Michael Burry, the legendary trader immortalized by Christian Bale in the movie The Big Short, shot to fame when he accurately predicted the 2008 financial crisis and stock market collapse.
He also nailed the 2020 crash, calling out the stock market bubble late last year.
Like most bubbles, the longer it goes on, the worse the crash will be.
Burry joined Twitter a couple of weeks ago. Since then, he’s unleashed a steady stream of angry responses to the government’s coronavirus lockdowns. In one message, he told US citizens to ignore the rules.
Americans must not abide. Government restrictions are doing orders of magnitude more damage to the lives of Americans than COVID could ever have done on its own.
As a former MD with a degree from Vanderbilt University School of Medicine, he has some authority. He says the coronavirus has a low death rate and should be allowed to circulate among the healthy population. Speaking to Bloomberg, he explained:
I would lift stay-at-home orders except for known risk groups… I would let the virus circulate in the population that is not likely to get severe disease from it…. Vaccines are not coming anytime soon, so natural immunity is the only way out for now.
The virus has so far infected 368,000 Americans and killed nearly 11,000. While devastating, Burry claims these figures don’t justify the economic and societal damage inflicted by lockdowns.
The coronavirus and the worldwide lockdowns have wiped trillions off the global stock markets in a matter of weeks. And we’ve seen record levels of unemployment in the U.S., figures that Burry calls “unconscionable.”
But he doesn’t blame the virus. He said this recession is “man-made”
Unconscionable. Let’s put today’s horrific jobless claims in perspective. This is not the virus. This is the response to the virus killing the US and global economy, with all accompanying human tragedy.
He also pointed to sky-rocketing levels of domestic abuse, drug addiction, and suicide under lockdown conditions. And he’s not the only one. Pressure is building to reopen U.S. cities as millions scramble for food banks and unemployment checks.
The investor said he would encourage young, healthy citizens to continue their lives, paying extra attention to washing their hands and interacting with the vulnerable. He would ask high-risk families to stay in their homes. Burry would also give doctors the power to use treatments like chloroquine.
Prudent plan: 1) Standardize on chloroquine and azithromycin – cheap and available 2) Sick and elderly voluntarily shelter in place. 3) Americans lead their normal lives with extra hand washing and special care if around elderly. Saving the economy means life, not murder.
Late last year, Burry cautioned that stocks were on thin ice. In particular, he said, passive investing had inflated an enormous bubble. In other words, investors were hoovering up baskets of index funds rather picking stocks based on their individual value.
This is very much like the bubble in synthetic asset-backed CDOs before the Great Financial Crisis in that price-setting in that market was not done by fundamental security-level analysis.
The coronavirus panic was, of course, the pin that popped Burry’s bubble. A move he reportedly profited from. Burry told Bloomberg he made a trade of “good size” against equities before March’s drop.