A lot of people are suggesting that it was immoral of Burry to profit from his insight instead of warning people of the impending calamity, yet what message speaks more forcefully? Saying you think the market is going to implode, vs. paying millions of dollars to insure specifically against that happening?<p>No one would have listened to his warning, and indeed his investors didn't like hearing it. Burry is not the bad guy in this epic catastrophe.
Another superb article from vanity fair. There was another one a week or so ago about a former sniper in Afghanistan.<p>Reading this reminded me of when I read about Jeff Greene about a year ago - another guy who made a mint from the housing/mortgage bubble collapse. See:
<a href="http://www.forbes.com/forbes/2008/1006/266.html" rel="nofollow">http://www.forbes.com/forbes/2008/1006/266.html</a><p>I love these types of stories - an 'outcast' who spots a trend and is either ignored or heavily critised for their point of view, but ultimately proved right and met with a deafening slience.<p>It echoes a now infamous incident that happened in Ireland in 2007, when we were at the height of our own property boom. The then Prime Minister (or Taoiseach) Bertie Ahern, said that "that he did not know how people who engaged in moaning about the economy did not commit suicide".
<a href="http://www.rte.ie/news/2007/0704/economy.html" rel="nofollow">http://www.rte.ie/news/2007/0704/economy.html</a>
Since then, Bertie has left his office in controversial circumstances over alleged corruption, and those who his remarks have been aimed at, such as courageous economists David McWilliams and George Lee, are held up as visionaries who warned about the dangers of excess when everyone else was gorging at the trough. As a result, the Irish taxpayer is to become the single largest owner of real estate in the WORLD, to the tune of €55bn ($75bn), because of the generous nature of the Irish Government bailout of the greedy Irish banks. This is in a country of just 4.5m people, which makes it all the more staggering. The Irish Government has bet the future of our country on the recovery of the Irish real estate market, and the youngest generation currently will end up paying for this stupidity over the next 50 years.<p>p.s. For all those who reckon it's morally wrong to make a fortune from a slump or crash, how is that different from making money in the good times? People are always borrowing foolishly (when the banks allow them to) and get into trouble even when the economy is doing ok. It's just these stories dont receive a mention when the media, along with everyone else, gets caught up reporting how fabulously brilliant we all are when times are good.
One of the best parts of this story is how crude a model can be and yet yield tremendous value. A dozen metrics on the underlying loans of the security and "most ARMs reset in two years" giving 3 years as the window for the market to fully recognize how bad the loans were.
Survivor bias: If I let hell loose on enough monkeys to bet on financial market before the bubble bursted, some of them would eventually "beat the wall street" and "forsee the burst" and earned themselves interviews, book deals and recognition.<p>The monkeys could have a chance to talked about their models then.
I reread the article, it is that good. However, one moment does seem extremely unusual.<p>How does one go from being active on investment forums to securing a few million from very experienced investors.<p>It is one of those one in billion occurences. I am sure Mike Burry would have done alright even without it, but still there must be more to the story.<p>Hopefully, full book goes into more detail.
It's great that this guy has a gift but let's call what he does for what it is: exploitation. Countless pension funds and state budgets are in shambles because of people like him.