1 Artificial Intelligence (AI) Growth Stock "Big Short" Investor Michael Burry Is Buying Hand Over Fist
Michael Burry is best known for predicting the subprime mortgage crisis that preceded the Great Recession. Lax lending standards and low interest rates led to a housing boom in the early 2000s, but many subprime borrowers eventually defaulted on their debt and the housing market collapsed in 2008, wiping away trillions of dollars in mortgage-backed securities. That forced many financial institutions into bankruptcy, and fallout from the crisis led to one of the most devastating stock market crashes in history.
Burry famously bet against those subprime mortgage bonds using credit default swaps (CDS), a financial instrument that obligates the CDS seller to compensate the buyer in the event of a default. His prescient investments made him a Wall Street legend. Burry personally pocketed $100 million in profit, while making another $700 million for hedge fund clients. Those events were chronicled by the 2015 film The Big Short, which was based on the best-selling book of the same title.
More than a decade has passed since Burry correctly forecasted the subprime mortgage crisis, but he is just as sharp today. His hedge fund Scion Asset Management soared 160% over the three-year period that ended in the first quarter, crushing the 67% return of the S 500 (SNPINDEX: ^GSPC). That makes Burry an excellent role model for individual investors.
Source Fool.com
