- Michael Burry predicted post-reopening inflation back in April 2020.
- The “Big Short” investor also said earlier this year that prices could surge.
- Burry trumpeted the value of profitable companies during inflationary periods.
- See more stories on Insider’s business page.
Michael Burry said as early as April last year – weeks after the first lockdowns in the US – that the post-pandemic reopening could cause inflation to spike. His prediction was proved right this week by data showing that consumer prices had jumped by 4.2% year-on-year last month, the sharpest increase in 11 years.
“When we start working and playing again, inflation may be in store,” the investor told Bloomberg for a story published on April 7, 2020.
Burry is best known for anticipating the collapse of the US housing market in the mid-2000s and making a billion-dollar bet on that outcome. That episode of his career was immortalized in the book and movie “The Big Short.” He also helped lay the groundwork for the meme-stock frenzy earlier this year by investing in GameStop and pushing for changes at the retailer in 2019.
The Scion Asset Management chief ramped up his inflation warnings this February. He cautioned that stimulus checks, the Federal Reserve’s continued pumping of liquidity into markets, and the reopening of large parts of the economy were likely to drive prices higher.
“Prepare for #inflation,” Burry tweeted on February 19. “#Inflation pressure building. The Fed is monetizing $80 billion of Treasury debt per month, and now comes $Trillions in stimulus/debt + reopening,” he tweeted four days later.
Burry highlighted America’s inflation woes in the 1970s and Weimar Germany’s hyperinflation in the 1920s as cautionary tales about the risks of soaring prices. He also flagged Warren Buffett’s description of inflation as a “tax on capital,” saying it discourages companies from investing by reducing their real returns and acts as an implicit tax on investors by eating into their purchasing power.
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The Scion chief’s takeaway was that profitable companies shine during inflationary periods.
“Each $ of earnings today becomes important,” he tweeted on February 23. “Earnings 10 and 20 years from now, the corollary goes, may be worth substantially less tomorrow’s today.”
Burry not only raised the alarm about inflation but said in February that the stock market was “dancing on a knife’s edge” and called out Tesla, GameStop, bitcoin, and Robinhood as examples of dangerous speculation in markets.
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