Michael Burry and his predictions: A financial oracle?

Michael Burry 2

IMPORTANT POINTS:

  • Michael Burry gained notoriety for correctly predicting the 2008 crisis.
  • Although he has had accurate predictions, he has also failed on several occasions.
  • Burry recently bet against the market via put options with a face value of $1.6 billion.

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Michael Burry, a leading figure in the financial world, has demonstrated a unique ability to anticipate major market turns. He gained notoriety by accurately predicting the 2008 housing market crash, thus cementing his status as an economic visionary. In addition, thanks to his foresight and betting on the market, Burry amassed a considerable fortune.

Following this milestone, Burry’s reputation grew, attracting the attention of investors and financial experts with his bold predictions. But did his success persist through the years? In this review, we dive into the “Big Short’s” hit-and-miss trajectory, breaking down his ability to forecast market trends, according to data revealed by trader Adam Khoo on Aug. 15.

A tour of Burry’s predictions

In 2005, Burry demonstrated his acumen by anticipating the collapse of the mortgage market. This premonition was confirmed when the global financial crisis broke out in 2008. On the other hand, however, after making a fortune betting against the US housing market, Burry remained low-key about predictions until 2015.

In that year, he predicted an imminent stock market crash in the ensuing months. Contrary to his prediction, the S&P 500 rose 11% the following year.

In May 2017, he returned with an omen of a global financial collapse, but the SPX rose 19% over the next 12 months.

In September 2019, Burry warned of a stock market crash due to a bubble in index ETFs.However, the market grew 15% the following year.

In March 2020, he made a massive bearish bet , but the SPX is up a staggering 72% over the next 12 months.

Less than a year later, he predicted another market crash, along with a short position in Tesla. Despite his assertion, the market rose another 16% in the following year.

And in September 2022, it suggested that the market had not bottomed out. . But once again, the market grew 21% in the following 11 months.

In January this year, Burry urged investors to sell, citing a recession and impending inflation , but the SPX remained resilient, up 17% .

Burry’s Last Gamble

As recently as August, it was revealed that Burry bet against the market via put options. Specifically, he bought 40,000 put option contracts linked to SPDR S&P 500 ETF Trust ( SPY ) and Invesco QQQ Trust ( QQQ ), with a face value of $1.6 billion, suggesting that he expects hundreds of shares tracked by these ETFs to decline in worth.

Put options , or simply puts, are derivative financial instruments that allow investors to sell a stock at a specified price before an expiration date.