Michael Burry - the man who shorted the US and made over $1 billion 📉💸
In the mid-2000s, Michael Burry, a doctor and self-taught investor, studied the mortgage market in the US. He noticed one thing:
hypothecated bonds (CDO), which everyone considered "reliable," were full of bad credits.
While all of Wall Street was enthusiastically buying these bonds, Burry saw: this was a bubble.
In 2005-2006, he did something that seemed crazy:
— He contacted major banks (Goldman Sachs, Deutsche Bank),
— And created unconventional derivatives (CDS) to short the mortgage market.
— The bet: over $1 billion on behalf of the investors in his hedge fund Scion Capital.
For two years, everyone thought he was crazy. The fund was losing money. Investors were pressuring.
But in 2008, the mortgage system collapsed.
The CDOs became worthless.
Burry made over $1.3 billion for the investors. And about $100 million - for himself.