Michael Burry, the man who predicted the 2008 financial crisis and made a massive fortune in so doing, has gambled on a new slump by the end of the year, against the sunny backdrop of an apparently rallying stock market. He has bet a massive $1.6 billion on another Wall Street crash by the end of this year, 2023.
The Burry bet, against the S&P 500 and Nasdaq 100 stock indices, became clear in new filings with the Securities and Exchange Commission, the American financial regulator.
They show that Burry’s firm, Scion Asset Management, bought $866 million in put options — the right to sell an asset at a fixed price in the future — against a fund that tracks the S&P 500.
The fund also bought $739 million in put options against a fund that tracks the Nasdaq 100. Burry is using more than 90 per cent of his fund’s portfolio to bet on a downturn, according to the filings.
This is an absolutely massive bet and whilst he clearly thinks he knows what he is doing, it is extremely worrying for the rest of us.