Few people saw the gigantic housing/financial crisis coming, but independent investor Michael Burry did - back in 2005. Terrific author Michael Lewis (Liar’s Poker and others) has an excerpt from his new book The Big Short in a recent issue of Vanity Fair, called Betting on the Blind Side (double meaning, gotta read it) which is very interesting in itself. But I took a few lessons from it that I think are useful to businesspeople, startup founders,a nd technologists. Here are a few of my thoughts.
Don’t be afraid to be different, or original: Burry grew up different; he lost an eye and had a fake one. He was also later diagnosed with Asperger’s Syndrome. He acted differently, he thought differently. He used that to take an original course in life, and make original, insightful investment decisions, even when his investors didn’t necessarily believe in what he was doing.
Make a change to something you’re passionate about: Burry started his career as a medical doctor, but it bored him. He learned about investing in stocks on the side and got interested in computers. That led to some investing, and also some blogging, and that eventually led to him leaving his Stanford residency to start a hudge fund in his home.
Give valuable gifts and you shall receive them: When he was a doctor, he would blog about value investing and trades he was making or thinking about… and bigger fish were reading his blog and making money off his ideas. But when Burry started Scion (his fund), his first investor was his biggest fan - a big fish in New York. That’s how he made his first million.
Don’t stop believing: In 2005, Burry started moving a lot of his investing interest from stocks to credit-default swaps on mortgage-backed securities. When many of his advisors became aware of this, they weren’t happy and wanted explanations, and even their money back. Burry defended his idea and told them to hang on until 2007, when he made $100 million personally and $750 million for his investors.
Be happy with yourself: After the bubble burst, a lot of things changed in investing and in life. Burry made a big profit, auctioned off the rest of positions to banks, liquidated and then closed up shop to concentrate on his personal life. He ditched his unhappy (enriched) clients, pulled away from the big (unwise) banks, and continues to do is own thing, which presumably pleases him.