'Big Short' Investor Michael Burry Bets $1.6 Billion On A Market Crash — Here Are 3 Investment Opportunities If You Want To Stay Away From Stocks – Yahoo Finance
Michael Burry has always been one to challenge mainstream thinking.
The renowned hedge fund manager successfully wagered against the U.S. housing bubble in 2008, a gutsy call that became the focal point of the film “The Big Short.”
Now, he’s betting against the U.S. stock market.
In its latest 13F filing with the Securities and Exchange Commission, Burry’s firm Scion Asset Management disclosed a substantial amount of put options against exchange-traded funds (ETFs) that track major U.S. stock market indices.
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In particular, Scion held $886.56 million worth of put options against the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) at the end of the second quarter. SPY tracks the S&P 500 Index and is the largest ETF in the U.S. measured by assets under management. Burry’s firm also had $738.84 million in put options against the Invesco QQQ Trust Series 1 (NASDAQ: QQQ), an ETF that follows the Nasdaq-100.
Put options provide the holder the right to sell an asset at a predetermined price. The value of put options typically increases when the price of the underlying asset drops.
With a combined value of $1.6 billion, these put options accounted for 93.59% of Burry’s portfolio at the end of June.
If you are wary about the market’s future like Burry, there are investment opportunities outside the realm of stocks. Here’s a look at three of them.
When the Federal Reserve kept its benchmark interest rates near zero, most savings accounts paid next to nothing.
Then inflation got out of control, and the Federal Reserve had to start tightening. In 2022, the U.S. central bank announced seven rate hikes.
Interest rate increases have continued in 2023, and the benchmark rate is the highest it’s been since 2001.
While higher interest rates have sent shockwaves across the economy — they are a key reason behind many experts’ warnings about stocks — they also mean that people can finally earn some return on their savings.
This one might sound counterintuitive. A high-interest rate environment also leads to high mortgage rates, so shouldn’t that impact the housing market negatively?
It’s true that real estate has taken a hit.
Billionaire investor Stanley Druckenmiller recently said that housing “has obviously gone down dramatically given the 500 basis-point increase in interest rates.”
But this is not doom and gloom, as he noted that there’s now a “structural shortage in single-family homes.”
“So if things got bad enough, I could actually see housing — which is about the last thing you would think of intuitively — could be a big beneficiary on the way out,” Druckenmiller said.
The reality is that regardless of the state of the stock market, people will always need a place to live. Meanwhile, elevated home prices and high mortgage rates mean owning a home is less feasible. And when people can’t afford to buy a home, renting becomes the only option. This creates a stable rental income stream for landlords.
Art might not be the first thing that comes to mind when people think of investments. But the ultra-rich have long been holding artworks in their portfolios — and reaping rewards from this unique asset class.
From 1995 to 2022, contemporary art has appreciated at a compound annual growth rate of 12.6%, outperforming the S&P 500’s annual return of 9% over the same time frame.
Art also offers diversification as its value is not directly tethered to the stock market, bonds or real estate.
To be sure, it usually takes a lot to get in the game.
For instance, in 2020, Amazon.com Inc. Founder Jeff Bezos reportedly spent $52.5 million on Ed Ruscha’s “Hurting the Word Radio #2” and another $18.5 million on Kerry James Marshall’s “Vignette 19.”
Nowadays you don’t need to be the founder of an e-commerce empire to delve into the art market. New companies have innovated ways for retail investors to invest in masterpieces by the likes of Banksy and Picasso for as little as $20 per share.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
