Show pageOld revisionsBacklinksBack to top This page is read only. You can view the source, but not change it. Ask your administrator if you think this is wrong. ======Michael Burry====== Michael Burry is an American physician-turned-investor and [[hedge fund]] manager, best known as the financial wizard who foresaw the 2008 global financial meltdown. Famously portrayed by Christian Bale in the film //[[The Big Short]]//, Burry is a modern icon of [[value investing]] and a testament to the power of independent thought. With no formal finance training, he taught himself the art of investing while completing his medical residency, sharing his research on early internet forums. His sharp analysis attracted the attention of legendary investors, enabling him to launch his own fund, [[Scion Capital]]. Burry’s story is a powerful lesson in contrarian conviction; he meticulously researched and then bet against the US [[subprime mortgage]] market when the entire world believed it was rock-solid. His diagnosis of [[Asperger's syndrome]] is often credited with giving him the superpower of intense focus and an immunity to the market's herd mentality, allowing him to see the truth hidden in plain sight. ===== The 'Big Short': A Masterclass in Contrarianism ===== Burry’s legendary trade wasn't a lucky guess; it was the result of painstaking, almost obsessive, research. In the mid-2000s, while Wall Street was gleefully packaging and selling mortgage-backed securities, Burry did what no one else would: he actually read the fine print. He spent thousands of hours sifting through mind-numbingly dull legal [[prospectuses]] for these securities, analyzing the individual home loans bundled within them. He discovered that these bundles, many of which had stellar credit ratings, were filled with high-risk, adjustable-rate "teaser" loans made to borrowers with poor credit. He realized they were ticking time bombs, set to explode when the low introductory rates expired. To profit from this insight, he devised a brilliant strategy. He went to major investment banks and convinced them to create a new financial instrument for him: [[credit default swaps (CDS)]] against specific [[collateralized debt obligations (CDOs)]] that he identified as most vulnerable. In simple terms, he was buying insurance on assets he was certain would fail. For years, he paid millions in premiums, and both his investors and the banks he dealt with thought he was insane. He faced a near-mutiny from his clients and immense psychological pressure. But when the housing market finally cracked in 2007-2008, Burry's "crazy" bet paid off spectacularly, earning his investors hundreds of millions and cementing his place in financial history. ===== Burry's Investment Philosophy: Beyond the Big Short ===== While the subprime bet made him famous, Burry is not a one-trick pony. His underlying philosophy is rooted in the principles of [[Benjamin Graham]], but with a unique, modern twist. Today, investors keenly follow his portfolio moves through his fund's mandatory [[13F filings]] with the [[Securities and Exchange Commission (SEC)]]. ==== Deep-Dive Research ==== Burry’s edge comes from his willingness to do the hard work. He practices a "first principles" approach, ignoring the noise of news headlines and Wall Street analyst reports. Instead, he dives directly into primary source documents: annual reports, financial statements, and legal filings. His ability to connect disparate dots and understand complex systems from the ground up allows him to spot opportunities and risks long before they become obvious to the mainstream market. ==== Margin of Safety and Unloved Assets ==== At its core, Burry's strategy is about finding a massive [[margin of safety]]. He hunts for assets that are deeply misunderstood, unloved, and trading at prices far below their intrinsic value. He has a knack for "dumpster diving" in forgotten corners of the market to find treasures others have dismissed as trash. After the housing crisis, he shifted his focus to other undervalued assets, including water rights, agricultural land, and small-cap technology stocks, always looking for situations where the potential reward heavily outweighs the risk. ==== High Conviction, High Concentration ==== Unlike many funds that prioritize diversification, Burry believes in making large, concentrated bets. When his research uncovers a truly exceptional opportunity, he doesn't just dip a toe in; he dives in headfirst. This high-conviction approach means his portfolio is often focused on a handful of well-researched ideas. This strategy carries higher risk but also offers the potential for extraordinary returns—it's a game of patience and precision, not a shotgun approach. ===== What Can We Learn from Michael Burry? ===== For the ordinary investor, Burry’s career offers several timeless lessons that align perfectly with a value-oriented mindset: * **Read, Then Read Some More:** Don't outsource your thinking. The greatest investment ideas aren't found on TV or social media; they're found in the footnotes of an annual report. Learn to read financial statements and do your own homework. * **Trust Your Own Analysis:** The market is a voting machine in the short term but a weighing machine in the long term. If your research is sound, have the courage to stick with your convictions, even if the entire world is telling you you're wrong. * **Embrace [[Contrarian Investing|Contrarianism]]:** The biggest profits are rarely made by following the herd. Learn to be skeptical when everyone is greedy and curious when everyone is fearful. The best opportunities are often disguised as problems. * **Patience is a Strategic Asset:** Burry's "Big Short" took years to pay off, and he nearly went broke waiting. True value investing requires immense patience to allow your thesis to play out. It's not about timing the market, but about time //in// the market with the right assets.