Introduction

Michael Burry, famous for predicting the 2008 subprime mortgage crisis, has now successfully anticipated the recent market correction driven by technology stocks. As the founder of Scion Asset Management, a hedge fund based in California, Burry placed significant bets against the stock market during the second quarter. By the end of June, he owned 20,000 put contracts against SPDR S & P 500 ETF Trust, valued at $886.6 million. Additionally, Scion held puts against 2,000,000 shares of the Invesco QQQ ETF, which tracks the tech-heavy Nasdaq-100 index. These options contracts were valued at $738.8 million at the end of the second quarter. Put options increase in value when the underlying asset decreases in price. With the recent correction in the Nasdaq Composite and S & P 500 indices, Burry’s bets have the potential to yield significant profits.

The Market Correction

This week, the Nasdaq Composite experienced a deeper correction, falling nearly 13% from its record high, following disappointing forecasts from tech company Meta. Similarly, the S & P 500 was 10.2% off its 52-week high. Burry took to X, formerly known as Twitter, to celebrate his victory. In a now-deleted post, he jokingly said, “QQQ makes its official correction… Does that mean they’re going to make another movie about me?” Despite HaberTusba reaching out to Burry for comment, he did not respond immediately. Burry gained fame for accurately predicting the housing bubble and was featured in Michael Lewis’ book “The Big Short” and its subsequent Oscar-winning movie.

Burry’s Market Insights

Over the past two years, Burry has been warning about a potential market bubble, specifically highlighting the risks associated with speculative assets like cryptocurrencies, meme stocks, and SPACs. He has also expressed concerns about the Federal Reserve lagging behind the inflation curve. Despite the 15-year gap since his successful bet against the housing bubble, investors still closely follow Burry’s comments on X, where he has amassed 1.4 million followers. In the second quarter, Burry also made small investments in travel companies Expedia and MGM Resorts, as well as healthcare giants Cigna and CVS Health.