"the market will stay irrational longer than you can stay solvent"
He's a clever man, and maybe the bubble will burst, and when it does there will inevitably be some hugely profitable short positions held by a new generation of Michael Burrys who will lose capital and reputation taking a premature short position on the subsequent major bubble.
Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
311–320 of 352 posts
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#312Earlier quoted context omitted.
He's not clearly right on Nvidia. People have been saying "it's clearly overvalued" for years now. And it just keeps growing at an insane pace and quite frankly their position in the market isn't really being eroded by anyone. There are hopes and dreams, but little real competition.
How short-term of a thinker do you have to be to consider Nvidia's run a long time? I blame TikTok.
Nvidia has been crushing it for 30 years.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#313Earlier quoted context omitted.
Given how fucked it’s competition is and how the delta between CUDA/NCCL and everything else like rocm/zulda has only grown yeah, Nvidia will own the whole thing for minimum 10 years. Everyone who tried to compete failed hard because no one has the money, and raw talent or ability to get that talent needed to beat Nvidia at the software game.
This game is far from over and I find your prediction almost naive.
Can you provide an alternative prediction that you believe is more accurate?
> This game is far from over
Do you think a company like AMD or Intel is going to make massive gains in taking market share away from Nvidia? Or do you think it will be another company? Or something else entirely?
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#314Earlier quoted context omitted.
This game is far from over and I find your prediction almost naive.
Can you provide an alternative prediction that you believe is more accurate? > This game is far from over Do you think a company like AMD or Intel is going to make massive gains in taking market share away from Nvidia? Or do you think it will be another company? Or something else entirely?
They always say "no, it'll be GOOGLE!" and try to bring up TPUsv6 (you still can't even play with ironwood/TPUv7 yet) as though they're competitive with blackwell let alone Reuben, as though anyone except google internal engineers get real value from them, and as though GCP doesn't have well over 1 million+ haswell/blackwell GPUs.
These same people unironically believe that Gemini was trained with zero GPUs for any part of the process (including all experiments), and it was all done on TPUs. They cite this as evidence that CUDA/Nvidia is dead.
It's stupid, it's wrong, but it's what they claim.
I'm going to be a lot wealthier than the Nvidia bears.
And if you don't believe this, just take one look at TPU pricing (remember, Trillium is TPUv6) and tell me this is competitive with Nvidia/Oracle/any neocloud with a straight face.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#315Earlier quoted context omitted.
Personally I find the reporting of underlying value more useful than the price paid in puts, since it reflects the asset itself rather than an arbitrary price for an option that could be any of many different strikes or expirations. The option price itself is not that meaningful.
> Personally I find the reporting of underlying value more useful than the price paid in puts How so? If I buy TSLA puts at a $10 strike or a $500 strike they show up the exact same on the 13F as both have to be reported as if they are delta 1 when showing a share count. One is a very meaningful bet and one is throwing money away.
That’s exactly correct, which is why I find the actual option price not so relevant. Presumably that’s why it’s also reported in the way that it is.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#316The market will correct before mid-terms next year. This is almost a certainty. By how much and when exactly - now, that's where the shorting profits are. PS. Burry infamously made several more bets after the "big short", bets that misfired. That is, his record is far from being 100% right.
A buddy of mine and I have been watching as investors he follows have been saying the market is going to have a major correction in the next 3-6 months for 3 years now. It definitely seems like the market is due for a major correction, but it sure hasn't happened despite repeated projections. The market can remain irrational longer than you can remain solvent.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#317Earlier quoted context omitted.
Can you provide an alternative prediction that you believe is more accurate? > This game is far from over Do you think a company like AMD or Intel is going to make massive gains in taking market share away from Nvidia? Or do you think it will be another company? Or something else entirely?
They always say "no, it'll be GOOGLE!" and try to bring up TPUsv6 (you still can't even play with ironwood/TPUv7 yet) as though they're competitive with blackwell let alone Reuben, as though anyone except google internal engineers get real value from them, and as though GCP doesn't have well over 1 million+ haswell/blackwell GPUs. These same people unironically believe that Gemini was trained with zero GPUs for any p…
I'd argue the Nvidia moat is the most difficult moat to understand unless one is really in the weeds using GPUs. "all you need to do is design a similar chip" seems to fit in peoples heads nicely when they are even a little ways removed from the details.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#318Earlier quoted context omitted.
Are you actually disagreeing with this? > If you're off, it could still crash and you could spend more money sustaining the position than you'd make. And in Black Scholes this is called Theta Decay. In any form of short, there are maintenance costs, and maintenance costs roughly scale with the risk-free interest rate (usually assumed to be roughly the Federal Reserve's overnight lending rate) Theta Decay is above-and…
> So you must always factor in the amount of time before a predicted crash: the longer it takes the more money you lose. I think the idea is, as a put buyer (market taker), this has already been baked into the option premium. The only "maintenance cost" in the sense of a cost that adds to an open position is from interest on margin loans. There would be a maintenance cost from rolling the position into a later expiry…
Theta changes with time.
If you want to minimize loss of time value, you buy 2 year LEAPs, and then as their 1-year approaches, you sell the LEAPs and roll them back into 2-year LEAPs. Theta rapidly changes as you grow closer to expiration.
No one should be buying and holding just one option. Anyone who understands Black Scholes will be selling/buying and exchanging options as time goes on.
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Buying puts is a bull-bet on Volatility and bear-trade on the underlying stock, while losing Theta (largely based on expectation date. Longer means less Theta decay).
Selling calls is a bear bet on volatility, bear bet on underlying while gaining Theta in value each day.
And then there are the many combination trades that are available.
In any case, I don't think any sophisticated trader does the strategy you are assuming here. The sophisticated strategies involve selling and renewing your options as time moves forward / and or the stock price changes (to keep Delta withing appropriate levels).
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#319I periodically read this ACT post to degauss my brain so I can think about these matters from a fresh perspective: https://www.astralcodexten.com/p/heuristics-that-almost-alwa...
This kind of thing happens with investors... they work their butt off for years, do well, then think it's them rather than the work.
That's sort of Taleb's whole thing: most successful investors just happened to be riding a wave and cannot claim any sort of genius. The Black Swan event is always explained away as some kind of environmental blip and investment success explained as the inevitable outcome of hard work- when in fact it is Black Swans that are inevitable and hard-working investors are just a background constant.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#320His track record since “the big short” has been horrific. That’s the problem with being a perma-bear, eventually the market dips but you missed out on extraordinary gains vastly out weighing your negative thesis. It’s a hellva lot easier to be bullish American companies then try and time draw downs. Doesn’t make any sense.
> His track record since “the big short” has been horrific. You would expect that with low probability, highly leveraged bets, which shorts largely are. You are wrong most of the time and then make a giant pile of money when you are right. People definitely should understand that strategy though and not just follow him blindly into investments without the expectation that you will probably lose your money almost ever…
Yeah I believe this is basically Taleb's investment strategy (or at least, what he seemed to claim in his books)