraint, and when they lose it, watch out." In his quarterly investment letters, he explained this phenomenon as "the extension of credit by instrument," a term he coined to describe the practice of lenders resorting to new financial instruments in order to justify lending money to unqualified borrowers.
"It was a clear sign that lenders had lost it, constantly degrading their own standards to grow loan volumes." - Michael Burry
What is a short position?
A short is the result of a trader borrowing a security from a brokerage and selling it on the open market in hopes the price will fall, and then the investor can repurchase it at a lower cost. The trader does this when they believe the security price will likely decrease in the short term. Creating a short position is risky for the trader because they have a finite potential for profit and an infinite potential for loss.
Burry is best known for popularizing short-selling stocks and sectors.
"The Big Short" film was released in 2015 and is based on the book by Michael Lews of the same name. (Jeff Vespa/Getty Images for PSIFF / Getty Images)
What is Michael Burry's net worth?
In 2004, Burry had over $600 million in assets under his management.
Burry’s net worth is currently estimated to be $300 million, according to celebritynetworth.com. Since his correct prediction of the 2008 housing market collapse that led to significant profits, he has continued to invest in stocks that have increased his net worth. He has profited the most from identifying and betting against markets.
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Scion Asset Management
Despite the millions Burry made for himself and his investors, he faced substantial criticism, leading him to shut down his original hedge fund, Scion Capital, in 2008. Partly driven by public reaction to his strategy and a desire to explore other investment ventures, he made this decision.
In 2013, Burry launched Scion Asset Management, a rebrand of his prior fund. This new firm strategically targets investments in gold, water and agricultural land, reflecting Burry's conviction that water, as a potentially scarce resource, is the most valuable asset of the future.
Michael Burry is the former hedge-fund manager who predicted the housing market's plunge. He is currently investing in farmable land, small technology companies and gold. (Tony Avelar/Bloomberg via Getty Images / Getty Images)
Michael Burry bets on a stock market crash
Burry is still an active investor and hedge fund manager and is betting on a Wall Street crash. His firm purchased $866 million in put options against a fund that tracks the S&P 500 and $739 million against a fund that tracks the Nasdaq 100. Put options are contracts that give the right to sell at a predetermined price within a specific time frame.
He continues to make predictions about the U.S. economy and executes careful investments. The investment community praises Burry for his technical analysis and ability to remain uninfluenced by trending market sentiments.
My natural state is an outsider. I’ve always felt outside the group, and I’ve always been analyzing the group." - Michael Burry
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Burry lives in Saratoga, California, with his second wife. He has two adult sons. Burry was diagnosed with Asperger’s Syndrome at the age of 35, following his son's identical diagnosis. He recognized that he shared the same symptoms as his son.
