Why Top Investors Are Betting Against the USA

Michael Burry, the investor made famous when he shorted the US housing market before the crash of 2008, has recently bet against the US Bond market. What relationship between the economy and the stock market made him think this would work, and is this a sign of things to come?

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[CliveBirse]

Biggest lesson i learnt in 2022 in the stock market is that nobody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.

[michaelwebsternz]

The problem with saying the US market is too overvalued compared to US GDP doesn't take into account that most of the S&P500 companies are global and make a lot of profits outside of the USA. So that correlation really doesn't make any sense anymore, it did a long time ago. Also quite a number of offshore companies are listed in the US markets.

[seanabbott]

The only thing propping up the US dollar at this point is that every other major currency is managed even worse.

[justin]

Bots are out in full force in this one.

Awesome video always learn something.

[egal]

7:52 that's because of the massive bubble that burst in 1990.
Often times GDP growth and the stock market are negatively correlated. Since new companies are formed or new shares issued the returns of the stock markets for investors tend to lack behind economic growth. In mature economies the companies tend to earn somewhat consistent aggregate earnings, which they then distribute to shareholders and increase the indexes.

[steveofthewildnorth]

Investors in question didn't make all that money by being wrong, but then again, they're not always right. Wall Street is chock full of survivor or success bias. We tend to ignore all the times said investors were wrong.

[wertywerrtyson]

The stock market today is very different from the old days because almost everyone has money in it through their savings, pensions or both. Many people have automatic savings each months into index funds and such so it’s not really based on what they believe is going to happen in the short term. Everyone automatically dumps money into the system every month no matter how it is going at the moment. I’m
One of those people I have both savings for my kids and my pension automatically invested in index funds every month. Historically that’s been a good thing but who knows if we millennials will ever get to retire. They keep pushing the age higher and higher in many countries. Here it’s expected to reach 70 for us born in the 80s and many in my family barely reach 70. But as long as people keep putting money into the system the values will increase. But if for some reason people stop putting their pensions and savings into stocks at a grand scale then it could really collapse the stock market.

[Croz]

In terms of the US stock market being overvalued, I wonder how much of that is tied up with a small minority of tech megacorporations and silicon valley unicorns where investors seem to believe they can put the moon on a stick as a long term goal. A correction in that regard might not be all that damaging to the US economy as a whole. A few companies in the tech bubble get brought down to earth, but they won't collapse or anything, and while a few investors will lose their shirts, long term investments are still going to be up from their initial investment.

[londonwerewolves]

70s: Inflation & OPEC will destroy US economy
80s: Japan manufacturing will destroy US economy
90s: Unified Europe consumer population will destroy US economy
00s: Southeast Asia labor costs will destroy US economy
10s: China will destroy US economy
20s: BRICS size & diversity will destroy US economy

OK, but if this doesn't happen in the next 50 years... I might become skeptical.

[bballchump]

It's been argued that the Buffet ratio has lost some significance over the years because of how international US corporations have become. For example, Apple only made 38% of its revenue from the Americas region in Q2 2021.

[christianlapointe]

Wow, graphics were particularly good in this one. Kudos to the animator .

[RSTGTT]

The big move right now would be betting against Canada imo: massive inflation, real estate bubble so fat the weighing scales are breaking, no jobs, economy is shriking... Good times ey

[pirate]

at 5:11 there is a small error. the SP500 is the 500 largest companies listed with plurality of assets in the USA and also the company has shown previous profitability. As an example, Uber, despite meeting the criteria that EE described, isn't on the SP500.

[peters]

I seem to watch a lot of Aussie YouTube’s. Well done Australia! Great English grammar, interesting, concise and well researched newsworthy items generally imho. Appreciated!

[berttorpson]

EE: no one can predict the future
Everyone who watches EE regularly: especially economists.

[wouldntyouliketoknow]

The fact that there is no strong correlation between the two is concerning. We know that those two things SHOULD be correlated. If they arent, that indicates that the stock market is fake. Valuations are vapor, money isnt real.

[torpedospurs]

Most of the companies in the US stock exchange are multinationals, so anything that breaks globalizarion will hurt their earnings. It doesn't have much to do with the US economy itself except insofar that deglobalizarion ends up hurting it too.

[ShrimpOfDeath]

Petition to add Divination as a subject for economics students.

[lilytea]

0:17: 💼 The stock market and the economy are interconnected, and their performance can impact each other in various ways.
3:02: 💼 Econometrics is the use of statistical methods to analyze economic data and provide useful information for decision makers.
6:01: 📈 The stock market and the economy do not always move in the same direction, as seen during extreme circumstances like the global pandemic.
9:02: 📈 The size of the US stock market can be both a blessing and a curse, with its immense value and high income potential.
12:07: 💰 Buying and selling bonds can be a profitable investment strategy.
Recap by Tammy AI

[ImHavingaCoronary]

I love that Michael Burry has become "the face" of top investors, but that isn't even his own face. He's basically the chicken little of investors, running around crying "this is failing" and getting lucky once in a while.