Michael Burry's $1.6 Billion Short Bet Against the Market? Why everyone is WRONG about it

Everyone is confused about Michael Burry's "$1.6 Billion Bet" against the stock market.
In today's video, we dive deep into the recent buzz surrounding Michael Burry's alleged $1.6 billion short bet against the market, representing 93% of his hedge fund’s value. But there is more to this story than meets the eye. Join me, a former stockbroker and a consultant to the wealth management industry, as I break down the intricacies of this financial move and the misinterpretations flying around. Let's separate fact from fiction and understand what these numbers truly represent.
🔗 Key Points:
-What a Form 13F reveals and its significance.
-The true meaning behind notional value in options.
-Decoding the real risks Burry might be taking.
-The potential gaps in 13F filings.
Remember, always be cautious about where you get your financial advice from!
🔔 Subscribe for more investing insights, breakdowns, and expert financial advice. Don't forget to hit the Like button if you found this video valuable.
#MichaelBurry #ShortBet #FinancialAnalysis #StockMarket #OptionsTrading #13F #InvestingInsights #Misinformation
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[@Matlockization]

Thank you for being transparent. Once upon a time the media did this, however now they no longer do.

[@DJVARAO]

Nicely explained! If journalists make a sincere effort to truly understand how the market operates, we could significantly reduce the influx of uninformed investments.

[@PreetBanerjee]

Yes, I’ve seen so many legitimate outlets get this wrong. But the reporting rules are also not helping.

[@adrianpc1369]

Then what is the point of Wall Street , they need suckers

[@Jason-mz8xw]

? I didn't get the deep dive from mainstream media, but they did state this doesn't mean he's short a massive amount and heeded investors to not make bets based on these puts.

[@PreetBanerjee]

@@Jason-mz8xw There were some outlets (like Bloomberg and The Wall Street Journal) that reported it correctly from the outset. But there were other mainstream outlets that got it wrong and sensationalized it, I think.

[@tonytonitza]

It is not about putting in the effort, it's about getting traffic. For a media outlet, this type of scaremongering creates traffic and makes them money. The nice part for them is that they can always protect their ass saying they looked at the fillings and their math is right haha

[@andrewpetre6352]

Grateful for this explanation. I had no reason to doubt all those people misreading the form, and I just lucked onto your video.

[@PreetBanerjee]

Glad it was helpful!

[@alexwong8851]

Great overview! It would be great if you can do more updates and explanations about what's happening in the market

[@PreetBanerjee]

Thanks, Alex!

[@jeffreysebern4693]

Preet!!! Man, where have you been? I know you havent gone anywhere. However, this is the first time I have received a notification and I have the settings set to receive all notifications.

[@PreetBanerjee]

Yeah, I think the notifications and bell feature doesn't always work. Glad you're still here! (Glad I'm still here, too lol)

[@thedankest1974]

Hey, this is great content. You need to upload in this format more regularly.

[@PreetBanerjee]

Agreed. I should slowly be able to ramp up going forward. I had a lot of big projects and an overseas move recently, but I have a more freed up schedule going forward. Thanks for watching and for the encouragement!

[@gauthamvijayan]

Wonderful explanation about notional value! Thanks a lot. Please upload videos regularly.

[@PreetBanerjee]

I will try my best.

[@unlimitedcosmicspeed]

I like your content, delivery and format. Thank you, subbed!

[@PreetBanerjee]

Thank you very much! I appreciate the encouragement 😊

[@Baltazar009]

Saw many videos about this topic where everyone is just repeating what someone other said about Burry selling almost whole portfolio. You are only one actualy taking time and look at it further and explain it. Thanks. This one example nicely cleared for me who i can listen on youtube and who have no idea what he is talking about. Subscribed.

[@PreetBanerjee]

Thank you - I appreciate that!

[@VictorPanainte]

Great info, big big thanks. More details please on different subjects 🙏 like

[@love2huntbooks2]

Great explanation and honestly, thank you for being a rational voice in the sensationalized ecosystem of KZbin/Media in general. You earned a subscriber.

[@PreetBanerjee]

Thank you very much - I appreciate that!

[@littleninjai222]

Nice new podcast digs, Preet! Does this mean more regular vlogs like Mostly Money podcasts? Bring back the Scotch! ;) Thanks for another great video.

[@PreetBanerjee]

Thanks! I think I’m done podcasting for a while but I’ll try to increase the video production 😊

[@blizzard762]

Great explanation. Burry has also made many market predictions that ended up being completely wrong and would have lost his followers a lot of money had they taken his trades. Even his housing crash prediction came several years too early, and his fund was painfully short squeezed before finally being vindicated.

[@PreetBanerjee]

"Too early Burry" and "Burry has predicted 72 of the last 5 crashes" are things I see often on socials.

[@smokelord2002]

Idk if it's that his housing bet was early, it's that it was riddled with fraud that prolonged it.

[@parkerbohnn]

I'd rather take Bury's advice than yours.

[@user-vr6hp8eo7d]

Exactly...the market will crash and come below today's level No matter it may take a bit of time....its ok...sure shot theory

[@wayward03]

​@user-vr6hp8eo7d timing is very important though for making money off it. It's pretty obvious that a lot of things are in a bubble. The question is whether assets will go down or the dollar will go down more, and when.

[@user-mw8ch3jt9x]

Nicely explained! A video worth the time viewed.

[@parkerbohnn]

I'd be short the U.S. stock market for life. I tell my grandson when he's my age the DOW will be coming back up to the 10,000 level.

[@user-ir3tv3qk3l]

Your explanation was very informative. Thank you for your kind explanation. Nevertheless, is it true that the situation in the United States is dangerous now? (Real estate vacancy rate, international crisis, consumption habits, etc.) In Big Short, brothers say it's a once-in-a-lifetime deal, so I don't think a huge economic crisis will come easily. It's very difficult to predict, but I'm curious about the situation in a year or two. (It's no secret that sqqq is a big part of my portfolio.)

[@PreetBanerjee]

It certainly *feels* like a lot of warning signs exist, but they also did since before the pandemic. What I know is that a downturn will come again because they always do, but I just don’t know when. Time and money spent hedging waiting for a crash is a big enough drag to offset the gains from being positioned to profit from drops over time. The problem with market timing is not only do you have to be right in the timing to get out, you then have to be right on the timing to get back in. Historically people are bad at calling either. For me, I prefer to just focus on building a long term portfolio that takes into account that there will be bad times to weather from time to time and sometimes they can get really bad but holding on for the long term always worked out in the end.

[@rohitbhatnagar7599]

Thanks for the clarification !!

[@bannistervoid]

Good stuff. Options are confusing for most people.

[@abdulmuti1]

Very nice explanation, It is crazy how big news channels just spend it way way out of proportion Thank you for the explanation

[@PreetBanerjee]

Thank you!

[@AlbinoCordeiroJunior]

Thank you, that makes a lot of sense.

[@Amir-jn5mo]

Amazingly informative video. I find it weird that they report the nominal value of the shares in the portfolio which results in such crazy misunderstandings like this one to begin with :/

[@PreetBanerjee]

I totally agree!

[@zeshanfarooqui1]

Wow. It’s sad the news agencies did not report this.

[@PreetBanerjee]

Agreed. The reporting may easily have led to panic selling by some investors. I hope clarifications or retractions are forthcoming.

[@supaflyutubeguy]

Great video, thanks Preet!

[@PreetBanerjee]

Glad you liked it!

[@omarghosn8655]

I have bought and sold some puts and understand their purpose and even I was taken by the sensational headlines...so this was very helpful to bring us back to reality :) Instead of him putting stop losses which would force the sell and liquidate his positions, he buys the puts and can gauge what the market is doing...if the underlying goes down moderately he can sell the puts for profit, if the market crashes he makes a killing and is sitting on alot of cash at the lows.

[@Cococokieful]

Michael burry would have lost money if his option expires yesterday. Lol all these "famed bears" are almost always wrong.

[@kevinzhu72]

Very informative video! This is the clearest explanation for the subject that I have seen.

[@PreetBanerjee]

Thank you - I appreciate it!

[@terencejamesmusic4126]

Thank you-that's a big difference.

[@nickbryantfyi]

just seeing this video is so refreshing preet. we need more experienced professionals like you providing educational content on the internet - not a bunch of 20 somethings hot takes.

[@PreetBanerjee]

Thank you, Nick! I truly appreciate your comment. Seeing a lot of questionable content out there motivates me to make more videos.

[@mcribprime6594]

What do you think of WBD stock at the moment?

[@PreetBanerjee]

I'm not really an advocate of picking individual stocks, nor analyzing them. So unfortunately I cannot answer your question. Sorry!

[@whatsup7184]

Holy S The overall video didn't display that Bobble Boy's intake position record/ expire date and his time frame and exist price at where yet...

[@BillyO8828]

Hahaha....Preet is the man! Exposing the HYPE in the blogosphere! I was sitting and watching all of these KZbinrs blogging how Burry was massively shorting the market. I retorted a couple of sacastic remarks stating that these bloggers had to no real idea what the big boys are doing behind the scene. I was saying that based on past experiences. I've done 20x better for myself, by just using the moving averages on a 1 or 2 hour timeframe, and just using the indicators as a guideline...not as a hard fast rule. Another proven method is using dollar cost averaging. For me, the least reliable method is to try to follow celebrity investors. Great video Preet!!!

[@priortokaraew7569]

Why short before the charts tell you to, generally speaking? Given that these options can expire much sooner than the market eventually heading in the direction you bet it would. Or do they have special types of options in the US via which one doesn't have to worry that they might expire worthless? Shorting with leaps can require a heavy outlay. Does anyone know what expiry time frames the options burry uses have?

[@PreetBanerjee]

Many people close out their positions before options expire, and it's also possible to sell those options for a gain before expiry even if the underlying securities don't hit the strike prices, but all that being said: shorting before some kind of technical signal would suggest a fall in prices is done because the option would jump in value upon the market also seeing those signals. So if you waited for a well-known indicator of a fall in value, then the price of the option will have jumped up before you could buy it (at a more favourable price).

[@PreetBanerjee]

Also: no one would know the expiry dates of Burry's option holdings as he is not required to disclose them (and it's very unlikely that he would voluntarily disclose them to the public.)

[@priortokaraew7569]

@@PreetBanerjee OK. Going by this, he's hustling strikes and expiries like the rest of us then. Probably taking on options a month or three out and rolling them over. Most likely three to not have any major adverse impact on budgeted outlays. Also, I'm not aware of any indicator that tells one in advance that the market is heading down before a big candle makes that move. I was presuming, maybe suggesting, he could be able to rely on reliable price action technical analysis and bespoke indicators that could catch these moves rather than base it on economic factors, while the charts show none of it for example.

[@PreetBanerjee]

@@priortokaraew7569 Gotcha. If there were any reliable technical analysis signals, given the explosion in algorithmic trading, option prices would respond too fast to capitalize on. It might be more likely that he has a rolling short because he's just expecting a decline at some point and wants to be hedged right now (and maybe make a more concentrated bet later) if and when those signals change, but doesn't want to allocate a large position because the risk of the market being "irrational" for lengthy periods of time would consume the cost of hedging (just like in the movie 😊 )

[@priortokaraew7569]

@@PreetBanerjee you're right given that the markets punish those traders that don't understand it but want to make money off of it, and rewards those that do, when it swings. the latter are often preemptively saddled up. however, they don't saddle up unless it's begun, way before any indicator can catch it. I just presumed that someone at a level of the billions like burry might use this approach which to my mind is efficient, optimal. one might dare presume, that he doesn't believe in price action charts, or rather surprisingly, not have access to the views of the charts from within his team that can tell him when in fact it begins, instead waiting for the theories of economics and their hard numbers to play out at some point in time. that's a lot of stress in waiting.

[@kurtwendler2067]

Thanks for this because I was getting more and more upset about this Burry thing.

[@keithloebbecke1981]

Thank you Sir!

[@user-ih8pw2ns9e]

Nice work!

[@sohaibarif2449]

Finally, Someone not spreading FUD about Crash 😂😂😂 Good info and agreed. 13F filling doesn't mean anything.

[@PreetBanerjee]

Thanks!

[@balintszabo7111]

Good clarification!

[@PreetBanerjee]

Thank you - and thank you for watching 😊

[@n_x1891]

What’s the legal reason for notionals

[@PreetBanerjee]

I’m not sure but I were to guess I think it would have been some attempt at a middle ground between getting funds to disclose their holdings and funds arguing that they shouldn’t have to disclose everything because sharing that information would affect their ability to profit.

[@thedankest1974]

One thing I don’t understand about put options is, why on earth would someone buy the stock you have the right to sell at a more expensive price, if they can buy it at market for cheaper?

[@PreetBanerjee]

Great question. Here is a simplified explanation: When someone buys a put option, they buy it from someone who sold that put option. So that person who sold it (the put writer) took the premium hoping that the buyer never exercises it, and the buyer hopes that the underlying stock goes down so that the put option become valuable (they can either sell the put option for a profit or exercise it). The reason they call it a put option is because you can "put the stock" to the writer who is obligated to buy it as per the contract. (A call option is called a call option because you can "call the stock away" from the call option writer who is obligated to sell it to you.)

[@thedankest1974]

Thanks for your response, starting to make sense. A couple of follow up questions. “That person who sold it” This implies they also bought it from some other person? Where do these options originate from? Does the writer of the option need to hold the amount of shares described in the contract? How are these types of investment tools provisioned, regulated, and managed? I’ve always been skeptical about options since they feel more contrived than stocks.

[@PreetBanerjee]

The original person who "sold" an options contract is considered the "writer". This is a new contract. If they want to get out of their obligation, they could close their position on an options exchange (basically the same as a stock exchange, where option contracts are traded complete with bid and asks). They might "buy to close" it at a loss or a gain. For example, if I owned 100 shares of stock XYZ, I could sell a call option priced at $5 (which means I collect 100 x $5 = $500 because option contracts are for 100 shares at a time usually). I get that $500 as income. If the stock never goes up to the strike price and the call option buyer doesn't exercise their call option to call them away from me, then I keep the original stock, and I've pocketed $500 to boot. If the stock does go up, and my shares get called away, I'm forced to sell them for a certain price which may be way lower than the new higher market price. So it's a trade off. If I decide to close my position before the expiry date, perhaps I "buy to close" my written option for $200, I've netted $300. Options are a steep learning curve, and there are a lot of complex strategies beyond just buying calls or puts, or selling calls or puts.

[@mhamedouidir5790]

Thank you

[@qjking322]

Very informitive

[@jawaharsarkar2011]

Awesome Job Done Banerjee Dada

[@PreetBanerjee]

Thank you so much 😊

[@jakejake7289]

Excellent post man! Subscribed : )

[@PreetBanerjee]

Thanks Jake!

[@florin9868]

the most accurate explanation of MB puts. great content

[@PreetBanerjee]

Much appreciated - thank you!

[@DarrenMalone253]

Great lesson bravo sir!

[@PreetBanerjee]

Thanks Darren!

[@luisbarbosa8136]

great video and explanation. good job ;)

[@PreetBanerjee]

Glad you liked it!

[@patrombach]

Excellent video

[@PreetBanerjee]

Thanks!

[@parkerbohnn]

I'm only about 1/50 of that 1.6 billion short the NASDAQ today.

[@PreetBanerjee]

Long puts? Short an index ETF? Or something else?

[@parkerbohnn]

I buy monthly out of the money puts on the major indexes and will continue to do this for at least the next 40 years.

[@leebeavers6912]

Thank you! Thank you so much for the common sense explanation!

[@PreetBanerjee]

You’re very welcome 😊

[@FlorisDVijfde]

Good to know. There are always predictions of a crash but nobody knows when it will happens. Even Burry's Big Short bet was risky. The crash could have happened one week too late.

[@viper782010]

Within next 6-7months these will be the trades of the century. This is too soon to Short the Index but not inaccurate, soon this will be the trade to make profit.

[@brett4932]

This whole thing is hilarious. The media is so, unbelievably dumb. This is insurance on his other long holdings as we entered into an overbought market that tends to sell off in Q3. Be greedy when others are fearful.

[@emanuelrodriguez1397]

I'm glad I watched this video before I sold the farm.

[@weho_brian]

THANK YOU. So much misinformation by youtubers, he was hedging/buying protection. He was not betting on a "Crash", I'm sick of all these trash youtube fake financial "advisors". Multiple other channels spreadhing this misinformation

[@PreetBanerjee]

Thanks Brian! While the reporting rules are a bit odd, they've been that way for a while and stories conflating option position sizes are not new (happens every few years at least). The bad commentary has real world impact on markets/investors.

[@maxpanicmovies]

Thanks to the FED (in)action, Burry is proved true as of yesterday.

[@jeanpaulfelix4095]

his 4m in puts are now worhtless even if they are longer dated. The machine always wins in the long run.

[@sp5152]

Classic Explanation bro.... Much more sensible... Burry is enjoying this panic due to half knowledge of people...make more such videos to educate Retail investors...

[@subhankarpaul8719]

Khub valo dada❤️

[@ericb9511]

that's called CASH FOR THE DIFFERENCE when you sell or put the option or stock

[@joeybaltz582]

no reasonable investor would wrap up 93% of their port into any single position. the 2% theory makes much more risk management sense. seeing burry has been around the market for a while i'm positive he has his own risk management strategy that looks similar to what you just illustrated

[@PreetBanerjee]

And given that written option positions aren’t required to be disclosed, it’s all potentially even more opaque. Thanks for watching!

[@lpgoog]

I always remind myself Buffett has put zero energy towards forecasting. 😅

[@Stone_624]

*Notional Value of an option position* Dipper : Woah. Dipper: This is Worthless *Reporting Long Positions but not Short positions* Dipper : Woah. Dipper: This is Worthless Seriously, What's even THE POINT ?

[@edmhie1]

This could be another MEME advise.

[@damaddog8065]

How do you know if this was not someone licking lead paint chips off of windows???

[@GregMoress]

Who paints windows?

[@leifseed]

Didnt age well, but then i wasnt expecting this to age well.

[@PreetBanerjee]

He unwound this trade after the market continued to go up. So your comment didn't age well. In addition to not understanding the point of the video.

[@hackmedia7755]

put contracts are cheap to buy and you're risking a lot less.

[@FromDesertTown]

I wouldn't say EVERYONE is wrong about it. Anyone who takes a few seconds to look into it finds that it's just a small investment in put options. But everyone in media who is trying to get clicks will put that "1.6 billion" falsity in their headlines, whether they believe what they're saying or not

[@PreetBanerjee]

True - the Wall Street Journal and Bloomberg (among others) nailed it, but they aren’t read by the masses. But a lot of mainstream news milked it, and it spread from there.

[@TheRetiredVeteran]

It looks like Michael Burry is right. Both the SPY and QQQ is down over 6% this month already.

[@PreetBanerjee]

I believe he has unwound this trade now because the markets were too strong?

[@kaydollazz3126]

Explain Warren buffet selling 8b in assets? The market will fall.

[@PreetBanerjee]

$8 billion out of a $350 billion portfolio, or 2.3%? Sounds more like being defensive/reducing exposure as opposed to a fire sale. The market might decline, sure. But there are always people making those calls, and many more people looking for confirmation of their gut through any signal they can find. I have no idea if the market with go up or go down today, tomorrow, or in the near-term. It does tend to go up over long periods of time in exchange for short-term unpredictability.

[@suaibshahin]

hi

[@an80sguy_]

Hah! This is a relief given the current narrative

[@miennam2296]

Wow

[@Western.war_edits]

👍🏼👍🏼

[@afterdark6822]

His positions say otherwise.

[@jddyea5527]

If you really want to know what's going to happen with the market you should ask the Pelosi's

[@vaibhav2314]

Study basic blocking calls of hijacker to your family and math plus mechanical agriculture

[@nathanieli5572]

😞 Promo sm

[@commonknowledgefacts5405]

Who are you man? Where are you and where is Burry?

[@PreetBanerjee]

My name is Preet Banerjee. I’m in London. I don’t know where Michael Burry is but he reportedly lives in San Jose.

[@fletchreport]

And that is why I don't pay much attention to the news. click bait hype

[@simonpageau6925]

I Will go to bed less dumb thanks to you! 👍

[@PreetBanerjee]

Ha ha - very kind!

[@donaldmorckel1684]

Can only imagine how CNN would wildly over imbelish this into something ridiculous .... 😮

[@fleurstarable]

Anniversary 1929.. looking ripe.. egg. Haha he got you again.. now watch.

[@PreetBanerjee]

Looks like he unwound his trade because of the strong markets.

[@hanakhanak9967]

Wrong! You are just a youtuber!

[@PreetBanerjee]

Did you even watch the video? Because your comment doesn’t make sense.

[@bsagbasg8621]

Unsubscribed

[@PreetBanerjee]

You just need to click the button to unsubscribe. This like the time Michael Scott declared bankruptcy by yelling "I declare bankruptcy".

[@bsagbasg8621]

@@PreetBanerjee bad choice of words as a reply to a former subscribe rather than making an effort to know the (y), you choose to say this. Try doing what's best for you & your subscribers. BR & GL

[@PreetBanerjee]

@@bsagbasg8621 In all seriousness, you could have just put your reasons in your initial comment. I take constructive criticism to heart. But you chose to engage in a pithy manner, so I responded in kind.

[@AkweliParker]

Bye, dude or dudette! Hey Preet, great, informative, non-sensationalistic presentation. I’ll subscribe to take this guy’s place 😂

[@PreetBanerjee]

@@AkweliParker Awesome - thanks for subbing!

[@LeGardien781]

If his bet is on Puts, how come it does not show the experition date? Thank you

[@PreetBanerjee]

It’s not required for the filing document so it wouldn’t be disclosed.

[@KylerTony45]

People need to learn how to read financials. He didn’t put billions.

[@andys2856]

He hasn't bet his whole portfolio just a fraction like 3%

[@powersection9264]

And he's going to d it again!!!!