Imagine a man, a licensed physician, who fell asleep in the operating room during surgery, which fired from his job. And all because the previous day too long followed the stock quotes. Freak and an outsider, who himself, years later, diagnosed Asperger syndrome. And finally the manager from California who put their fortune and investors against the US economy. He won, became a millionaire and now invests in … the water. Yes, this is Dr. Michael Burry. Guest, who predicted the great economic crisis, when the world of finance balował at best. On the basis of this story was a film “The Big Short”, which is fighting for an Academy Award.
“Mortgage bonds MBS, subprime loans, credit default swaps CDS. Complicated, huh? You start to feel tired, or stupid. Well, that’s it. Wall Street likes to use complicated words you to think that only they can deal with it. or even better, you to eff off from them. ” With these words begins the film adaptation of the book by Michael Lewis, economic journalist describing “the mechanism of the machine of doom.” It is precisely this machine mortgage loans high risk worked out our hero – for many financial gurus.
But from the beginning. Before the movie “The Big Short” stood up to fight for Oscar, before the resulting book Lewis, even before we became witnesses and at the same time victims of the global economic crisis, at a time when Michael Burry was not their business, was born a little retarded genius. Why retarded? Because manifesting exactly the same characteristics that only years later, doctors diagnosed his son – the characteristics of Asperger’s syndrome.
Taking into account a bachelor’s degree in economics, his medical degree from Vanderbilt University School of Medicine and an internship in the clinic of neurology at the university Stanford hospital, Dr. Burry assists in surgery. Sleepless night spent on investing in the financial market, which dealt with after hours, he makes itself felt. Zasypiający standing doctor allows the operating table. What was next? It is easy to guess.
He is thrown by a surgeon leading from the treatment room and flies out of work in the hospital. You will not see this in the film, but years later the story was pulled Bloomberg. And no wonder, that he did it the economic magazine, because in fact after this incident the antisocial, neurotic doctor decides to devote himself entirely the analysis of financial markets, investing and writing something like a blog, mounted on a discussion board website Silicon Investor.
it is assumed also thriving fund Scion Capital, which – as described in Lewis – the end of 2004, managed 600 million dollars. Around this place is revealed Burry’ego genius, and perhaps fixation. In 2005, it begins a particularly interesting market for subprime loans. Viewing thousands of detailed data. As for mortgages of high risk – or, as we hear in the film from the mouth of the beautiful blonde immersed in a bathtub filled with foam – “when I use the word subprime, I immediately think of g ….”.
This was Lipná loans mortgage with a variable interest rate, granted to people without credit worthiness and therefore endangered the lack of repayment, beautifully packaged, complemented by a package of loans stable. Sold as they were by the largest banks of America under the name CDO. Burry studying the structure and way of concluding these agreements, discovered the growing bubble – on the considered then to be absolutely reliable and stable – the mortgage market. He predicted that within two years the value of CDO will dramatically decline, which can lead to disaster in the financial market.
He decided to cash in on the coming inexorably crash. He tied the bank Goldman Sachs, which also was convinced about the stability of the market. that’s why bankers willingly agreed to prepare for him swap, or contract that collateral in case of default on repayment of the debt – the notorious later CDS.
this consisted in the fact that the fund Burrego pay a sum of money Goldman CDS price in exchange for the bank in the event of a crash, he pledged to withdraw cash. Prepared for him to earn financial product allowed only in case of declines in value. Bank raking dollars on sales commissions and could not believe that he wants to play against pewniakowi – residential market.
The strategy game to drop proved to be effective. As a result of this agreement and the outbreak of the economic crisis earned 700 million US dollars for its investors, enriching himself about 100 million. The investment fund, which led, recorded a return on investment of close to 490 percent. initial capital.
Dr. Michael Burry became a star and one of the few people who have earned on the crisis, which only work in the US deprived of 8 million people, and for the 6 million Americans meant the loss of their homes. Shortly completely liquidated the company and devoted himself to personal investments.
As he wrote Lewis, Dr. Burry repeatedly contacted the government. He was ready to go to the hearing, during which he wanted to tell, as predicted crisis. No one, however, not interested. For as many as four times, he was questioned by the FBI, which examined the legality of its actions.
Today, Dr. Burry lectures at universities, is a frequent visitor to economic fora, and privately invest in gold and … water. In his view, the US should invest in parcels of land with access to water. According to his predictions, access to drinking water is constantly shrinking and the future price of water will be much higher.
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