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So the guy from 'The Big Short', Michael Burry recently made a big move not common in the world of investing - he sold his entire portfolio of stocks. Every. Single. Last. One.

If you don't know who Michael Burry is, He's:

• A doctor turned hedge fund manager
• The guy whom Christian Bale played in the movie 'The Big Short' 
• One of the first people to discover the housing bubble back in 2007
• Made a ton of money from that bet

Needless to say, the man is legit and when he does something to his portfolio, you better pay close attention to it. But does he know something the rest of us don't?

The asset manager liquidated his entire portfolio valued at around $200 mil, keeping only one stock- private jail operator, GEO group (Hint: a for sure recession-proof business). 

But why?

• If you're unaware, Twitter is Burry's go-to place for sharing his thoughts but he deletes them all afterwards so you can't really find his previous tweets on his profile
• Worry not, we've sieved through the internet to find clues to his reasoning and here's what we found:

He thinks the bottom IS NOT IN and we're only halfway there

• He believes the 2022 first-half crash was due to "multiple compression", meaning investors got worried about the economy and lowered their valuations on companies
• The next crash will be due to "earnings compression", meaning companies will report lower earnings due to an economic slowdown

He's predicting a "bullwhip effect" 

• The previous QE and supply chain disruption caused an increase in demand from consumers which then led to an overproduction of stocks and an overflow of supply and inventory 
• This would eventually cause retailers to cut prices, causing CPI to slow down a bit and the Fed might start to cut rates
• But then consumers will buy more, use up more of their money, spend more of their savings and take up more debt. All amid rising costs of living
• He believes this will likely cause a recession

Now don't go sell everything just because Michael Burry did. 

That said, it definitely deserves some attention when a prolific investor sells everything.

We can't time the market but buckle up, folks - we might be in for a ride.

Before you go...

• Check out issue #84 where we talked about how the liquidity trap 📉
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