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S&P 500 investors vs. Michael Burry; Who performs better?

S&P 500 investors vs. Michael Burry; Who performs better?

Since famously predicting and profiting from the mortgage market crash in 2008, legendary investor Michael Burry has continued to make bold and unconventional predictions and market bets. 

In August, he made headlines once again by purchasing 40,000 put options worth a nominal $1.6 billion, effectively shorting popular exchange-traded funds (ETFs) SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ).

However, recent history suggests that many of Burry’s forecasts have fallen short. In fact, those who disregarded his stock market warnings and invested in the S&P 500 have seen an average 6-month annualized gain of 34%, according to data shared by market strategist Charlie Bilello on September 11.

S&P 500’s performance after Burry’s bearish calls

The chart below provides insights into the S&P 500’s 6-month annualized surges that came in the wake of Burry’s market warnings. 

S&P 500’s returns after Burry’s bearish calls. Source: Charlie Bilello

The most notable rally came after Burry revealed a “significant bearish market bet” against US stocks in March 2020, after which the S&P 500 staged a 96% 6-month annualized rise.

Similarly, the stock market index’s annualized returns over a 6-month period jumped more than 20% after Burry’s September 2022 warned investors of the “greatest speculative bubble.”  

More recently, the hedge fund manager urged investors to “sell” at the start of 2023. Since then, the S&P 500 saw a 6-month annualized surge of nearly 30%, and a year-to-date rally of around 16%. 

‘He’s been wrong over and over again’

In his interview with Peter Mallouk, CEO of the wealth advisory firm Creative Planning, Bilello commented on Burry’s controversial bearish calls.

“The most dangerous prognosticator is someone who is brilliant and someone who was right before. And Michael Burry hits both of those.” 

– Billelo said in the interview.

Because he is “extremely intelligent” and predicted the way the 2008 crash was going to unfold, the ‘Big Short’ investor has won the investors’ attention in the years to come. But not many of his recent prophecies have materialized.

“He’s been predicting for years, and years, and years that something else is causing a bubble, and everything is gonna collapse. And he’s been wrong over, and over again.”

– he added.

Those who have been following his advice lately have sustained a “train wreck,” Bilello added. Furthermore, investors should not be listening to anyone promoting a strategy of moving in and out of the market because it is too dynamic and unpredictable. Rather, they should focus on the long run, Bilello concluded. 

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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