Who is Michael Burry? “Eccentric Investor” or “Wall Street Prophet”?

Michael Burry, known as the "eccentric investor" or the "prophet" of Wall Street, whose historic strategies are always a hot topic in the financial world. So who is Michael Burry really? What is your investment method?
Who is Michael Burry?
Michael Burry (Michael James Burry) is an American investor, doctor and founder of the hedge fund Scion Capital. Michael Burry became famous on Wall Street after accurately predicting the 2008 financial crisis and earned about 800 million USD for his short selling decision.
In addition, Michael Burry is also the model in the famous book "The Big Short", later adapted into a movie of the same name. The film won an Oscar for the category "Best Adapted Screenplay", thereby making Michael Burry's name widely known around the world.
Biography of Michael Burry "Defective" childhood Michael Burry was born on June 19, 1971 in San Jose, California and had an incomplete childhood compared to his peers. At the age of two, he faced retinoblastoma and lost his left eye.
Not only that, he also struggled with Asperger's, a form of autism spectrum disorder, and was bullied at school. However, he still tried his best to study and entered the prestigious Vanderbilt University of Medicine. Although pursuing a medical career, Burry possesses a strong passion for finance.
After work, he spends most of his time researching economics and participating in discussion forums. Also during this time, Burry became acquainted with Benjamin Graham's school of value investing* through the book "Security Analysis".
*Value investing: A strategy of buying assets (stocks, bonds, real estate...) that are valued lower than their real value.
Journey to pursue passion
The conflict between passion and career peaked in 2000 when Burry decided to give up medicine to pursue "the calling of his heart".
Michael Burry ventured into the investment industry by borrowing $145,000 while his personal assets were only $40,000. Even though the market is always volatile, he maintains profits from his investment portfolio.
In November 2000, Burry founded the hedge fund Scion Capital using inheritance and loans from family. Compared to that time, his fund was relatively small. Not only that, he only received 25% of the profits from the fund and had to write articles for Microsoft to earn extra income.
After that, Gotham Capital fund and White Mountains insurance company invested about 10 million USD in Scion Capital, helping the fund grow more.
In its second year of operation, Burry's investment strategy brought a gross return of 55%. Meanwhile, the same year profit of S&P 500 companies was -11.88%.
Short selling myth Scion
Capital hedge fund under the leadership of Michael Burry has achieved much success. However, his name only really became famous throughout Wall Street after his decision to "short sell" the housing market in 2008.
In 2005, Michael Burry recognized the dangers in the subprime mortgage market based on a series of signs: banks lending too easily, housing prices and interest rates continuously rising, consumers' excessive optimism about the economy... thereby predicting that the real estate bubble will burst at the end of 2007.
*Subprime mortgage loans: Loans for people with bad credit history or low income.
Michael Burry implemented a short selling strategy by buying Credit Default Swaps (CDS) from two banks, Goldman Sachs and Deutsche Bank. CDS were credit default swaps that helped Burry collect profits from the insurance company if subprime mortgages defaulted.
Initially, Burry's decision was not supported by investors, many people sent emails directly demanding to withdraw capital and sued him in court. However, he used the "side pocket" strategy to refuse the above requests.
*Side pocket: Refers to a fund account, reserved for investments that are illiquid or difficult to value. When an investor wants to withdraw money from the fund, the fund has the right to apply a side pocket to retain the investment.
As a result, in 2008 the US economy collapsed, Burry's prediction came true. He earned $100 million in personal profits and more than $700 million in profits for investors. With his success in deciding to go "upstream" in the market, he became a legend in the financial industry.
However, Michael Burry later decided to close Scion Capital to focus on personal investments.
Reappearing with ups and downs In 2013, Michael Burry returned to the financial market with a new fund called Scion Asset Management and focused on areas such as gold, agricultural land, semiconductors... but did not bring outstanding results.
In August 2023, he opened a short position targeting the SPDR S&P 500 ETF Trust and Nasdaq with a capital of 26.5 million USD. However, he was forced to close his "short position" with an accumulated loss of up to 40% (estimated at about 1.6 billion USD) two months later.
Michael Burry's investment method
Up to now, the investment strategy of "legendary" Michael Burry is still a topic of interest to many people.
According to Michael Burry, the only method he follows is fundamental analysis combined with value investing. Specifically, he focuses on opportunities that are being undervalued by the market. Then re-evaluate by researching business activities, analyzing financial statements...
Michael Burry's investment strategy has proven effective over the years. However, this is a method that requires patience, high independent analysis ability and high discipline.