Breaking Burry, by Quoth the Raven

Markets are staying irrational longer than Michael Burry could stay short. He’s going to be right eventually, probably sooner rather than later, because the market is off-the-charts irrational. From Quoth the Raven at quoththeraven.substack.com:

Totally perverse unnatural massive market distortions: 1, Michael Burry: 0

One major headline today is that Michael Burry, of The Big Short fame, is shuttering his fund, Scion Capital. In his letter calling it quits, he wrote: “Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.”

I’ve been around markets long enough to believe that short sellers are generally more objectively right than most investors. They called Enron a fraud when investment banks were telling people to buy it, they blew the whistle on Madoff before he collapsed and they warned repeatedly about 2008 on national television before the entire global economy nearly collapsed.

But market dynamics know nothing of objectivity anymore. They have become a rigged, bloated, algorithm-warped humiliation ritual masquerading as a market — a parody of what price discovery used to be.

As I told Julia La Roche weeks ago, back when the market still resembled something coherent, regulated and free, and about $7 trillion in Fed balance sheet bilge ago, you could find a terrible company and short it, and the market would eventually notice.

“You dug into a company, found it was mismarked or cash-burning or structurally doomed, and you bet against it,” I told her. “When Einhorn did Allied Capital… everything’s mismarked. Everything’s dogshit. At some point, it’s going to come crashing down.”

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