- Michael Burry has been warning of mass speculation, excessive stimulus, and a looming crash.
- “The Big Short” investor expressed many of the same concerns in a 2010 interview.
- Burry also reflected on the start of his career and his bet against the housing bubble.
Michael Burry has been sounding the alarm on rampant speculation in markets, runaway government spending, and investors’ failure to learn from past bubbles and crashes. He raised similar concerns in a Bloomberg interview in 2010.
The Scion Asset Management boss also discussed his iconic bet against the mid-2000s housing bubble, which was immortalized in the book and the movie “The Big Short.” Moreover, he explained what drew him to investing, touched on Warren Buffett’s influence on his career, and foreshadowed the GameStop investment that sparked the meme-stock craze this year.
Here are Burry’s 14 best quotes from the interview, lightly edited and condensed for clarity:
1. “I had some social challenges when I was younger. I was very attracted to being a rock star, an athlete, or something like a money manager. The reason being that they’re performance-based. Sports, it doesn’t matter how nice a guy you are. It doesn’t matter how you groom your hair. If you perform, that’s all you need to do. From a young age, I was pretty interested in the whole idea of meritocracy, and people being ranked according to their effort and talents. Running money was something where I could put the effort in and do it.”
2. “I’ve had these interests that have been very intense in my life. The two interests that are really intense being music and the markets. And every once in a while there’s something else that will catch my fancy for a little bit, but it always comes back to those two things.”
3. “My natural state is an outsider, and no matter what group I’m in or where I am, I’ve always felt like I’m outside the group, and I’ve always been analyzing the group.” – reflecting on his diagnosis of the dot-com and housing bubbles.
4. “I’m in this book, ‘The Big Short,’ but I’m not a big short. I don’t go out looking for good shorts. I’m spending my time looking for good longs. I shorted mortgages because I had to. Every bit of logic I had led me to this trade, and I had to do it.”
5. “Home-price appreciation was built into the mortgage market. Once home prices were no longer going up, the credit would start to be pulled away, and home prices would start to fall. That’s what I saw in 2005, and that’s why I made it the largest investment of my life.”
6. “My number one concern is there’s been a total abdication of personal responsibility throughout our entire society. I don’t think that anyone anywhere is taking blame themselves for what they did to contribute to the crisis. The most damaging thing we can do as a country is to blame a narrow set of people, and not look within ourselves for what each of us did or didn’t do that led to this mess.”
7. “I’m 100% sure that the economic policies and theories that got us into this mess won’t prevent the next mess from happening. By not learning the lessons we needed to learn, we’re essentially dooming ourselves to making the same mistakes. It’s that simple.”
8. “All those bailouts, all the stimulus, all this money we’re printing – this isn’t hitting us yet. It’s like we’re a teenager and we’ve got depression, and our parents have given us a credit card and said, ‘Go cure your depression.’ It’s not being made clear that we have to pay this back at some point.”
9. “It’s a giant gamble to leverage our future and our kids’ future and their kids’ futures to try to get out of this. It’s very difficult to predict exactly which way it’s going to go, but I don’t think it’s a good gamble.”
10. “We’ve become a nation of bubbleheads. We’ve just had this huge bubble burst, and now everybody has got their ideas on what the next bubble is and what’s going to blow up next. It’s not hard to say there’s a bubble; the tough part is predicting when it will burst.”
11.”I want an investment thesis that I haven’t heard about or seen. I’m looking for an original thesis.” – Burry eventually found that original thesis in GameStop. He invested in the video-game retailer in 2019, and wrote several letters to its directors urging them to buy back more than 80% of GameStop’s outstanding shares.
12. “I’m very interested in smaller tech companies. I’m interested in companies with a secular growth profile, or a secular history that is generally not dependent on what the government does. I’m looking for good products, good management, good market position, competitive dynamics.”
13. “There’s only one Warren Buffett. There’s no point in even trying to be like Buffett.” – Burry said the Berkshire Hathaway chief inspired him to become a money manager, and that he patterned his early career after Buffett.
14. “Wall Street always thinks stocks are cheap. I’d hate to live in New York and hear that 10 times a day.”