How did Michael Burry first make his money, as he bets against the US stock market once again?

Michael Burry, the former physician turned investment banker and hedge fund manager, has caused speculation throughout the financial world once again with his latest bet against the US stock market. Many will remember Burry made a sizeable bet regarding shorting the US housing market - the subject of the Oscar-nominated film “The Big Short” starring Christian Bale in the role of Burry.

Recent securities filings reveal that Burry held negative options on both the S&P 500 and the Nasdaq 100 by the end of the second quarter. Specifically, he possesses options with a notional value of $886 million against the S&P 500 and $738.8 million against the Invesco QQQ Trust ETF, a fund comprising tech giants like Apple, Microsoft and Tesla that trades on the Nasdaq.

Remarkably, Burry's bearish stance accounts for over 90% of his firm's portfolio, according to CNN reports. This significant allocation to bearish positions raises questions about his strategy, given that the S&P 500 has risen approximately 17% year-to-date, and the Nasdaq 100 has surged by nearly 39% over the same period. 

While the motivation behind his negative positions remains unclear, these options are instruments that grant the right to sell shares at a predetermined price in the future and are typically acquired to express a pessimistic outlook.

Burry's market sentiments have been apparent throughout the year. In January, he took to Twitter with a concise "Sell." However, by March, he had reversed course, admitting he was "wrong to say sell." 

How did Michael Burry first make his money?

Michael Burry initially made money as a physician before transitioning into the world of investing. He used his medical career to accumulate capital, which he then used to start his investment journey.

Burry earned his M.D. from the Vanderbilt University School of Medicine and subsequently worked as a resident physician. During his medical career, he had a strong interest in investing and finance. He began managing his own personal investments and honed his investment strategies.

In 2000, he founded Scion Capital, a hedge fund, using a portion of his own savings and capital from investors. Burry's investment approach was unique and research-driven. He conducted in-depth analyses of financial markets and identified investment opportunities that were often overlooked or undervalued by mainstream investors. One of his most notable predictions was recognizing the risks associated with the housing market and subprime mortgage market well before the 2007-2008 financial crisis.

Burry's successful bets against the US stock exchange and the housing market during the crisis resulted in substantial profits for his hedge fund and his investors. His ability to identify these risks and execute profitable trades showcased his analytical skills and investment acumen - as seen in “The Big Short.”