To be fair, we don’t know exactly how Burry did on this bet. We know he did file forms with the SEC saying he opened the bet sometime before mid-August and that he closed those positions as of the end of September. Depending on the exact timing of those purchases it’s possible he made or lost money.
But it doesn’t matter how he did. The question is what do YOU do? On that same SEC form that made headlines like this, he reported 35 other positions. Some won, some lost. Burry makes news because of all his wins and losses over the years he had a big win that was made into a movie. That means it’s an enticing headline for news outlets to write about other “big bets” of his.
But should YOU be trading based on what the news is reporting Burry is doing? Absolutely not. First of all, there’s a delay. If you waited for the news to drop that Burry exited his bet against the market, you may have watched the market go UP about 10% over the last three weeks (costing you dearly if you were betting the market dropped). Second, there’s no reason to think that Burry is going to be right more often than not in the future. The media loves chasing the “got it right once” darlings. We love believing that someone who guessed right in the past, whether it was skill or luck, is the chosen prognosticator of the future. But they’re not.
So what do you do? Buy and hold. Instead of speculatively gambling on market timing or individual stocks, you buy ALL the stocks in the form of an index fund. As all the companies of the world do business, innovate, sell, and profit, that growth is funneled directly to you via your index fund. You ignore all the short term speculative volatility, like the kind highlighted by this headline, and instead keep chunking away money for years and decades to come. That’s how you get rich.
p.s. Our “Learn to invest” webinar is TUESDAY where we go over all this stuff in greater detail. Perfect for beginners. Sign up at the link in bio!
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Jeremy
