I’d read some of Michael’s Lewis’s stuff on Michael Burry and watched some documentaries on the housing crisis but finally watched The Big Short last night. I came away thinking that you can generalize and universalize Michael Burry’s basic strategy / process.
The Burry Process:
- Constant Opportunities: Assume that greed can beget misrepresentation and that misrepresentation abounds regardless of decade or market cycle because avarice = a human constant.
- Incentive: Create structures that reward you for uncovering the truth.
- Fervor: Be okay with, even excited about, the arduous work that uncovering the truth takes.
- Faith: Have the endurance to overcome naysayers who won’t do the work to see past the misrepresentation and will question your research.
- Humility: Do it, primarily, for the love of, and satisfaction that comes from, discovering the truth.
This process is applicable beyond housing bubbles and probably useful in all macro trend analysis.