Michael Burry, famously known for predicting the 2008 housing market collapse, has recently made a significant bet against the stock market.
According to Security Exchange Commission filings, Burry’s firm, “Scion Asset Management,” has placed over $1.6 billion in put options against the S&P 500 and Nasdaq-100. This move indicates that Burry is expecting a considerable market downturn.
Please note that we are not giving financial advice in this article, but continue reading if you want to learn more about Michael Burry and betting on the recession.
A History of Wise Decisions
Burry’s decision to bet against the market is noteworthy because of his track record.
This famous event was written about in Michael Lewis’s best-selling book “The Big Short: Inside the Doomsday Machine,” which was then made into a movie. The new bet that Michael Burry made against the market is especially amazing because it makes up more than 90% of his portfolio.
Despite these bearish moves, Michael Burry’s Scion Asset Management bought shares of Expedia Group, MGM Resorts, CVS, and Cigna and sold shares of regional banks and Chinese stocks to increase its exposure to the travel and health care industries.
However, Burry’s view on the market has changed over time. Earlier this year in January, he sent a cryptic message to his 1.4 million followers on Twitter, simply stating, “Sell.” But by the end of March, he backtracked and admitted, “I was wrong to say sell.” As usual, all of this tweets are deleted shortly after publishing.
BREAKING: Michael Burry has just said:
I was wrong to say sell. pic.twitter.com/BjPOGVRXnz
— unusual_whales (@unusual_whales) March 30, 2023
Other Experts Betting on a Recession
Burry is not the only one preparing for a recession. Steve Hanke, a professor of applied economics at Johns Hopkins University and a veteran economist, also states that a recession is coming. He notes that stocks currently have a higher price compared to bonds and predicts that the US economy will experience a recession in the first half of 2024.
The US Money Supply (M2) is contracting at a rate of -3.7%/year. The application of the Quantity Theory of Money tells us that the U.S. is SLEEPWALKING into a 2024 recession. Read my interview in Business Insider:https://t.co/Xolb1nmogS
— Steve Hanke (@steve_hanke) August 27, 2023
In a similar way, Berkshire Hathaway’s CEO, Warren Buffett, has been making moves that show he expects a recession. In the second quarter, Berkshire Hathaway sold a net of $8 billion worth of stocks which was added to their cash pile. This helped their cash, cash equivalents, and Treasury bills grow by $38 billion.
Warren Buffett has a history of keeping cash on hand to make money when the stock market and economy are bad. For example, during the 2008 financial crisis, he struck deals with several cash-hungry companies, such as Goldman Sachs, General Electric, and Harley-Davidson.
Betting on a Recession in 2024
Betting on a recession can be a risky move, but it can also be highly profitable if done correctly. For example, people who bet against the home market and banking institutions during the 2008 financial crisis made a lot of money.
If you’re considering betting on a recession, there are several ways to do it. One way is to buy put options against stock indices, as Burry has done. Put options give you the right to sell an asset at a particular price. If the market declines, the value of the put options will increase.
Another way to bet on a recession is to short sell stocks. When someone does short selling, they take shares of a stock and sell them at the current market price, hoping to buy them back at a cheaper price in the future.
You can also bet on a recession by putting your money into assets that do well when the economy is bad, like gold or Treasury bonds.
However, it’s essential to approach betting on a recession with caution. Timing the market is very difficult, and there is always the risk of losing money. Again, we want to remind you that we are not providing financial advice, but simply sharing information about different methods available for betting on the recession.
Buy sports betting stocks ahead of football season?
Could it be that simple?
Sports Betting ETF $BETZ with a buyable pullback after breaking out of a multi-month base a few weeks back.
— Justin Spittler (@JSpitTrades) August 6, 2023
Betting on the Online Gambling Industry
While the stock market may be facing a downturn, the online gambling industry is on the rise.
According to Insider Intelligence, the total amount of cash bet on US sporting events via retail sportsbooks, online sportsbooks, and lottery parlay cards is expected to rise by 45% in 2023 to nearly $137 billion.
Seven sports betting stocks stand out as good bets for investors: Penn Entertainment, DraftKings, Flutter Entertainment, Churchill Downs, Caesars Entertainment, MGM Resorts, and Boyd Gaming Corp. These companies are getting more attention from investors, and their monthly unique player base is growing. Their earnings per share and sales are also going up in a healthy way.
For example, Penn Entertainment has grown by 8.6% in the last month, while DraftKings has grown by a huge 177% in the first seven months of 2023.
As of August 1, Boyd Gaming Corp.’s stock price has gone up by 25.3%. The company runs 28 casinos in ten states and the emphasis on their local markets has helped Boyd keep a steady growth.
Meanwhile, Flutter Entertainment, which owns popular gambling sites such as FanDuel, PaddyPower, and PokerStars, has seen its stock price rise by 42.4% as of August 1, 2023.
Caesars Entertainment has also seen a post-pandemic bounce in casino activity and high demand for its online sports gambling platform. Its second-quarter profits showed a net income of $920 million compared to a loss of $123 million in the same quarter of 2022.
How to Bet on the 2024 Recession
If you want to bet on a recession, you need to be careful and think about putting your money in different areas.
Remember that the stock market can be hard to predict, and what happened in the past doesn’t mean what will happen in the future. Before making any big investments, it’s important to do your own research, consider what you can afford, and talk to a financial adviser.
To stay updated on the latest betting news, make sure to follow OnlineGamblers.com.
The rise and fall of sports betting stocks using David Portnoy as the guide. https://t.co/w24RwEAZmd
— Alan Woinski (@awoinski) June 16, 2023
Michael Burry is famous for predicting the 2008 housing market collapse. Recently, he has placed a significant bet against the stock market, indicating that he expects a considerable market downturn.
According to SEC filings, Burry’s firm, Scion Asset Management, has placed over $1.6 billion in put options against the S&P 500 and Nasdaq-100.
Earlier this year, Burry sent a cryptic message to his 1.4 million Twitter followers simply stating, “Sell,” but later admitted, “I was wrong to say sell.”
Yes, Steve Hanke, a professor of applied economics, and Warren Buffett, CEO of Berkshire Hathaway, have also been making moves that indicate they expect a recession.
The US Money Supply (M2) is contracting at a rate of -3.7%/year, indicating that the US is sleepwalking into a 2024 recession.
One can bet on a recession by buying put options against stock indices, short selling stocks, or investing in assets like gold or Treasury bonds.
The online gambling industry is on the rise, with a 45% expected increase in cash bet on US sporting events in 2023, amounting to nearly $137 billion.
Some good bets for investors in the sports betting industry are Penn Entertainment, DraftKings, Flutter Entertainment, Churchill Downs, Caesars Entertainment, MGM Resorts, and Boyd Gaming Corp. However, this is not financial advice but marely information on trends.
Penn Entertainment has grown by 8.6% in the last month.
DraftKings has grown by a huge 177% in the first seven months of 2023.
As of August 1, Boyd Gaming Corp.’s stock price has gone up by 25.3%.
Flutter Entertainment’s stock price has risen by 42.4% as of August 1, 2023.
Caesars Entertainment showed a net income of $920 million in the second quarter, compared to a loss of $123 million in the same quarter of 2022.
It is essential to do your own research, consider what you can afford, and talk to a financial adviser before making any significant investments.
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