Michael Burry shorts Major index in sizable bets • Hacker News Board

Re: Michael Burry shorts Major index in sizable bets

#61

Post by slashdev » Tue, Aug 15, 2023, 11:23 AM UTC

once_inc wrote: post #60

slashdev wrote: post #36

Earlier quoted context omitted.

He can be wrong on the timing but right on the prediction. I think he could still be right here in 2024. Certainly he was right about inflation peaking. So now is that recession still to come or not?

He was wrong on the timing in 2007 as well. The only reason his short position was vindicated is that he held on despite the protests of his investors. Burry would have been rekt if the collapse had come later.

He’s famously too early, but often right that something was coming.

Timing the markets is pretty much impossible, even for the experts.

Re: Michael Burry shorts Major index in sizable bets

#62

Post by weard_beard » Tue, Aug 15, 2023, 12:34 PM UTC

piva00 wrote: post #59

weard_beard wrote: post #54

Earlier quoted context omitted.

but are the jobs and people who work them that important? that's like, 1/5 of the annual salaries on wallstreet.

Yes, of course it's important, they're people for fucks sake, with lives and salaries for expenses that move the economy. What does it matter it's 1/5 of Wall Street salaries? Even worse, saying they aren't "important" because of how much they earn, I feel disgusted reading this comment...

Perhaps they can eat their many many children…

Re: Michael Burry shorts Major index in sizable bets

#63

Post by xcxcx » Tue, Aug 15, 2023, 1:56 PM UTC

jjoonathan wrote: post #5

xcxcx wrote: post #3

He's not short the index, he's long the puts. Different convexity profile.

I need some ELI5 help here. Does that mean he bet on a big, fast downward move as opposed to a slow, small downward move?

The VIX index, a mean-reverting proxy for risk aversion on the S&P500, is currently relatively low. This makes buying options, both puts or calls, relatively cheap. Usually volatility is negatively correlated to spot price of the underlying instrument (in this case the S&P500), but if the market remains flat and there's a significant spike in volatility, the position can still be P&L positive.

As for the convexity, assuming the puts he's buying are out of the money, his total position increases in $ value as it becomes in the money and vice versa. The opposite is true with an outright short.

Re: Michael Burry shorts Major index in sizable bets

#64

Post by slashdev » Tue, Aug 15, 2023, 2:50 PM UTC

projektfu wrote: post #50

dragonwriter wrote: post #38

Earlier quoted context omitted.

> He can be wrong on the timing but right on the prediction. The prediction, stripped of timing, is nothing. “Someday, there will be a market crash” is almost certainly true, but means nothing.

With options, timing is essential.

Yes. Although short options aren’t reported. People are assuming this is a bet against the markets, when it could even be a bull put spread betting the markets go up or sideways.

Re: Michael Burry shorts Major index in sizable bets

#65

Post by piva00 » Tue, Aug 15, 2023, 3:16 PM UTC

weard_beard wrote: post #62

piva00 wrote: post #59

Earlier quoted context omitted.

Yes, of course it's important, they're people for fucks sake, with lives and salaries for expenses that move the economy. What does it matter it's 1/5 of Wall Street salaries? Even worse, saying they aren't "important" because of how much they earn, I feel disgusted reading this comment...

Perhaps they can eat their many many children…

I really have no idea if you were sarcastic on the previous comment and on this one or if you are just a gaping asshole. Either way it's not really conducive to any discussion.

Re: Michael Burry shorts Major index in sizable bets

#66

Post by gymbeaux » Tue, Aug 15, 2023, 4:26 PM UTC

It’s a crapshoot of course, but I tend to agree with a bear case these days. It takes a while for interest rate changes to completely affect the economy and the Fed is still raising rates. Credit card debt recently crossed $1T. Layoffs are still occurring in the tech industry and elsewhere. My thinking is the Fed will overshoot (as it always has historically) with interest rates and when the economy starts tanking like in 2007/2008 they’ll cut back to 0.00 immediately. By then the damage is done, unemployment shoots up, credit defaults shoot up, foreclosures shoot up, and we probably get some deflation.

Except for retirement savings, I’m almost entirely out of stocks… not so much because I think it’s downhill from here for a while, but more because my high yield savings account is giving me about 5% APY guaranteed.

Re: Michael Burry shorts Major index in sizable bets

#67

Post by gymbeaux » Tue, Aug 15, 2023, 4:29 PM UTC

thefourthchime wrote: post #32

FWIW: Clark Howard, a finance guy I highly regard, predicts that the 4th quarter will see a softening of the economy. His reasoning is that the regional banks are being extremely tight with lending right now, and by the fourth quarter many small/medium businesses will have trouble staying afloat due to the lack of financing.

It’s already well-known that interest rate changes take a while (months? A year?) to effect the economy. It’s also well-known that higher interest rates hurt startups, “pre-revenue” companies, consumer buying power, etc. So to be bearish right now seems like a no-brainer.

Re: Michael Burry shorts Major index in sizable bets

#68

Post by weard_beard » Tue, Aug 15, 2023, 6:28 PM UTC

piva00 wrote: post #65

weard_beard wrote: post #62

Earlier quoted context omitted.

Perhaps they can eat their many many children…

I really have no idea if you were sarcastic on the previous comment and on this one or if you are just a gaping asshole. Either way it's not really conducive to any discussion.

I am DEFINITELY being sarcastic! That last one was the most famous piece of sarcasm ever written, "A modest proposal" by Dr. Jonathan Swift!

I can understand the limits of text to convey subtle meaning but if you're that far removed from culture that you cannot pick up when someone... I am loathe to say "alludes" (more like beats you over the head) to the most famous piece of satire in all of history then maybe you should consider getting off the internet and picking up a book.

Re: Michael Burry shorts Major index in sizable bets

#69

Post by piva00 » Tue, Aug 15, 2023, 7:23 PM UTC

weard_beard wrote: post #68

piva00 wrote: post #65

Earlier quoted context omitted.

I really have no idea if you were sarcastic on the previous comment and on this one or if you are just a gaping asshole. Either way it's not really conducive to any discussion.

I am DEFINITELY being sarcastic! That last one was the most famous piece of sarcasm ever written, "A modest proposal" by Dr. Jonathan Swift! I can understand the limits of text to convey subtle meaning but if you're that far removed from culture that you cannot pick up when someone... I am loathe to say "alludes" (more like beats you over the head) to the most famous piece of satire in all of history then maybe you s…

I'm not English nor Irish (or from any anglo-saxon-adjacent place) to have Jonathan Swift as any important part of my cultural-literary canon, so excuse the ignorance but at the same time fuck you for telling me to "pick up a book" as if I should have known your cultural references :)

(And yes, the "fuck you" is in jest, I'm still astounded [and a bit ashamed] I didn't pick up the sarcasm at first...)

Sorry.

Re: Michael Burry shorts Major index in sizable bets

#70

Post by weard_beard » Fri, Aug 18, 2023, 2:03 PM UTC

piva00 wrote: post #69

weard_beard wrote: post #68

Earlier quoted context omitted.

I am DEFINITELY being sarcastic! That last one was the most famous piece of sarcasm ever written, "A modest proposal" by Dr. Jonathan Swift! I can understand the limits of text to convey subtle meaning but if you're that far removed from culture that you cannot pick up when someone... I am loathe to say "alludes" (more like beats you over the head) to the most famous piece of satire in all of history then maybe you s…

I'm not English nor Irish (or from any anglo-saxon-adjacent place) to have Jonathan Swift as any important part of my cultural-literary canon, so excuse the ignorance but at the same time fuck you for telling me to "pick up a book" as if I should have known your cultural references :) (And yes, the "fuck you" is in jest, I'm still astounded [and a bit ashamed] I didn't pick up the sarcasm at first...) Sorry.

Touché. If you wouldn't mind sharing where you're from and what you consider a good example of satire in your region I will take my own advice :-)