‘The Big Short’ Investor Bets $1.6 Billion on Stock Market Crash

[Thunk]

Michael Burry, The Big Short investor famous for making big bucks by predicting the collapse of the housing market in 2008, just made another huge and risky bet.

According to Security Exchange Commission filings released Monday, Burry placed bearish bets against the S&P 500 and Nasdaq 100 totaling to $1.6 billion—more than 90 percent of his portfolio.

âThe Big Shortâ Investor Bets $1.6 Billion on Stock Market Crash

According to Security Exchange Commission filings, Burry placed bearish bets against the S&P 500 and Nasdaq 100, putting more than 90 percent of his portfolio on the line.

www.thedailybeast.com

 

[DudleySmith]

I read his book; pretty sharp guy. I always respected the short sellers; they need to remove all the restrictions on short selling. All restricting them does is hand a free stop loss to the other gamblers and distort the stock markets even more, effectively just another govt. subsidy. They also need to remove the ridiculous 'limited liability' scam protecting shareholders from their share of the debts and criminal liabilities when the companies they own fail. Limited liability was originally only intended for a very few corporations that did specific functions, like public transportation, not for any moron who had the money to incorporate. Of course all the right wing 'free market' frauds will snivel no end if that were to happen, since far fewer people would gamble and prices would fall to realistic levels. They don't actually want 'free markets' for their pet scams.

 

[odanny]

Cool.

 

[Flopper]

Michael Burry, The Big Short investor famous for making big bucks by predicting the collapse of the housing market in 2008, just made another huge and risky bet.

According to Security Exchange Commission filings released Monday, Burry placed bearish bets against the S&P 500 and Nasdaq 100 totaling to $1.6 billion—more than 90 percent of his portfolio.

âThe Big Shortâ Investor Bets $1.6 Billion on Stock Market Crash

According to Security Exchange Commission filings, Burry placed bearish bets against the S&P 500 and Nasdaq 100, putting more than 90 percent of his portfolio on the line.

www.thedailybeast.com

Shorting the market is very risky. For one thing the market goes up more than it goes down. The upward bias in the market and the fact that the market tend to drop much faster than they rise makes timing the covering of the short difficult. Also, shorts create overhanging stock that is shares that will have to bought back which creates buying power. Lastly, there is a finite limit on how much you make make in a short sale where there is no limit on profits from buying..

 

[Flopper]

Michael Burry, The Big Short investor famous for making big bucks by predicting the collapse of the housing market in 2008, just made another huge and risky bet.

According to Security Exchange Commission filings released Monday, Burry placed bearish bets against the S&P 500 and Nasdaq 100 totaling to $1.6 billion—more than 90 percent of his portfolio.

âThe Big Shortâ Investor Bets $1.6 Billion on Stock Market Crash

According to Security Exchange Commission filings, Burry placed bearish bets against the S&P 500 and Nasdaq 100, putting more than 90 percent of his portfolio on the line.

www.thedailybeast.com

Nobody seems to remember all of those that shorted the market and lost their ass but they certainly remembers the one that made a killing calling it right, which is mostly pure luck. I suspect the reason is no one who makes the big successful call is shy about spreading the word and those who call it wrong tend to hide under a rock.

 

[Toro]

I would never give that guy money.

It’s one thing to make a big bet. It’s quite another to bet literally everything.

There’s a saying - Bulls make money, bears make money, pigs get slaughtered

 

[Mac1958]

He bought a shit-ton of put options on both SPY and QQQ (his 13f is below).

I don't know what strike prices he bought, so it's tough to say what he's actually thinking.

SCION ASSET MANAGEMENT, LLC Top 13F Holdings - WhaleWisdom.com

Detailed Profile of SCION ASSET MANAGEMENT, LLC portfolio of holdings. SEC Filings include 13F quarterly reports, 13D/G events and more.

whalewisdom.com

 

[Flopper]

He bought a shit-ton of put options on both SPY and QQQ (his 13f is below).

I don't know what strike prices he bought, so it's tough to say what he's actually thinking.

SCION ASSET MANAGEMENT, LLC Top 13F Holdings - WhaleWisdom.com

Detailed Profile of SCION ASSET MANAGEMENT, LLC portfolio of holdings. SEC Filings include 13F quarterly reports, 13D/G events and more.

whalewisdom.com

Back when I was wild and craze in the late 60s and 70's, I got hooked on the idea of trading stocks as the way to make the big bucks. Over a few years, I studied the bar charts, point & figure charts and, volume charts. I read the Journal daily. I subscribed to various soothsayers who advertised in Barron's. I traded stocks daily holding a day or so up to a few months. After 4 years I calculated my returns after taxes and found I was making money but only half what I would made if I had just invested in the Dow stocks and forgot about it.

My biggest loses were in shorts. My biggest profits came from a few stocks I held 6 mos. or longer. This is when I became a real long term investor which was the smartest thing I ever did. I gave up the idea of playing the market for investing. I still play but I do so in Vegas.

 

[Mac1958]

Back when I was wild and craze in the late 60s and 70's, I got hooked on the idea of trading stocks as the way to make the big bucks. Over a few years, I studied the bar charts, point & figure charts and, volume charts. I read the Journal daily. I subscribed to various soothsayers who advertised in Barron's. I traded stocks daily holding a day or so up to a few months. After 4 years I calculated my returns after taxes and found I was making money but only half what I would made if I had just invested in the Dow stocks and forgot about it.

My biggest loses were in shorts. My biggest profits came from a few stocks I held 6 mos. or longer. This is when I became a real long term investor which was the smartest thing I ever did. I gave up the idea of playing the market for investing. I still play but I do so in Vegas.

Options are good for hedging risk and generating income (I'm a retired advisor and I'm selling covered calls and analyzing stocks every day for myself because I freakin' love it), but a VAST majority of the regular public don't have the resources or cash to beat the market with them.

And unfortunately, and to no surprise, there's a million hucksters out there pushing programs promising to help them.

You were smart to compare your returns to those of the market. A lot of people don't think to do that, and just keep flailing, or worse.

 

[luiza]

Michael Burry, The Big Short investor famous for making big bucks by predicting the collapse of the housing market in 2008, just made another huge and risky bet.

According to Security Exchange Commission filings released Monday, Burry placed bearish bets against the S&P 500 and Nasdaq 100 totaling to $1.6 billion—more than 90 percent of his portfolio.

In my not so secret BlackBook this bet is a certainty to succeed .Because of short term volatility I prefer not to bet in the present market but await the crash to then bet on the smashed debris after we have bottomed . I am then a Commodities woman as selected prices will hit the stars .As many of us have thought for years , this will be Depression that will dwarf the one of nearly a hundred years ago . That bad .

 

[DudleySmith]

Corporate welfare and govt. bailouts favor propping up Wall Street since the early 1960's, which is part of the reason financial capitalism has replaced productive industrial capitalism with rent seeking and parasitism. Chain stores, conglomeration, and monopolies have pretty killed real competition and small and medium sized business in the U.S., another reason the middle class is dying off and upward mobility is stagnant.

The current reliance on 401K's is concerning as well; the same people who keep claiming Social Security is a Ponzi scheme are peddling this scam no end, never mind all the bailouts and welfare bills needed to keep stocks 'viable'.

 

[Mac1958]

By the way, looking at the 13f again, that $1.6 billion isn't actual cash, it's the notional value of the stocks he WOULD be moving IF both QQQ and SPY dropped to whatever strike prices his puts are based on.

So this move was a sliver of the overall value of his portfolio. A hedge.

Not nearly as big a deal as the headlines are making it. And we don't know what the strike prices are.

 

[percysunshine]

Someone always has the other side of the bet. Not much press about who took the equal long position.

 

[Flopper]

In my not so secret BlackBook this bet is a certainty to succeed .Because of short term volatility I prefer not to bet in the present market but await the crash to then bet on the smashed debris after we have bottomed . I am then a Commodities woman as selected prices will hit the stars .As many of us have thought for years , this will be Depression that will dwarf the one of nearly a hundred years ago . That bad .

Since 1950, there has been only 6 stock market crashes. However, there have 36 double digit corrections. IMHO, chasing the bottom is a fools errand particularly if you waiting for a market crash. Bottoms are only clear well after the market has risen. I have been successful in the great recession and several recessions buying the market down; that is dollar cost averaging. In most of our recessions there are several downtrends and up trends so picking the the bottom can be very difficult and you can easally miss the whole thing and find yourself buying after most of the recovery.

 

[Flopper]

Someone always has the other side of the bet. Not much press about who took the equal long position.

Short sales are only 4% to 9% of all sales so there are always plenty of people buying those shorts. The vast amount of buying and selling by mutual funds and institutions guarantees a very liquid market.

 

[Toddsterpatriot]

Michael Burry, The Big Short investor famous for making big bucks by predicting the collapse of the housing market in 2008, just made another huge and risky bet.

According to Security Exchange Commission filings released Monday, Burry placed bearish bets against the S&P 500 and Nasdaq 100 totaling to $1.6 billion—more than 90 percent of his portfolio.

âThe Big Shortâ Investor Bets $1.6 Billion on Stock Market Crash

According to Security Exchange Commission filings, Burry placed bearish bets against the S&P 500 and Nasdaq 100, putting more than 90 percent of his portfolio on the line.

www.thedailybeast.com

He looks a little shifty.

 

[Toddsterpatriot]

Shorting the market is very risky. For one thing the market goes up more than it goes down. The upward bias in the market and the fact that the market tend to drop much faster than they rise makes timing the covering of the short difficult. Also, shorts create overhanging stock that is shares that will have to bought back which creates buying power. Lastly, there is a finite limit on how much you make make in a short sale where there is no limit on profits from buying..

I knew a guy who shorted more shares than existed of a stock.
Made a bunch of money.

 

[Toddsterpatriot]

By the way, looking at the 13f again, that $1.6 billion isn't actual cash, it's the notional value of the stocks he WOULD be moving IF both QQQ and SPY dropped to whatever strike prices his puts are based on.

So this move was a sliver of the overall value of his portfolio. A hedge.

Not nearly as big a deal as the headlines are making it. And we don't know what the strike prices are.

Good catch. He didn't buy 2,000,000 puts on each, he bought 20,000 puts.

It looks like they multiplied 2,000,000 by the June 30 closing price of QQQ and SPY, not the strike.

 

[Flopper]

I knew a guy who shorted more shares than existed of a stock.
Made a bunch of money.

As long he never has to cover the short, no probably.

 

[BackAgain]

Michael Burry, The Big Short investor famous for making big bucks by predicting the collapse of the housing market in 2008, just made another huge and risky bet.

According to Security Exchange Commission filings released Monday, Burry placed bearish bets against the S&P 500 and Nasdaq 100 totaling to $1.6 billion—more than 90 percent of his portfolio.

âThe Big Shortâ Investor Bets $1.6 Billion on Stock Market Crash

According to Security Exchange Commission filings, Burry placed bearish bets against the S&P 500 and Nasdaq 100, putting more than 90 percent of his portfolio on the line.

www.thedailybeast.com

It could crash. It might not.

90% of his wealth on basically one big ass bet?

Ok.