Mark Puddleglum on Nostr: /The Big Short: Inside the Doomsday Machine/ In Dr. Mike Burry's first year in ...

/The Big Short: Inside the Doomsday Machine/

In Dr. Mike Burry's first year in business, he grappled briefly with the
social dimension of running money. "Generally you don't raise any money unless you have a good meeting with people," he said, "and generally I don't want to be around people. And people who are with me generally figure that out."

He went to a conference thrown by Bank of America to introduce new fund managers to wealthy investors, and those who attended figured that out. He gave a talk in which he argued that the way they measured risk was completely idiotic. They measured risk by volatility: how much a stock or bond happened to have jumped around in the past few years. Real risk was not volatility; real risk was stupid investment decisions. "By and large," he later put it, "the wealthiest of the wealthy and their representatives have accepted that most managers are average, and the better ones are able to achieve average returns while exhibiting below-average volatility.

By this logic a dollar selling for fifty cents one day, sixty cents the next day, and forty cents the next somehow becomes worth less than a dollar selling for fifty cents all three days. I would argue that the ability to buy at forty cents presents opportunity, not risk, and that the dollar is still worth a dollar." He was greeted by silence and ate lunch alone. He sat at one of the big round tables just watching the people at the other tables happily jabber away.