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Michael Burry Bets on Estée Lauder as Recession Signal, Dumps Rest of Portfolio
Michael Burry, famed for predicting the 2008 subprime mortgage crisis, has once again caught the attention of investors with a bold move. In the first quarter, Burry’s firm, Scion Asset Management, drastically reduced its holdings—selling nearly everything to focus on a single surprising stock: Estée Lauder.
The decision to invest solely in the cosmetics company has prompted speculation. Many analysts interpret this as a recession warning, pointing to the “lipstick index”—a theory that suggests consumers tend to buy affordable luxuries like makeup during tough economic times.
Instead of investing in high-growth sectors like tech or AI, Burry chose a more unconventional path. According to recent filings, Scion also took out put options against tech heavyweights like Nvidia and major Chinese firms such as Alibaba, JD.com, and Baidu. These moves suggest Burry may be anticipating both a deeper trade conflict and a downturn in AI demand.
By going all-in on Estée Lauder, Burry appears to be banking on the idea that consumers will shift their spending toward low-cost luxury items during an economic slowdown. The "lipstick index" theory—popularized by Leonard Lauder, the company's heir—posits that makeup sales often rise in recessions as people seek small pleasures in place of more expensive indulgences. Though debated and considered unreliable by some economists, the concept continues to resonate in times of financial uncertainty.
This isn't Burry’s first contrarian play of the year. Back in May 2024, he also moved early on gold, investing $10 million via the Sprott Physical Gold Trust, which lets investors own gold without managing the physical asset. That position paid off handsomely as gold surged in value during the ongoing bull run.
With his bets now set on cosmetics and precious metals, Burry seems to be preparing for stormy economic weather ahead.
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