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Exclusive | Michael Burry should have retired right after The Big Short: Aswath Damodaran 

Burry, who correctly called and profited from the subprime mortgage crisis of 2007- 08, recently warned retail investors about "the mother of all crashes"

June 30, 2021 / 02:49 PM IST
Aswath Damodaran (Illustration by Suneesh Kalarickal)

Aswath Damodaran (Illustration by Suneesh Kalarickal)

Professor Aswath Damodaran, often referred to as the “Dean of Valuation” for his expertise in valuation and markets, took a swipe at Dr Michael Burry for his gloomy market forecast, saying the investor-physician should have retired after The Big Short came out.

Burry, one of the few investors to correctly call and profit from the subprime mortgage crisis of 2007- 08, was the key protagonists of the book The Big Short by Michael Lewis. The book was later made into a critically acclaimed movie of the same name.

Burry recently warned retail investors of “the mother of all crashes”.

"When crypto falls from trillions or meme stocks fall from 10s of billions, Main Street losses will approach the size of countries. History ain't changed," he had tweeted.

Damodaran said market gurus take themselves too seriously. "Michael should have retired after the 2008 crash. Right after The Big Short came out. You're in the right place at the right time, you look like a market expert" he told Moneycontrol in an interview.

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"And I think there are people who think deeply about markets, Michael Burry is not one of them. So I think that to even respond to a comment by him is giving him more value, more respect than he truly does deserve.”

Also read: EXCLUSIVE | Bitcoin has not just failed, it's failed miserably: Valuation guru Aswath Damodaran 

While Damodaran agreed that markets could be in a bubble, he said this could be true at any point in time. "Looking in the past and saying this looks just like 2008, or just like 2000 is exactly how we get into trouble. Market crises never resemble each other" he said during the 10th episode of Moneycontrol Masterclass.

“In fact what I am reminded of when people keep pointing to the past is all these army generals who prepare to win the last war. And guess what, the next war looks nothing like the last one."

Also read: Exclusive Interview | COVID-19 behind us, inflation will have big influence on how markets behave: Aswath Damodaran

He had a piece of advice for Burry. "I'm afraid that on this one I've got to look at Michael Burry and say just stop talking. I mean, it's a no, and tweeting just makes it worse," Damodaran

Burry famously foretold the housing bubble in the 2000s and made a windfall by shorting the mortgage bond market.

While he earned a personal profit of $100 million, his fund Scion Capital netted returns of 489.34 percent between November 1, 2000 inception and June 2008.

His personal investments in recent years have focused on water, gold and farm land.

To read Aswath Damodaran’s Moneycontrol  Masterclass interview, click here



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Chandra R Srikanth is Editor- Tech, Startups, and New Economy
first published: Jun 30, 2021 02:49 pm
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