[HN Gopher] Michael Burry warns the 'mother of all crashes' is c...
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Michael Burry warns the 'mother of all crashes' is coming
Author : birriel
Score : 57 points
Date : 2021-06-19 15:49 UTC (7 hours ago)
(HTM) web link (markets.businessinsider.com)
(TXT) w3m dump (markets.businessinsider.com)
| meowkit wrote:
| I like Burry, but we really need a prediction market or some sort
| of tracker for these crash predictions. Really for "moon"
| predictions too.
|
| I've been seeing this prediction form Burry for a while.
| akomtu wrote:
| I'm not sure why crypto is even relevant here. If Bitcoin drops
| to zero tomorrow, the economy won't budge. The real thing is the
| moratorium on evictions expiring this month, and with about 8
| million americans haven't been paying rent and mortgage for a
| while, this opens interesting possibilities in July. My bet,
| though, is that the moratorium will be extended till end of year.
| ganoushoreilly wrote:
| That coupled with the cancelation of extended un-employment
| benefits in some states is definitely going to cause some
| friction.
| alpineidyll3 wrote:
| Investment personalities predicting crashes is a classic PR move,
| because if the predicted crash doesn't occur, there's no penalty.
| If it does, the person receives universal permanent adulation.
|
| Ultimately, this nonsense preys on the public's misunderstanding
| about how markets work, and that all financial positions are
| bets, which express a measure of certainty in an uncertain
| outcome.
| ItsMonkk wrote:
| I see Burry as a financial pen-tester. He researches very
| deeply into the mechanics of how the market works. He's looking
| into the code. Once he finds a bug, he finds what effects would
| occur if the bug occurs. Once he has found something with a big
| enough impact, then he asks what would trigger it to occur.
|
| In 2006 he found excessive margin being applied to housing. He
| saw that the Fed was raising their rates. He knew that it was
| inevitable that this would cause foreclosures. There were
| massive bets bigger than anything the system could bear, and in
| fact his bets were a piece of it. Was he early? Yes. Had he
| been later, would he have got a bigger return? Perhaps not. It
| was only that he was so early that no one else had a clue that
| he was given such amazing odds.
|
| Now he sees the bubble is happening because passive investing
| into the stock market through our 401k's has driven the smart
| money of the money into front-running that passive
| investment[0]. He's saying the massive 30% increase in the
| money supply after CO-VID is going straight into the stock
| market and that flow is drying up. Every stock is now far above
| their value, with their 'value' being their net future risk
| adjusted returns.
|
| Burry sees that this is unsustainable, and he sees that this
| bubble is now two times of magnitude as large as any other
| bubble ever created. When a small percentage of people pull
| their money from the being invested in passive funds, they will
| quickly overpower the buy pressure and the markets will drop,
| causing others to pull until they go to 0. His expectation is
| that once this starts to burst, the Fed is going to have no
| other choice than to do the same exact thing they did last
| time, and they have to react faster than last time with no way
| to think about it. They will print beyond ever thought possible
| or the system will fundamentally collapse. This is why he
| mentions Weimar Republic inflation. If 2008 was the previous
| largest bubble and that costs us 4T, two magnitude is a 400T
| problem.
|
| So he's asking what the economy will do when 400T is created in
| the blink of en eye. He's got his money where his mouth is. And
| particularly importantly, nothing he is saying now can affect
| the future. Either we are the Titanic, and we already hit the
| Iceburg, or he's wrong this time. Maybe he's early. But is he
| wrong?
|
| [0]: https://www.youtube.com/watch?v=x-rJciYZmi0
| boldslogan wrote:
| >>He's got his money where his mouth is.
|
| Looking at his scion capital quarterly report, it seems he
| has a lot of his portfolio in puts (40%?) then the next 30%
| in calls then a mixed bag of stocks.
|
| https://whalewisdom.com/filer/scion-asset-management-
| llc#tab...
|
| to me it seems he is more bearish on Tesla than the market?
| So it is hard to say he is against the entire market...?
| Judging by the gigantic position he has against them.
|
| Can you clarify what you mean here? Does he have other
| positions like puts on crypto?
| ItsMonkk wrote:
| TSLA is a growth stock, and growth stocks have done
| extraordinarily well throughout CO-VID. To have a put on
| TSLA is to have a bet against growth. His TLT and TBT bets
| are the next largest piece of his portfolio and show what
| he's thinking.
|
| As for Bitcoin, he never said that it would cause a crash,
| merely that when the stock market does go down Bitcoin will
| go with it(because of it's reliance on leverage that will
| get called away) and the effect will be to wipe out all the
| kids and retail investors that have bet on it.
|
| How do you profit on Bitcoin crashing? As you recall, he
| specifically was worried in 2006 about the banks going
| under, and Bitcoin has that problem to a much larger
| degree. If you bet against Tether and Tether goes to 0,
| there's a good chance all coins go to 0 and you won't be
| able to receive your winnings. Sometimes the only winning
| move is not to play.
| OJFord wrote:
| > How do you profit on Bitcoin crashing?
|
| Sell futures?
|
| (I'm not GP nor really disagreeing with anything else you
| said.)
| blackoil wrote:
| It should be easy to cite all the bad predictions he had made.
| polishTar wrote:
| Well, that'd be exhausting, but it didn't take long to find
| that since he became a celeb-investor in late 2015 (when the
| movie came out), he's made similar predictions including: a
| couple weeks after the movie's release
| (https://nymag.com/intelligencer/2015/12/big-short-genius-
| say...), in 2017 (https://www.lombardiletter.com/michael-
| burry-stock-market-cr...), in 2019
| (https://www.cnbc.com/2019/09/04/the-big-shorts-michael-
| burry...), and now obviously in 2021.
|
| Continually predicting the market is about to crash seems to
| be his thing.
| rkk3 wrote:
| > Continually predicting the market is about to crash seems
| to be his thing.
|
| It's a story the press love & he has been type cast.
| lake_vincent wrote:
| Yeah, but at least he puts his money where his mouth is. His
| fund has huge puts on treasuries, and calls on food staples.
| Not just a PR move, his investments actually reflect his
| prediction.
| tambeb wrote:
| >> Yeah, but at least he puts his money where his mouth is.
|
| I'd argue one could also interpret this as "putting his mouth
| where his money is."
| what_ever wrote:
| Doesn't work that because putting mouth is free, putting
| money isn't.
| rybosworld wrote:
| Burry is addicted to predicting crashes. He managed to do pretty
| well on predicting the global financial crisis, but his timing
| was off by a few years. He still got famous though, and now
| people hang on to his every word. Doesn't seem to matter that the
| other 5 crashes he predicted never happened.
| throwkeep wrote:
| > "The problem with #Crypto, as in most things, is the leverage,"
| he tweeted. "If you don't know how much leverage is in crypto,
| you don't know anything about crypto."
|
| Wasn't a lot this knocked out when Bitcoin crashed to $30k? How
| much still remains?
| Supermancho wrote:
| Take a look after June 25th, 2021.
| yumraj wrote:
| why June 25th?
| babyshake wrote:
| Quarterly futures expiration. OP is predicting another
| crash?
| ac29 wrote:
| The largest exchange, Binance, has had over $50B of futures
| volume in the last 24 hours [0]. Futures are generally traded
| with leverage and in crypto trading, leverage can be huge -
| 100x is available many places.
|
| [0] https://www.coingecko.com/en/exchanges/derivatives
| AznHisoka wrote:
| It was at 30k earlier this year. It needs to go below 10k for
| me to consider it crashing.
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(page generated 2021-06-19 23:02 UTC)