In 2023, Michael Burry, the famed investor known for his past successes and bold predictions, had quite an eventful year. From his pessimistic outlook on the stock market and the economy to his strategic investment moves, Burry made headlines once again.
- Doom and Gloom:
Burry began the year by making gloomy forecasts about the economy. He predicted that while inflation had peaked, it wouldn’t be the last peak of this economic cycle. He foresaw a potential dip into negative Consumer Price Index (CPI) territory in the second half of 2023 and even suggested that a recession in the United States was on the horizon. He expected the Federal Reserve to cut interest rates as the government attempted to stimulate the economy. While inflation did decrease from its peak, a recession did not materialize, and interest rates remained stable. - Bank Woes and Bargains:
During the regional-banking crisis in March, Burry commented on the failures of several banks, likening their mistakes to those made during previous financial crises. Despite the chaos, he correctly predicted that the crisis would be short-lived and not a major threat to the broader economy. Burry capitalized on the market uncertainty in the first quarter by buying shares of distressed banks like First Republic and PacWest. He continued to find bargains in the second quarter, expanding his portfolio to include energy, commodity, and shipping stocks such as Coterra Energy and Sibanye Stillwater. In the third quarter, he increased positions in some of these investments but also significantly reduced his overall stock portfolio holdings. - Short Positions:
Burry’s most attention-grabbing moves in 2023 were his short positions. In the second quarter, he purchased bearish put options on ETFs tracking the S&P 500 and Nasdaq-100, amounting to a $1.6 billion bet against these indices. This drew significant attention due to the size of the position and the implied leverage. In the third quarter, Burry closed out his previous short positions and instead purchased put options on 100,000 shares of Blackrock’s iShares Semiconductor ETF, worth $47 million. Despite the high stakes, neither of these bets seemed to pay off as both the S&P 500 and Nasdaq continued to rise, and the microchip ETF reached near-record highs.
Throughout the year, Burry maintained a low profile, refraining from public commentary since April.
However, his followers eagerly await his return to the market scene, as the current investment landscape remains uncertain and they value his colorful, insightful, and often prophetic insights.
Michael Burry’s unique perspective and investment decisions continue to intrigue and captivate the financial world.