Michael Burry, the short-selling investor who predicted the 2008 global financial crisis, is reported to have recently bet over 2 trillion won on the decline of the U.S. stock market.
According to the British newspaper The Times and the U.S. CNN broadcast on the 16th (local time), Burry recently invested $1.6 billion (2.15 trillion won) on the U.S. stock market's downturn.
Burry's investment firm, Scion Management, purchased put options worth $866 million (1.16 trillion won) on a fund tracking the Standard & Poor's (S&P) 500 index in the second quarter of this year. It also bought put options worth about $739 million (990 billion won) on a fund following the Nasdaq 100 index.
Put options are rights to sell a specific asset at a predetermined price. Investors buy put options when they expect the asset's price to fall in the future. The Times reported that more than 90% of the funds managed by Burry are betting on a decline in the U.S. stock market.
Burry's short-selling investment draws more attention given that the U.S. stock market has risen this year. The S&P 500 index has risen more than 17% since the beginning of the year, and the Nasdaq Composite index has jumped 30%. Expectations for a soft landing of the U.S. economy are also increasing.
CNN highlighted that Warren Buffett, chairman of Berkshire Hathaway and known as the "investment genius," also made investments anticipating a downturn, similar to Burry. Buffett sold $8 billion (10.7 trillion won) more to the market in the second quarter than he purchased in stocks. The media conveyed the market sentiment that some say Buffett and Burry might know something others do not.
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