The Big Short

Just saw the movie. A bit late but it’s a great movie. Hard to believe but it’s been 10 years since the housing bubble burst. Highly recommended.

The biggest impression it left on me is never go short. Even if you are tremendously right like Braum and Burry you will still suffer greatly in the process when the whole world is running against your position.

It just dawns on me that professional funds are very pro cyclical, just like margins. Because it’s not fun to be short, most funds choose the safe route and buy what other funds are buying. People call them smart money but they are really not that smart.

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Michael Burry was from San Jose and lives in Saratoga now. Net worth 300M.

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Have you watched Glengarry Glen Ross then in the spirit of RE?

Going short is insanely expensive with the interest you pay. Options are better, but there was no way to do what they did with options. Also, if you’re a multi billion dollar hedge fund you can’t put big money to work on out options. They’d totally distort market pricing. They have to borrow shares and go short. It seems insane since you have to be really right to make money after interest. It’s like buying options 10-20% OOM.

No. What’s that?

What? You’ve seen Seinfeld but not Glengarry Glen Ross?? It’s a 90s movie about crooked realtors.

Michael worked as an computer engr intern while was in college. He asked me about tax laws and TDSP mutual funds % returns around the age of 20 or 21. At that age most boys were only interested in girls, cars and sports. He was very different and inquisitive. Most people could not answer the kind of questions he asked. I thought he became a coroner doing autopsy. I then heard he was in Hedge Fund business and I did not get connected. He married a Chinese girl from SF. I think his younger brother is more social playing baseball but it might be him. Investment is something that takes some luck. Some just happens to be the only person who did something at the right time. The contrarian often took calculated risk and gained more.

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One also needs to crazy enough to do opposite of what people do to get ahead. A lady told me she went out bought several 100 s of Amzn end of last year. I thought price was too high. Guess what? She is making out like a bandit on the paper.

Burry now lives in Saratoga. From the movie he’s sort of socially inept. He’s smart that he knows when to call it quits. He walked out right at the top of his career.

I guess he’s saying stocks that are in super popular indexes (eg SPY, Russell 2000) are over valued relative to stocks that aren’t. They do all go down together in sell-off days, since people sell the index.

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Big Short’s Michael Burry Reveals His Picks of Undervalued Japanese Companies

Past performance is no guarantee for future results.