On Monday, it was reported how the American asset managers invested their money for the second quarter. The well-known financial profiler Michael Burry, who bet everything on the financial crash happening in 2008, has now bet big on the US stock market going down.
Michael Burry’s daring venture before the financial crisis in 2008 – and that he was finally right – was filmed in the Hollywood film “The Big Short”.
Shorting the market
In the second quarter, Burry has bet $1.6 billion on the stock market going down, according to his report to the US Securities and Exchange Commission for the second quarter published on Monday.
He has bet $887 million on the broad index of America’s 500 largest companies (S&P 500) going down, and he has bet $739 million on the technology-heavy Nasdaq index going down in value.
To “short the market” or “go short” means that you borrow shares that you do not own, sell the shares, and hope that you can buy them back at a lower price. That way, you can make money if the stock market goes down, and lose money if the market goes up.
It is through the capital management fund Scion that Burry bought blank options in the index funds SPY and QQQ, which follow the development of the US’s largest index S&P 500 and Nasdaq, reports Reuters.