Meet Michael Burry (The Big Short Investor)

☞ Who is Michael Burry?

Michael James Burry, an American investor and a neurology specialist, is quite the interesting figure in the financial realm.

He kickstarted Scion Capital in 2000, utilizing a modest inheritance. But what really earned him his reputation was his astute prediction of the subprime mortgage crisis, a financial storm that raged from 2007 to 2010.

Burry foresaw this crisis while many others didn’t, and he took action by shorting the 2007 mortgage bond market.

This move not only earned him a personal profit of $100 million but also garnered a staggering $700 million for his investors. Talk about a knack for reading the financial winds!

Following this success, in 2008, he chose to close down Scion Capital to focus more on his personal investments. Then, in 2011, he established Scion Asset Management, a private investment firm still operating today from the heart of Silicon Valley, Saratoga, California.

Burry’s narrative became more widely known through the 2015 film “The Big Short,” where Christian Bale depicted him.

This movie offered a dramatized portrayal of pivotal figures in the subprime mortgage crisis, based on Michael Lewis’s nonfiction book “The Big Short: Inside the Doomsday Machine,” adapted into an Oscar-winning screenplay by Adam McKay and Charles Randolph.

Beyond his involvement in the mortgage bond market, Burry’s insights into money and investing are highly regarded. He’s often hailed as “the Big Short investor,” not just for his savvy maneuvers but also for his forward-thinking perspectives that steer investors toward fruitful returns.

Adding to his enigmatic persona, Burry made headlines in April 2022 with a tweet suggesting that the Federal Reserve had no plans to combat inflation. This tweet sent ripples through financial circles, as Burry’s opinions often carry significant weight.

Despite holding an M.D. and being licensed to practice medicine in California, Burry doesn’t actively pursue a medical career. Instead, he’s deeply engrossed in the realm of finance and investments, carving out his path as a respected and influential figure in the financial world.

Early life

Born in 1971 and raised in San Jose, California, Michael James Burry faced a significant challenge early in life.

At the tender age of two, he lost his left eye due to retinoblastoma, a rare form of cancer. Since then, he has worn a prosthetic eye, a testament to his resilience in overcoming adversity from an early age.

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Education-wise, Burry pursued his academic endeavors with zeal. He obtained a bachelor’s degree in economics from the University of California, Los Angeles (UCLA), where he also delved into premed studies.

His thirst for knowledge led him to Vanderbilt University School of Medicine, where he earned his M.D. His academic journey continued with residencies at Stanford University in neurology and pathology, showcasing his diverse interests and pursuits.

Interestingly, even during his rigorous medical education, Burry found time to nurture his passion for investing. His spare moments were dedicated to honing his investment skills, hinting at his innate drive and multifaceted talents.

However, Burry made a pivotal decision to pivot from his medical path. After completing three years of residency in neurology at Stanford University Hospital, he chose to dedicate himself entirely to the world of investments.

Despite this shift, he remains connected to his medical roots by maintaining his medical license with the Medical Board of California through continuous education courses.

In his personal life, Burry is a family man. He shares his life with a wife and two adult sons. One of his sons was diagnosed with Asperger’s Syndrome during childhood, which led Burry to realize that he too shares this condition.

This personal journey likely influenced his perspective on various aspects of life and potentially shaped his approach to investments and decision-making.

Beyond his professional and personal life, Burry’s interests are diverse. The portrayal in “The Big Short” film gave a glimpse into his passion for heavy metal music, showcasing his multifaceted personality.

As for his financial stature, according to estimations by Celebrity News Net Worth, Burry’s net worth stands at an impressive $300 million, a testament to his financial acumen and successful ventures in the investment world.

Investing philosophy

Michael Burry stands out as an investor with a unique approach, often described as “obsessive” due to his meticulous strategies that go against the grain of conventional thinking.

He’s known for diverging from the herd mentality, as showcased by his prescient move to short the mortgage bond market for CDOs back in 2007.

This approach, along with his self-identification as a value investor, reflects his commitment to seeking undervalued assets and opportunities where others might not.

His critical stance towards government financial policy, particularly the Federal Reserve, is well-documented. Burry has been vocal about his concerns and criticisms, expressing discontent with the handling of the real estate bubble and the subsequent financial crisis.

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In a 2010 New York Times op-ed titled “I Saw The Crisis Coming. Why Didn’t the Fed?,” he openly questioned the actions of key figures in Washington, accusing them of either willful ignorance or deliberate assistance in fostering the bubble.

His dissatisfaction with the response to the crisis, particularly the taxpayer-financed bailouts, highlights his skepticism towards government interventions.

Burry’s skepticism toward the Federal Reserve’s policies persists, evident in his tweet on April 14, 2022.

In this tweet, he expressed doubts about the Fed’s intentions to combat inflation, foreseeing a scenario where the Fed focuses on reloading its monetary tools rather than actively fighting inflationary pressures.

He anticipated a series of half-point hikes and quantitative tightening, suggesting the Fed’s readiness to intervene only when necessary, prioritizing financial market stability over immediate inflation concerns.

His viewpoints showcase a distinct investment philosophy—one that’s deeply rooted in skepticism, a keen eye for undervalued assets, and a proactive approach in questioning prevailing financial policies and their potential impacts on the market.

Burry’s willingness to voice dissenting opinions and his ability to foresee market shifts have cemented his position as a respected yet contrarian figure in the world of investing.

☞ Who is Michael Burry FAQ

What caused the subprime crisis?

The subprime crisis erupted as a sudden surge in high-risk mortgages defaulted, sparking the Great Recession—an economic downturn rivaling the severity of the Great Depression.

During the mid-2000s housing boom, the combination of this boom and historically low interest rates led numerous lenders to extend home loans to individuals with poor credit.

When the real estate bubble eventually burst, many borrowers found themselves unable to meet payments on these subprime mortgages, triggering a cascading financial crisis.

What’s the story behind ‘The Big Short’ movie?

‘The Big Short’ stands as a 2015 film adaptation of Michael Lewis’s best-selling book.

Directed by Adam McKay, the movie delves into the lives of American financial professionals, including Burry, who foresaw and profited from the buildup and collapse of the housing bubble in 2007 and 2008.

Originally published in 2010, Lewis’s book, ‘The Big Short: Inside the Doomsday Machine,’ serves as a follow-up to his earlier hit, ‘Liar’s Poker,’ recounting his experiences at Salomon Brothers in the 1980s.

Both nonfiction works provide an intricate exploration into the lives, workplaces, and psyche of several Wall Street professionals, offering a vivid portrayal of the financial world.

Scion Capital and Scion Asset Management?

Scion Capital emerged as a hedge fund founded by Burry in 2000, drawing attention for its distinctive investment strategies. However, in 2008, Burry made the decision to shutter Scion Capital, redirecting his focus toward personal investments.

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In 2013, he embarked on a new venture, establishing Scion Asset Management LLC, a private investment firm that he oversees to this day.

The firm’s current assets under management stood at $201 million as of March 2022, as indicated by the company’s SEC filings. This newer endeavor showcases Burry’s ongoing involvement and expertise in the investment landscape.

☞ Final Thoughts

Michael Burry certainly made a name for himself as one of the rare investors who accurately foresaw the subprime mortgage crisis, a significant financial upheaval spanning from 2007 to 2010.

His bold move involved shorting the 2007 mortgage bond market through CDO swaps, a strategy that proved immensely profitable for him.

This prescient maneuver not only set him apart but also redefined his reputation in the financial world, showcasing his astute foresight and unconventional approach to investing.

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Pavlos Written by:

Hey — It’s Pavlos. Just another human sharing my thoughts on all things money. Nothing more, nothing less.