Michael Burry, the man who outsmarted the subprime mortgage market before the 2008 financial crisis, has entered the chat. The subject at hand: The current banking crisis that’s got Wall Street shaking in its boots. Burry, who was immortalized in Michael Lewis’ “The Big Short,” took to Twitter to share his thoughts – and they weren’t as bearish as you might think.
According to Burry, regulators’ recent move to backstop regional banks should be enough to stabilize the financial markets. And he’s got history on his side:
The Panic of 1907 was resolved within three weeks after J.P. Morgan and other financiers pooled money to bail out the banking system. (Ironically, J.P. Morgan would later receive its own bailout a century later.)
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But Burry doesn’t just think history should repeat itself – he expects it to. He believes that the immediacy and magnitude of the rescue measures from regulators will be enough to resolve the crisis soon without causing any significant damage.
Burry said in a tweet, which has since been deleted (a common practice for Burry).
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While Burry’s confidence may be reassuring, investors are not so convinced. The sell-off continued on Wall Street, with concerns spreading beyond regional banks. Shares of Credit Suisse, a Swiss bank with significant U.S. and global operations, fell more than 20% to another all-time low.
Burry, who founded Scion Asset Management, is known for being a contrarian investor who is willing to take risks. His successful bet against the subprime mortgage market made him a household name, and it seems he’s not done shaking things up just yet.