Interesting article in Wall St Journal about how gurus who got famous from calling market crashes almost never repeat their predictions. For example, the Big Short hero has made 5 more "the market is going to crash" since his initial success, but 6 months later the S&P is up an average of 34% since each prediction. https://www.wsj.com/finance/investing/how-to-get-rich-and-famous-from-a-stock-market-crash-6914580a How to Get Rich and Famous From a Stock Market Crash ‘Big Short’ hero Michael Burry sees disaster and—eventually—he’ll get it right again Michael Burry’s bet on a housing bust earned him money. PHOTO: ASTRID STAWIARZ/GETTY IMAGES “Sooner or later a crash is coming, and it could be terrific.” A wimpy prediction like that would struggle to go viral in 2023. It caused a sensation in 1929, though, weeks before Black Tuesday. In a preview of that calamity, stocks briefly plunged in what would be called the Babson Break. America was about to sink into the Great Depression, but newsletter writer Roger Babson would reap fame and fortune from his timely call, founding a college and even running for president. Few remember that he also predicted trouble in 1927 and 1928, and later on made a premature recovery call. Every market crash or bottom has a Babson—someone who can dine out forever by nailing it. In 1987, it was Elaine Garzarelli, who predicted a collapse days before Black Monday. She became the best-paid strategist on Wall Street for a while and went on to run some poorly performing mutual funds. In 1982, it was Elliott Wave theorist Robert Prechter’s predicting a roaring bull market after stocks spent 16 years in the doldrums, but also crashes that never materialized. Both are still making money in the punditry business despite decades of mostly lousy predictions. Burry-edSix-month annualized S&P 500 rise after Michael Burry warningsSource: Factiva; FactSetNote: Quotes on Aug. 28, 2019; March 13, 2020; June 16, 2021, Sept. 29, 2022; Jan. 31, 2023 "bubble in passive investing""significant bearish marketbet""greatest speculativebubble""could be worse than 2008""SELL"0%20406080100120 (In response to emailed questions, Garzarelli says claims on her website that “94.5% correct calls” have been audited, while Prechter was more humble, admitting that criticisms of his record are “about right”). Michael Burry is the latest seer with a shaky encore. His early but successful bet on the 2007-08 housing bust made him rich and—after Christian Bale played him in the Hollywood adaptation of Michael Lewis’s “The Big Short”—famous. But he has also made at least five dire predictions about stocks in just the past four years with comments such as “could be worse than 2008” and “greatest speculative bubble of all time.” Buying the S&P 500 instead would have made an investor money each time in the six months after his views became public. The average annualized gain was 34%—about four times the index’s long-run appreciation. His latest public warning was a one-word tweet this January from a frequently deleted account called Cassandra BC: “SELL.” That one didn’t work out either, but Burry’s investment firm, Scion Asset Management, still gets outsize attention. There have been 264 print-media mentions of Burry in the past month alone, according to Factiva, spurred by Scion’s latest securities filings. It purchased puts—bets on a market decline—on two popular stock index funds. To the uninitiated, the notional value of the derivatives makes it look as though he bet nearly everything on a crash. That isn’t the case at all, but Burry has done nothing to disabuse his 1.4 million followers on X (formerly known as Twitter) of that idea. Burry, who didn’t respond to requests to comment, might fancy himself a Cassandra, but he is the polar opposite. The Trojan priestess was cursed with always being right but never being believed. It isn’t hard to understand why prophets of doom get so much public attention, but how does one explain famous ones being so unimpressive after they become famous? Numerous studies of expert opinion have shown that pundits are, as a group, as accurate as a coin flip. Some have a special knack for being wrong, though. In an analysis of 68 stock market gurus several years ago, CXO Advisory Group had Prechter as dead last. The explanation is simple, according to “Predicting the Next Big Thing,” a 2010 study by Jerker Denrell and Christina Fang. People who got rich and famous on extreme bets tend to follow up with more of them, and outlier predictions typically fail. The saying, though, is that “a broken clock is right twice a day,” not once. Burry is certainly eccentric, but probably less-so than Babson, who tried to reinstate Prohibition and invent an antigravity device. And, unlike most pundits, he put his money where his mouth was on his big housing call and many successful stock picks. Talk remains cheap. If you aspire to become the next Babson, Prechter or Garzarelli, this might even be an ideal time to make a call on social media and timestamp it: Rising interest rates and historically high stock valuations provided the backdrop to wipeouts in 1929, 1973, 1987 and 2007. Unfortunately, the cacophony of online voices means that, on any given day, there is someone out there also predicting a calamity. Unless you are saying it on CNBC or have Goldman Sachs on your business card, the chances of being sought for your views are far higher if you actually risk money—ideally other people’s, not your own. And if your timing is impeccable, the hardest part is over—you will be rich. Now just get Michael Lewis to write a book about you.
I was reading the other day that a few big names are seeing an overvalued market, including Burry and Buffet. By about a 198% But the market has been staying overvalued for ten years, at least, and can stay another ten exactly like that. In 'The big short' they pictured Burry struggling for a year with all customers leaving his fund, and a massive premium on his bet being charged to the account. They might be right and the market might be overvalued, but to time it right is a hell of a bet.
The problem is that big macro inflection points are rare. We had 2008, then a mini one in 2020 (buy Covid) which many people on these boards called live, then the 2021/22 top. From 2009-2022 the oftentimes-contrarian Big Call would have been to stay long and strong - but “stay long, the bull market has years left to run” isn’t going to go viral. Burry at least seems to have a trader’s mindset where all these various scenarios are on his radar, but when it comes to positioning he focuses on making +EV bets.
I'm not calling any market top, bottom or any level in between .... but 10 year bonds made an alltime low yield back in Aug 2020 to currently a 15 year high. Sumtim got to give at sum pernt.