Michael Burry, famous for predicting the 2008 financial crisis, has significantly changed his investment strategy. He sold all his shares in the Sprott Physical Gold Trust as US inflation showed signs of cooling.
Burry’s decision has sparked interest in the financial world and affected the crypto market.
Michael Burry on New Investment Approach
As reported in an X post, Michael Burry has completely sold his position at Sprott Physical Gold Trust. Data shows this trust had grown by 23% in the past six months, probably due to gold’s function as a hedge against inflation.
11/ Let's not forget Burry's second largest position in his portfolio – Molina Healthcare $MOH
Molinia provides managed health care services to low-income families and individuals under Medicaid and Medicare programs
This could potentially be an election play as candidates have… pic.twitter.com/MkeroHFKG9
— Michael Burry Stock Tracker ♟ (@burrytracker) August 15, 2024
Burry’s decision to sell reflects a shift in his view of the economic situation, especially given the recent decline in inflation in the United States. He seems to be moving away from investments that protect against inflation.
This shift comes after the latest US Consumer Price Index (CPI) report shows that inflation is slowing down considerably.
According to the US Bureau of Labor Statistics, the CPI for July increased by only 0.2%. Core inflation increased by 3.2% YoY, marking a 0.1% decline from June’s value of 3.3%. This value marks the least increase and lowest level since April 2022.
This drop in inflation might lead the Federal Reserve to deliberate on lowering interest rates. Based on the X post, the possibility of the Fed cutting interest rates may have influenced Burry’s investment decision.
Instead of gold, Burry is now betting on consumer spending and the US dollar. He bought a significant stake in Shift4 Payments, a company that facilitates payments for over 200,000 businesses.
Shift4 shares (FOUR) now make up 13.97% of Burry’s portfolio. It shows he believes consumers will increase if the Fed starts cutting rates. Burry’s timing seems good; July’s retail sales increased by 1%, much more than the expected 0.3%.
Burry also invested in real estate; he bought shares in Hudson Pacific Properties, a real estate investment trust whose value has declined 49% this year. This move suggests that Burry thinks it will recover, especially if interest rates drop.
“I try to buy shares of unpopular companies when they look like road kill and sell them when they’ve been polished up a bit,” says Burry.
The investor is also bullish on Chinese stocks. According to the X post, almost 50% of his portfolio is invested in these stocks. Furthermore, Burry invested some of his funds in Molina, a healthcare company. This stock is up over 20% in the past month.
Impact on the Crypto Market
Meanwhile, the crypto market sentiment declined after the US inflation data release, with Bitcoin’s price sharply declining.
Moreover, the coin has recorded a 4% price decline in the past week. This drop in Bitcoin’s price has also affected other major cryptocurrencies.
Ethereum (ETH) dropped by 5% to $2,543, and XRP declined by 2% to $0.5584. Burry’s move away from gold might have made some investors nervous about all alternative investments like cryptocurrencies. This could affect buying interests, potentially leading to further price declines.
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