January 26, 2022

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The Big Short (2015) - Dr. Michael Burry Closes Scion Capital (Final Letter to Investors)

"The Big Short" is one of my favourite financial markets genre movie. It tells the story of Dr. Michael Burry who was one of the few and earliest fund manager who foresaw the toxic assets of subprime mortgage 2 years ahead of everyone else. He also foresaw the eventual collapse of the property market which led to the 2008 Financial Crisis dubbed "The Great Recession". Most people would know him from the movie as he was relatively obscure prior to the meltdown of the markets.
However, looking back at his outstanding investment track record, he is a true fundamentalist and value investor who subscribed to Benjamin Graham's investment philosophies. Despite so, when he was taking the position to short the market via credit default swaps (a form of derivative which insures against the toxic subprime mortgage assets packaged together by investment banks and sold to investors), his clients started to lose faith in him. This was especially given the entire market was bullish on property and these toxic financial assets. He was a contrarian and he went the other way. He was very much detached from the investment community as a whole. He was alone. Ultimately, he was right. It took awhile to get there, but eventually he did. When times are confusing or challenging, I would always remind myself with inspirations from legends like him. Enjoy the video.
“Winning can mature you, losing can age you”.
Investing in a stock market today may seem like a simple act of inputting numbers online, but the reality is that it does take a toll on you emotionally and psychologically. An investor must be prepared mentally before embarking on this journey as it requires effort, commitment and diligence. The onus is on you to protect your own investment and capital. If you are not prepared to do so, you face the risk of a complete loss of your capital. One is better off leaving the money in fixed deposit or with professional fund managers than to throw away your hard earned money.

Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 10, Page 117
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Last modified on Wednesday, 22 September 2021 07:50

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This  information should not and cannot be construed as or relied on and (for  all intents and purposes) does not constitute financial, investment or  any other form of advice. Any investment involves the taking of  substantial risks, including (but not limited to) complete loss of  capital. Every investor has different strategies, risk tolerances and  time frames. You are advised to perform your own independent checks,  research or study; and you should contact a licensed professional before  making any investment decisions.

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