Michael Burry Financial Turmoil
Michael J. Burry, M.D., Sc.D., is an American physician, investor and hedge fund manager who famously predicted the financial turmoil of 2008 in his book The Big Short: Inside the Doomsday Machine (2010). As a result of his foresight and investment acumen, he became one of the most prominent investors of that era.
Burry’s predictions were based on his analysis of subprime mortgage-backed securities (MBS), which he correctly believed to be overvalued due to loose lending practices at major banks such as Goldman Sachs and Bear Stearns during the early 2000s housing boom. During this period, many borrowers had taken out loans with adjustable interest rates that would eventually reset higher than what they could afford; when these mortgages defaulted en masse in late 2007/early 2008 it created a domino effect across other asset classes such as CDOs (collateralized debt obligations) linked to these MBS investments, leading to catalyzed market losses for all involved parties except those smart enough—like Burry—to anticipate them from the start and take protective measures such as shorting stocks or buying put options against certain assets.
In addition to predicting the financial crisis through analysis of MBS values, Michael Burry also saw opportunities in other markets related to commodities such as copper or grains which had been driven up by increased global demand resulting from China’s economic growth throughout 2006–2008; he made several successful bets here too based on his ability to identify trends before others did so. This further cemented him as one of Wall Street’s foremost prognosticators ahead-of-his time investors.
