Michael Burry is Betting on Financial Armageddon. (He’s Right) #Finance

Michael bur recently sold about $50 million worth of his stock Portfolio this is the same investor who foresaw the collapse of the housing market in 2008 managing to accurately Bet On It earning his hedge fund millions in the process in 2024 Michael bur has been on a

selling spree offloading some of his largest Holdings and suggesting quite an ominous outlook for the US economy now he has replaced these positions with other Holdings but we’ve seen a significant shift and how B is positioned for the future he’s seeing key risks from an investment

standpoint and an economic standpoint that we’re going to cover in this CashNews.co three of his major sales were Amazon alphabet and Oracle these three companies represented around 15% of his Portfolio in 2023 and these companies have done very well since the start of 2023

gaining around 70 to 120% these are classic large cap US tech companies and most US tech companies have been performing quite well over the last year in fact they’ve been performing so well that these large cap tech stocks have reached the highest Valuations in over 20 years

meaning that large cap tech stocks haven’t been this expensive since 2000 a period known as the dotcom bubble that popped in the early 2000s leading to absolutely massive losses for investors that were holding these companies these expensive Valuations may be the reason why

Michael bur decided to sell these three large hold ings US tech stocks now have a PE ratio of 30 that means investors are paying $30 for each dollar that these companies earn for comparison the average stock PE ratio today is around 15 so investors are paying two times more to be the owner of a

tech company rather than the owner of any other us business in fact Michael bur’s own Tech Holdings have seen big Valuation increases oracle’s PE ratio increased from 25 to 38 alphabet’s PE ratio Rose from 19 to 28 they went from reasonable to outright expensive

so it’s possible that bur isn’t becoming outright bearish on us big Tech but he might think that the Valuations have just become too high relative to other things that he can buy for example we’ve seen michaelb go in an absolute buying spree of Chinese tech stocks

in 2024 substantially increasing his Holdings in jd.com Alibaba group and Buu Incorporated altogether he now owns about $23 million of Chinese Tech firms and the main reason for this shift could be how cheap these stocks are relative to us one this is a chart showing exactly that Chinese stocks are

at one of the cheapest levels relative to US stocks in over 15 years there is a huge amount of pessimism on Chinese stocks today that’s reflected in these cheap Valuations bur is betting that this can turn around and if he’s right it could lead to a large outperformance

of Chinese stocks relative to us ones something that we saw between 2016 and 2018 or very briefly in 2020 and 2022 but for this to happen Chinese companies would need to start making more money this is a chart that shows us the earnings of Chinese companies and you can see they’ve been

trending steadily lower since 2018 so that’s six consecutive years of disappointment for Chinese stocks it’s no wonder that these companies are cheaper today than they were in the early 2000s when they’re earning were growing at an extremely rapid pace for Chinese stocks to become

more expensive today we would need to see these Profits begin to turn back up this is clearly something that Michael bur is expecting to be a plausible scenario and we personally do share some of that optimism we initiated a trade on the Chinese ETF mg back in January of 2024 and

we still have an active position on Chinese stocks today but ideally we would want to see this ETF hold above its key moving averages and resume its uptrend quite soon if Chinese stocks break down again it could be a similar setup to what we saw right here in 2023 now michaelb didn’t just buy

Chinese stocks he made one more major addition to his Portfolio that tells us a lot about how pessimistic he’s getting on the US economy around 7% of his Portfolio today is made up of an instrument called Sprout physical gold trust and this gives Michael bu

direct exposure to the price of gold gold is known to be a safe haven asset it keeps or even gains in value during economic uncertainty and Market volatility when we look at the last 100 years of gold’s price action we see four key periods where the price of gold actually Rose in the 1930s in

the 1970s in the early 2000s and in 2020 all of these periods represent key moments when the global economy was in turmoil in the 1930s you had the Great Depression one of the worst Financial crises in history banks failed and unemployment soared as a result gold prices during that period doubled

fast forward to the 1970s the global economy faced extremely high levels of Inflation you had oil shocks multiple recessions and Rising Interest Rates during that period this very difficult economic period was a very good moment to own gold that Rose 15-fold during

that period in the early 2000s you had the tech Bubble Burst you had the housing bubble burst we had the global financial crisis and the European Debt crisis all of these consecutive events led to huge concerns regarding the stability of the financial system and triggered a

Sevenfold increase in the price of gold now the most recent episode was in 2020 and of course we know the covid-19 pandemic immediately triggered a global economic crisis so if Michael bur is increasing his allocation to gold today it probably doesn’t mean he’s feeling optimistic about

the future Michael bu has expressed his concerns about the vulnerability of the economy his concerns about Inflation but it’s only in the first quarter of 2024 where he actually decided to buy gold in an attempt to bet on these things playing out now again we do share the

optimism that Michael bu has on gold we initiated trades on gold miners in late 2023 that are today up around 30% since then gold has broken out above a key long-term resistance with key moving averages pointing upwards suggesting gold is in a very strong uptrend similar to these periods right here

we recently added another stock that we like in the gold mining sector that we think could have significant upside in the event that this bull market on gold does continue