Michael Burry: Idiot or Genius?
For those of you who don’t know who Michael Burry is, he’s the guy who Christian Bale played in “The Big Short.” Michael Burry is an American hedge fund manager and the founder of Scion Asset Management. He first gained notoriety in the early 2000s for his bet against the subprime mortgage market, chronicled in the book The Big Short. In recent years, Burry has been making headlines for his predictions of an impending market crash. Is he a genius or a fraud? Let’s take a closer look.
Burry’s Predictions
In 2016, Burry predicted that the stock market would crash within two years. In 2018, he doubled down on that prediction, saying that the crash would be “worse than 2008.” So far, his predictions have not come to fruition; the stock market has continued to reach new highs. Until now, right now we are seeing some downturn. But is this downturn natural? Nevertheless, Burry insists that a crash is coming, and he has been buying up defensive investments in preparation.
The Question of Methodology
Burry’s detractors point to his lack of methodology as evidence that he is luckier than anything else. His bet against the subprime mortgage market was based on admittedly small sample size; he studied just 100 mortgages before determining that they were overvalued. Furthermore, his predictions of an impending market crash are largely based on conjecture rather than hard data.
On the other hand, Burry’s defenders argue that his ability to think outside the box is precisely what makes him so successful. He was characterized as an autist in the big short. There are many successful think outside of the box autistic billionaires. They point to his early investment in Tesla as proof that he is ahead of the curve in spotting disruptive companies.
After all he is the guy who made a killing by betting against the subprime mortgage market in the 2008 financial crisis. And now he’s at it again. Some people view him as a genius investor who can see beyond conventional wisdom; others view him as a charlatan who relies on luck more than anything else. What do you think? Is he a genius or an idiot? Only time will tell whether Burry is truly a genius or merely a lucky gambler.