Michael Burry vs SPY and QQQ: Who Wins?

American investor and hedge fund manager Michael Burry is known for being among the first investors to predict and profit from the subprime mortgage crisis that started in 2007. Burry's story was told in the book "The Big Short" by Michael Lewis, which was later adapted into a movie of the same name.  

Burry’s 2023 bet against the market with put options on the SPY and QQQ exchange-traded funds had many investors wondering if Burry would be right again and if they should make similar moves. 

We take a look at Burry’s missed calls and compare the performance of his firm Scion Asset Management with that of SPY and QQQ ETFs. 

Michael Burry Bets Against the Stock Market 

Burry’s "big short" made him and his Scion Asset Management clients hundreds of millions of dollars betting against home loan securities in the 2008 subprime mortgage crisis. Fast forward to 2023 and Burry bets against the stock market by purchasing put options contracts against 2 million SPDR S&P 500 ETF Trust (SPY) shares and 2 million Invesco QQQ Trust (QQQ) according to an Aug. 14 regulatory filing. 

In the two months following those bets, SPY was down about 5% and QQQ was down about 2%. It remains to be seen what stocks will do versus Burry going forward, but his big wins in the past have investors listening to his predictions and considering his bets against the stock market. 

Michael Burry Predictions That Failed 

In recent years, Michael Burry’s predictions have produced mixed results, many of which have been negative. Here are a few examples of Burry’s missed predictions: 

• September 2019: Burry warned of a stock market bubble and crash. The stock market, as measured by the SPY ETF, was up 15% over the following 12 months. 
• March 2020: A large bearish bet by Burry during the onset of Covid-19 was followed by a giant gain on the S&P 500 of over 70% in the following 12 months, indicating a significant miscalculation on his part. 
• January 2023: Burry tweeted a single word, “Sell,” citing his prediction of a recession. In stark contrast to Burry’s call, stocks would surge—the Nasdaq had its best first half in 40 years in 2023. In March, he retracted the call and said, “I was wrong to say sell.” 

Michael Burry vs. SPY and QQQ 

When comparing the historical performance of Burry's Scion Asset Management versus the SPY and QQQ ETFs, Burry is behind over the past year, but wins for the three-year and five-year returns. Against QQQ, Burry is behind for the 10-year return.

Returns are annualized through Oct. 6, 2023. Burry's performance is that of Scion Asset Management. 

Should You Follow Burry’s Predictions? 

Michael Burry has had large success with some of his predictions, but his track record as a whole is mixed and could end up in losses for investors who follow him. While his famous “big short” made him and his investors hundreds of millions of dollars in 2008, he initially made the prediction two years prior. He missed multiple predictions in the 2020s, including his missed call in January 2023 when he suggested selling, but the market went on to see large gains for several months to follow.

Ultimately, the decision of whether or not to sell stocks is a personal one. Investors should carefully consider their own circumstances and risk tolerance before making any decisions. Thus, following the advice or trades of someone who may have significantly different investment objectives and risk tolerance.