Burry’s bet paid off handsomely, earning him a hefty personal profit of $100 million and more than $700 million for his remaining investors. Then the dominoes began to drop, with Bear Stearns, Lehman Brothers, AIG, and the rest of the financial system behind them. However, as prices continued surging, Burry’s clients grew nervous and frustrated as he continued his short plays using derivatives. As a result, by the end of 2004, he was managing $600 million and turning investors away. Burry was so successful that he attracted the interest of companies such as Vanguard, White Mountains Insurance Group, and well-known investors such as Joel Greenblatt.
Wall Street crashes
And as unemployment soared across the nation, many borrowers defaulted or foreclosed on their mortgages. Unfortunately, the underlying loans of CDOs were often rated incorrectly, inflating the CDO’s value and misleading investors. The least risky tranches (senior/AAA) have more certain cash flows and a lower degree of exposure to default risk. The goal of creating CDOs is to use the debt repayments as collateral for the investment.
However, the main reason Wall Street institutions crush the markets day in and day out simply has to do with the fact that… In late 2025, Burry deregistered his hedge fund, Scion Asset Management. Burry also posted on X, alluding to the idea of an “AI Bubble.” In further filings, Burry has withdrawn Scion Asset Management from the SEC’s registration, effectively closing down his fund. Its aim was to generate personal investments, which include water, alpari review farmland, and gold. In 2013, Burry reopened the Scion hedge fund under the name Scion Asset Management. In 2008, following the investor revolt and his subsequent financial victory, Burry shut down Scion Capital.
He argues that index funds distort market pricing and create blind spots in capital allocation. Today, he uses similar methods to highlight bubbles in tech stocks, crypto, or government debt. Michael Burry, famously portrayed in The Big Short, gained notoriety for predicting the 2008 housing market crash. This factor could lead to sector rotation out of current market leaders and into laggards such as small-caps and interest-rate-sensitive stocks. While a crash isn’t imminent, investors ignoring his warnings risk exposure to overvalued tech and geopolitical landmines.
Film
He claimed that the hype and speculation driving retail investments will soon drive the market into a crash. According to him, the culprits for the upcoming crash were passive investments, a surge in bullish stock trade, and extreme speculation and debt. After being wrong about Tesla twice within two months, Michael Burry’s stock market predictions that followed were nothing short of gloomy, as he took to Twitter to announce that the market was dancing on a knife’s edge.
Anticipating the market’s collapse in the second quarter of 2007, as interest rates would rise from adjustable-rate mortgages, he proposes to create a credit default swap (CDS) market for mortgage-backed securities (MBSs), allowing him to bet against, or short, MBSs for profit. Based on the 2010 book of the same name by Michael Lewis, it depicts how the 2008 financial crisis was triggered by the United States housing bubble. Past performance is not indicative of future returns and financial investing is inherently risky. Then it alerts a watchlist of stocks before the market opens so you’re ready to trade. During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital.
After the housing market crashed as he predicted, Burry cashed in around $100 million for himself and another $725 million for his investors. While he continues to be a financial sage with many correct predictions about stock market fluctuations, even Michael Burry can sometimes be wrong — as the above examples have shown. While new investment opportunities flourished amid the vaccine rollout, Michael Burry saw inflation as the latest threat to the stock market, stating Bitcoin was among the most threatened stocks. While the central figure of the critically acclaimed Hollywood drama “Big Short” certainly hit the nail on the head about the 2008 housing market crash, there have been many times when his predictions weren’t as successful. Predicting a colossal stock market collapse and walking out of the financial crisis with hundreds of millions of dollars certainly made the world listen whenever Michael Burry forecasted large-scale market crashes. In 2008, Michael Burry made approximately $100 million for himself and an additional $700 million for his investors after the housing market crashed, as he had predicted.
With many exchange-traded funds and index funds holding hundreds of stocks and all rising and falling together, there could very well be devastating results in a market crash. Michael Burry, famous for predicting the U.S. housing crash, disclosed that he has been buying shares of GameStop GME, the former meme-stock favorite, as quoted on CNBC. The film, along with The Wolf of Wall Street, had a brief resurgence in the wake of the January 2021 GameStop short squeeze as the events shown in the films provided reference points for what was happening with the GameStop and related stocks. This conclusion led him to short the market by persuading broker finexo Goldman Sachs and other investment firms to sell him credit default swaps against subprime deals he saw as vulnerable. He was right, This was the 2008 Financial Crisis, Housing Bubble which resulted in the collapse of Lehman brothers investment bank & a major stock market crash!
- He highlighted that a major problem with cryptocurrency is its leverage, suggesting that understanding the amount of leverage in crypto is crucial to truly understanding the market.
- Burry realized this would be unsustainable long term and that the credit products based on these subprime mortgages would plummet in value as soon as higher rates replaced the original rates.
- David McCandless’s visual blog Information is Beautiful deduced that, while taking creative license into account, the film was 91.4% accurate when compared to real-life events, calling it a “shockingly truthful film” with “very little dramatization or fakery.”
- Unfortunately, the underlying loans of CDOs were often rated incorrectly, inflating the CDO’s value and misleading investors.
- All the capital being being spent and lent by the richest companies on earth will not buy enough time-by the very definition of mania.
- Now, I think the whole thing is just going to come down, and it will be very hard to be long stocks in the United States and protect yourself.
George Soros – Investor Profile
- Geo Group remains the largest position on Michael Burry’s stock portfolio at 25.02%.
- As the housing market collapsed and borrowers could not pay their mortgages, banks were suddenly overwhelmed with loan losses on their balance sheets.
- Investing is not suitable for everyone; ensure that you have fully understood the risks and legalities involved.
- After the housing market short, Burry continued to exploit market inefficiencies.
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The fund’s name drew from The Scions of Shannara, a fantasy novel reflecting Burry’s eclectic interests. Burry’s foray into professional investing was unconventional. You understand that you can opt-out at any time. Get a brief on the top business stories of the week, plus CEO interviews, market updates, tech and money news that matters to you. He continues to make predictions about the U.S. economy and executes careful investments. Put options are contracts that give the right to sell at a predetermined price within a specific time frame.
Could passive investing make the next crash worse?
Since then, stocks have rebounded and resumed a broadly upward trajectory, punctuated by brief, intermittent pullbacks within the larger uptrend. Sharing a chart on X, Burry noted that American households now have more wealth locked in stocks than in real estate. The short seller has now trained his sights on the broader market, though projecting it in a less flattering light. The shares have added about a fifth of their value in 2026, though they remain well off the early 2021 highs that marked the height of the meme-stock craze. Daily stocks & crypto headlines, free to your inbox
Trader who predicted 2008 financial crisis bets $1.6bn on stock market crash by end of 2023
Michael Burry says the AI boom is a bubble of epic proportions, and there’s no way to stop it from popping and taking down the stock market and economy with it. Over half of U.S. equities are in passive funds, leaving few active investors to stabilize the market. Michael Burry warns the U.S. stock market could face a crash worse than 2000. While Burry may be right to raise flags given how hot the stock market has been in recent years, that doesn’t mean there aren’t many safe investments out there today, especially when looking at the long run. Even if you may be worried about inflated valuations and a possible bubble in the market today, simply selling all your investments and converting your money into cash may not be the best solution. In a crash, investors may be inclined to pull money out of all of their investments, not only money that’s invested in ETFs and other passive investments.
“The Big Short” recounts how the housing bubble, driven by the growth of the subprime mortgage market and the investment vehicles derived from it, led to the 2008 financial crisis. In 2005, eccentric hedge fund manager Michael Burry discovers that the United States housing market, based on high-risk subprime loans, is extremely unstable. Burry convinced major investment banks, such as Goldman Sachs and the like, to sell him a new financial instrument, the credit xm group review default swaps (CDS), that he would use against risky subprime mortgage bonds. In 2022, he warned investors that the crypto market was in what he described as the “greatest speculative bubble of all time in all things,” predicting a significant crash for cryptocurrency investors.
Sold -18.8k shares Increased shares by 100.0% HCA Healthcare Inc stands as a top investment, attesting to Burry’s confidence in the healthcare sector’s resilience and growth potential. He famously bet against the real estate market in 2008 which is documented in the movie “The Big Short”, based on the best-selling book by Michael Lewis. Michael Burry is an American investor, and hedge fund manager. For more information please read our full risk warning and disclaimer.
Unfortunately or, instead, fortunately in retrospect, when they demanded to withdraw their capital, Burry simply refused the investors’ pleas (by placing a moratorium on withdrawals from the fund), angering his clients even more. This “big short” not only validated Burry’s thesis but also exposed deep structural flaws in the global financial system, later chronicled in Michael Lewis’s book The Big Short and its film adaptation. He pored over thousands of pages of prospectuses for mortgage-backed securities (MBS), identifying systemic risks in subprime loans—high-interest mortgages issued to borrowers with poor credit. Armed with a $1 million inheritance from his family, Burry founded Scion Capital LLC in 2000, focusing on undervalued stocks and deep fundamental analysis. In 1996, while still in residency, he launched a value investing blog that attracted prominent followers, including noted hedge fund managers and institutional investors. This article explores Burry’s background, his foresight on the housing bubble, his path to wealth, and the rationale behind his water investments.
Burry suggests that there may not be many safe options for investing in the U.S. market today. Select market data provided by ICE Data Services. The ETFs include the likes of Grayscale Bitcoin Adopters ETF BCOR, VanEck Video Gaming and eSports ETF ESPO and VanEck Social Sentiment ETF BUZZ. Price/Sales (P/S) of the stock stands at 2.70X, higher than the industry average of 1.62X but lower than the S&P 500 measure of 3.14X. Burry is not alone in backing the stock. The film won the Critics’ Choice Movie Award for Best Comedy and was named one of the Top 10 Films of the Year at the American Film Institute Awards 2015.
As with most private funds, detailed operational and strategy specifics are not always publicly disclosed. After dissolving his original hedge fund, Scion Capital LLC, post-crisis, Burry reopened it under Scion Asset Management in 2013. And as predicted, the bubble eventually burst, resulting in a 100 million dollar payday for Burry. Boiling it all down, “The Big Short” serves up a delicious, yet somewhat tragic, financial cocktail, reminding us that Wall Street, in its gluttonous revelry, threw quite the party at the expense of the global economy. The film manages to excel at illustrating and defining high finance’s dry, complex abstractions by employing creative and vivid methods such as celebrity cameos, metaphoric descriptions, and visual aids like a Jenga tower.
Speaking to The Globe and Mail, Eisman said, “Eliminate my sense of humor and make me angry all the time, and that’s Carell’s portrayal. It’s accurate enough, but it’s not really me.”. While the general plot of the film is the same as the book, many of the character names have been changed. Glenn Kenny reported that the film accurately got the message across that even though the lives of the characters were not interconnected, their stories were. David McCandless’s visual blog Information is Beautiful deduced that, while taking creative license into account, the film was 91.4% accurate when compared to real-life events, calling it a “shockingly truthful film” with “very little dramatization or fakery.”
This resulted in vast economic growth across the U.S., increasing the demand for homes and mortgages. Confronted with the dot-com bubble’s collapse and 9/11, the Federal Reserve lowered the interest rate from 6.5% in May 2000 to 1% in June 2003. However, for them to profit, the economy has to collapse, representing the suffering of millions of average citizens who have put their trust and savings into these financial institutions. Wanting in on the action but lacking official credibility to play, they seek the investment advice of retired banker Ben Rickert. A third plot strand follows two young investors, Charlie Geller and Jamie Shipley, with a $30 million start-up garage company called Brownfield, who get a hold of Venett’s paper on the matter. Meanwhile, Deutsche Bank executive Jared Vennett inadvertently gets wind of what Burry is doing and, too, tries to capitalize on Burry’s beliefs.
You should consider whether you understand how an investment works and whether you can afford to take the high risk of losing your money. Trade & invest in stocks, ETFs, options, futures, spot currencies, bonds & more with Interactive Brokers today. He betted against the housing market as he predicted a significant price drop. It would seem that both stocks he betted against are performing well this year, with the S&P 500 increasing by 16% and the Nasdaq 100 by 38%. As of August 14, 2023, Burry made bearish bets against the S&P 500 and Nasdaq 100, betting over 90% of his portfolio on a market crash.