Michael Burry, the investor who famously bet against the US housing market before the 2008 crash, has once again sounded the alarm and dumped all of his stock – except one.
In a dramatic move revealed by recent SEC filings, Burry’s Scion Asset Management has slashed its portfolio to just seven positions.
Six of them are aggressive short bets: bearish put options against some of the biggest names in tech and Chinese equities, including Nvidia, Alibaba, and Baidu.
Only one company appears to have managed to retain Burry’s faith: Estee Lauder, where Burry has doubled down, boosting his holdings to 200,000 shares valued at $13.2 million.
While cosmetics may be an unusual choice ahead of a potential financial meltdown, it’s not without logic.
In times of economic distress, consumers often indulge in small luxuries even as they forego big-ticket items – a phenomenon known as the ‘lipstick index.’
When wallets tighten, lipsticks replace dresses and handbags for that touch of retail therapy.
Burry’s bearish position coincides with uncertainty on Wall Street over Donald Trump’s trade war and the Big Beautiful Bill – a spending package expected to saddle the US with at least another $4 trillion in debt over the next 10 years.
Michael Burry, the investor who once famously bet against the US housing market before the 2008 crash, has once again sounded the alarm and dumped all of his stock except one
Bearish has taken out aggressive short bets: bearish put options against some of the biggest names in tech and Chinese equities, including Alibaba and Baidu
Only one company appears to have managed to retain Burry’s faith: Estee Lauder, where Burry has doubled down, boosting his holdings to 200,000 shares valued at $13.2 million.
In a dramatic move revealed by recent SEC filings, Burry’s Scion Asset Management has slashed its portfolio to just seven positions
The national debt already stands at $36 trillion and the cost of servicing the payments currently dwarf defense spending as a proportion of America’s GDP.
This is rattling investors, not least Burry and JPMorgan boss Jamie Dimon who said last week that government ‘mismanagement’ has the potential to ‘kill us.’
Dimon told the Reagan National Economic Forum on Friday that a ‘crack’ was going to appear in the bond market.
A ‘crack’ in the bond market occurs when investors lose confidence in the government’s ability to service its debt. Bonds are sold, yields go higher and the cost of borrowing increases for all Americans, including the government itself.
‘I’m telling you it’s going to happen, and you’re going to panic. I’m not going to panic. We’ll be fine. We’ll probably make more money,’ he said.
Burry sees that as a signal to buy big on cosmetics, according to his recent filing.
Under new CEO Stephane de La Faverie, Estee Lauder is trying to reassert itself in a struggling global beauty market, particularly in North America and China.
Product launches have accelerated. Luxury price tiers have been introduced.
Still, Estee’s stock is down 15 percent year-to-date, although it did gain 2 percent on Friday amid broader market turmoil.
‘Burry’s bet suggests belief in Estee Lauder’s ability to reclaim its status as a beauty powerhouse in an increasingly competitive global market,’ said Angeli Gianchandani, a global brand marketing expert at New York University.
Burry appears to be bracing for a hard crash when it comes to the market and there are warning signs that have not been seen since the depths of the 2008 crisis.
Burry rose to fame with his bets against the US housing market before the 2008 financial crisis. Michael Lewis’ nonfiction book The Big Short was released in 2010 and the movie version came out in 2015.
He also profited in the early 2000s by shorting high-flying tech stocks during the peak of the Dot Com bubble.
However, his bets have sometime appeared to misfire. In late 2020, he initiated short positions against Tesla stock, but later said it was just ‘a trade’ and he’d exited the position after Tesla’s stock continued to soar.
This also isn’t the first time Burry has gutted his portfolio. In 2023, he famously dumped most of his holdings only to later admit he was wrong.
In times of economic distress, consumers often indulge in small luxuries even as they forego big-ticket items – a phenomenon known as the ‘lipstick index’
Under new CEO Stephane de La Faverie, Estee Lauder is trying to reassert itself in a struggling global beauty market, particularly in North America and China
Markets are also seeing a flight to alternative assets. Gold has surged 24 percent year-to-date, outperforming Bitcoin’s 12 percent gain, as investors hedge against a weakening U.S. dollar down 8 percent this year.
Bitcoin has caught a second wind as well, bolstered by adoption from both corporations and state governments.
Arizona and New Hampshire have passed legislation establishing strategic Bitcoin reserves and a dozen more states are considering similar measures.
Not everyone is convinced, however, and JPMorgan’s analysts recently noted that while Bitcoin may offer high returns, gold remains the safer bet for risk-averse investors seeking protection against geopolitical risks and currency debasement.
‘We are skeptical that Bitcoin and other crypto assets offer the potential to improve portfolio resilience. Despite their low correlations to traditional assets, crypto assets have historically made portfolios more fragile,’ JPMorgan analysts wrote.
In the bond market, yields on the 10-year Treasury note have surged to 4.54 percent, while 30-year bonds are touching pre-2008 crisis levels above 5 percent.
The moves can be seen unsettling because of their cause – the fear that Washington is about to unleash a new wave of new debt.
With Moody’s recently downgrading America’s credit rating, concerns about fiscal instability have only deepened, reinforcing investor skepticism about the sustainability of Washington’s approach.
House Republicans, steered by Speaker Mike Johnson and under the watchful eye of Donald Trump, muscled through the so-called ‘One Big Beautiful Bill’ – a sprawling package of tax cuts and spending increases that could, according to the nonpartisan Congressional Budget Office, add $3.8 trillion to the deficit over the next decade.
Michael Burry, the money manager made famous in the book and film ‘The Big Short,’ appears to be betting on a major downturn in the US stock market
Christian Bale portrayed Burry in the 2015 film The Big Short. Burry rose to fame with his bets against the US housing market before the 2008 financial crisis but has not always been right
With yields rising, equities look increasingly vulnerable as a place to park cash.
The S&P 500 has clawed back most of the losses incurred when Donald Trump introduced his tariffs back in April.
Mortgage rates are at highs not seen since the Great Recession with the average contract interest rate for a 30-year fixed-rate mortgage close to 6.92%.
Credit card and auto loan rates are surging. Households and businesses are feeling the squeeze.
And while politicians in Washington plays games with tax breaks and entitlement cuts, real Americans are bracing for impact.
Cuts to Medicaid and food stamps loom on the horizon. Healthcare for millions could be stripped away. SNAP benefits could shrink hitting low-income Americans the hardest.
‘This bill is a debt bomb ticking,’ warned Rep. Thomas Massie (R-Ky.).
‘I’d love to stand here and tell the American people, “We can cut your taxes and increase spending and everything’s going to be just fine.” But I can’t do that because I’m here to deliver a dose of reality. This bill dramatically increases deficits in the near term but promises our government will be fiscally responsible five years from now. Where have we heard that before? How do you bind a future Congress to these promises? This bill is a debt bomb ticking.’
