Financial genius in 'Big Short' says shutting down the economy is crazy

rojo wrote:

When you talk about human toll, there are a lot of people that are going to be in grave financial ruin if this goes on for 18 months.

That's what everyone assumed would happen: the experts would come up with a plan, the government would implement a plan, and little by little life would return to normal, with occasional need for additional measures to cope with local outbreaks, much as we're seeing in parts of Asia and Europe.

But what we're actually getting is a lack of national strategy, a president and conservative media that short-circuits any national plan before it can fully take effect, and lasting uncertainty about how bad things will get or how long they'll last because so many people are flouting the rules, selling snake oil or mocking the idea of doing anything at all.

Who TF is Michael Burry? wrote:

Who TF is Michael Burry and why should we care what he thinks? Is he an epidemiologist?

He's Batman

Sweden is projecting a 4+% GDP decrease despite not really enforcing lockdowns.

Economic data before and after shelter in place orders suggests business were being hammered before the government stepped in. Nobody wants to go out in a pandemic.

This is not something the government can solve by telling people to get back to work.

People still don't get it.

Burry is autistic. He can be a high IQ person in or more realm but Burry has emotional intelligence deficits. He did not go to college or graduate school to study economics. I am not going to listen to the social science opinions of a man who washed out of medicine and by the time it was all said and done, washed out as a hedge fund manager.

It will be interesting to see how this stat gets affected in 2020:

https://upload.wikimedia.org/wikipedia/commons/3/3f/Total_suicides_in_the_United_States_1981_2016.png

Will corona top 48,000 deaths (2018 suicides)?

Even if corona kills 100,000 (twice the normal flu/pneumonia figure), it will represent a little over 3% of typical mortality. the average person has nearly thirty times the likelihood of dying from heart disease or cancer, and many of those are from younger cohorts than corona.

you don't play the game well wrote:

two can play that game wrote:

How many economically influenced drug addictions and suicides will you trade to keep your 90-year-old grandmother alive for an extra 6 months?

People who die of drug addiction and suicide willfully make those decisions. People who die from the corona virus don't go looking for a virus dealer or order extra viruses from their doctor. The also don't pick up a corona virus and blow their brains out or slit their wrists.

I'm not knowledgeable enough about this stuff to either agree of disagree with Dr. Burry, but I don't think the fact that drug addicts and suicide victims willfully make those decisions really makes a different here. These people make the decision to use drugs or to kill themselves because of the misery they experience in their lives. If you increase the misery people experience and people kill themselves as a result, I don't see why that's any less tragic than someone dying of a virus.

800 dude wrote:

PAR wrote:

Finally, let me ask this - if ending the shutdown resulted in the death of your spouse, your kids, your parents, your siblings, your relatives, and your best friend - would it still be worth it to you? Because if you end the shutdown prematurely, someone else's spouse, kids, parents, siblings, relatives, and friends will die and that shouldn't make it less important to you.

That's like asking someone if it was worth going all in with a flush when it turned out that the other guy had a full house. You can't assess intelligent risks ex post. Then it's not risk anymore; it's certainty.

Exactly!!! Finally someone gets it.

Burry is autistic. He can be a high IQ person in or more realm but Burry has emotional intelligence deficits. He did not go to college or graduate school to study economics. I am not going to listen to the social science opinions of a man who washed out of medicine and by the time it was all said and done, washed out as a hedge fund manager.[/quote]

There was a heated facebook battle between a dad of one of my kid's friends and a bunch of moms. The dad is an engineer and is on the spectrum. He made the identical argument that Burry makes. There were basically three big premises in the Barry argument that broke down after further scrutiny and revealed the unintended lack of empathy that is common in people on the spectrum.

1. People are suffering worse now than they would be if we all risked infection. There have definitely been rises in domestic abuse incidents and mental health episodes due to lockdown measures. But who can say with any certainty that it would be any better if we hole up the at risk people and let everyone else go back to work? Remember, at risk people include about 15% of the workforce who are over 60. And would also include people who are obese, have diabetes, asthma, and so on. And they would all be locked down until a vaccine could be found as the virus would spread very quickly among everyone who goes back to work. So, you may lower the economic pain, but you are actually making life even worse for a very significant group of people.

2. There are actually some benefits to being in lockdown. I am neighbors with a cop. While domestic violence calls are up, everything else is way down. DUIs, murder, assault, auto accidents have all dropped off to almost nothing. Air quality has improved, with LA seeing some of the best air quality in decades. And a lot of people are coping with this quite well. My kids have Zoom meetings with their teacher. People are out going for walks in the neighborhood. Mutual aid groups are sprouting up everywhere to take care of the elderly in our neighborhood.

3. There are a lot of people who do not want to risk their lives to work and compliance with a partial lockdown is very doubtful. There is a diabetic guy in my office. If his wife goes to work, he would have to quarantine himself in an RV or something. Thus, there really isn't just a way to flip a switch and separate out at risk groups from everyone else. We all live together. And polls have shown that people do not want to come back to work until it is safe. My wife works in schools. She told me that she will quit if they try to make her go back this school year. It is not hard for her to find a job in her profession. So, that is a real option for her and many others in similar situations.

So, the world just doesn't work the way Barry thinks it works. People are not rational. People have fears and value health and family over shareholder equity prices.

Moo Goo wrote:

He got lucky once. He has been doubling and tripling down on moribund Men's Warehouse stock. I lost all respect for his acumen.

He got lucky once? Here are Scion Capitals returns vs. the S&P:

Year Scion S&P

2000 6.61% -7.45%

2001 44.67% -11.88%

2002 13.10% -22.10%

2003 40.81% 28.69%

2004 8.86% 10.88%

2005 6.49% 4.91%

2006 -18.16% 15.79%

2007 138.27% 5.49%

2008 3.09% -9.45%

SI 472.40% 5.20%

He did 90 times better than the S&P over an 8 year period, not just once.

Primarily he has been investing privately since then (including buying up farms like the almond farm he lives on with his family in California). Every couple of years you can pull up a filing of his investments when he gets over the $100 million threshold.

One of my favorite quotes of his is from the UCLA commencement speech, "Accept the world for what it is, work hard to exploit the opportunities it presents, and try to do so in as just a manner as possible."

This guy is a M.D. and he still can't get it right.

student of economics wrote:

Burry is autistic. He can be a high IQ person in or more realm but Burry has emotional intelligence deficits. He did not go to college or graduate school to study economics. I am not going to listen to the social science opinions of a man who washed out of medicine and by the time it was all said and done, washed out as a hedge fund manager.

First off, you are wrong, he got dual degrees as an undergraduate in Economics and Pre-med. He graduated from medical school and did a neurology and pathology internship at Stanford Medical while writing financial articles for Microsoft and investing money. He went into finance because it was his passion, not because he "washed out" of medicine. He even keeps up his medical license. Saying he "washed out as a hedge fund manager" is like saying Seinfeld "washed out of television". He pulled a Costanza and left on a high note because he was tired of being threatened with lawsuits by investors and audited by the government because he was able to see something that nobody else did.

Economists think that ending social distancing too early would be more damaging than not. I'm surprised 50 people can agree on pretty much anything nowadays...

https://www.vox.com/2020/3/29/21198750/chicago-poll-social-distancing-economy

joedirt wrote:

One of my favorite quotes of his is from the UCLA commencement speech, "Accept the world for what it is, work hard to exploit the opportunities it presents, and try to do so in as just a manner as possible."

It's great that you and he see a global pandemic and lots of death as an opportunity to be exploited!

You also apparently have a shared lack of empathy.

What I would argue, and what Burry is arguing if you bother to read his warnings as a doctor and investor, is your emotions are causing you to adhere to a mitigation plan that, while well intended, is far more harmful in both economic terms and in terms of human life than restarting the economy would be. As far as other economist having a different point of view, that is nothing new. He is used to being called Chicken Little. Bernanke and Greenspan believed firmly in the economic policies that led to the housing crisis.

Not quite. How would economists know what the impact of getting a virus is? Are they doctors also? What if they were told that only members of society are past their working years are impacted? Their answer would have been quite different.

He's wrong. The economy would tank without government intervention. Turns out people don't like going outside when there's a pandemic. Shocking....

Actually the article says "there is broad agreement among economists that there is no economic gain to be had by opening up businesses if that allows the virus to overwhelm health care system capacity in the way we’ve already seen in Wuhan, Lombardy, Madrid, and now New York."

This implies (though is captured anecdotally rather than through a direct survey question) that the damage isn't only from the people that will die from the virus, but in the broader impact that will have on the world when the hospital system is overwhelmed (as has been seen elsewhere) which DOES have massive impact even on those who don't have the virus. More young people will die from trauma/infection that otherwise could have been cared for, first responders will be overwhelmed, etc. Second and third order impacts matter.

Of course, if it overwhelms the healthcare system which it is not doing. And to the guy who thinks people are spending more time indoor, false. People are home from work and school and are therefore spending way more time outdoor. I have never seen so many people outside, ever, regardless of time of year or day of week.