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Becoming NFT?

This transcript details a rare and revealing conversation between Michael Lewis (author of The Big Short) and Michael Burry (the famous investor who predicted the 2008 housing crash).

Burry is notorious for being reclusive and avoiding interviews. He agreed to this talk to explain his recent controversies and his bearish outlook on the current stock market, specifically regarding Artificial Intelligence (AI).

Here is a breakdown of the key concepts and warnings Burry presents.

1. The AI Bubble: "The Two Luckiest Companies"

Burry is betting against the current AI hype, specifically targeting Palantir and Nvidia. He compares this moment to the Dot-com bubble of 2000.

The Argument: He believes the market is valuing companies based on "infrastructure build-out" rather than actual profitable utility.

The Historical Parallel: In 2000, companies spent billions building fiber optic cables and routers (the infrastructure of the internet). The stock market crashed before that building was even finished.

Nvidia & Palantir: Burry calls them "lucky." They didn't invent AI products; they just happened to have products (chips and data software) that could be repurposed for the AI trend.

Burry’s Warning: Just because a technology (like the internet or AI) is revolutionary doesn't mean the stocks won't crash. In 2000, Cisco's revenue kept growing even as its stock price collapsed.

2. The Palantir Short: Understanding the Bet

The media recently reported that Burry had a massive "short" position against Palantir. Burry clarifies two things: the size of the bet and the reason for it.

The Media Error (Notional Value) The news claimed Burry bet over a billion dollars. Burry explains this was mathematically wrong. He bought Put Options.

The Media Math: 50,000 contracts×100 shares×$200 stock price=$1 Billion reported position.

The Reality: He only paid the premium for the options (about $2). So his actual risk was roughly $10 million, not $1 billion.

Why He Bet Against Palantir He argues Palantir is a "consulting company" masquerading as a tech giant.

The Billionaire Ratio: He noted Palantir created 5 billionaires despite only having ≈$4 billion in revenue. He views this as excessive wealth extraction by insiders.

Dilution: The company pays employees in stock (Stock-Based Compensation). To keep the share price up, the company has to buy back its own shares, which burns cash.

3. The Danger of Passive Investing

One of Burry's deepest concerns is the shift from Active Management (stock pickers) to Passive Management (Index funds/ETFs like the S&P 500).

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The Problem: Today, over 50% of money is "passive." When money flows into an index fund, it buys every stock in the index regardless of whether the company is good or bad.

The Consequence: In the past, if the tech sector crashed, value stocks might go up. Now, because everyone owns the same "basket" of stocks via ETFs, if the market turns, everything will crash together. This is why he closed his fund to outside investors—he predicts a long, painful bear market where there is "nowhere to hide."

4. Macro View: Debt, Crypto, and Gold

Burry is known for his "institutional pessimism."

US Debt: He views the US fiscal situation as unsustainable (trillions in interest payments), but he refuses to short it because the US government is too powerful and can print its way out for a long time.

The Fed: He believes the Federal Reserve is largely useless and potentially dangerous, especially if it loses independence to political figures.

Bitcoin: He calls Bitcoin at $100k "ridiculous" and the "tulip bulb of our time," arguing it mostly facilitates criminal activity.

Gold: He has held gold since 2005 as a hedge against currency collapse.

5. Why He Talked to Michael Lewis

Finally, Burry reveals a personal side. He has Autism Spectrum Disorder (ASD), which allows him to analyze data without emotional bias ("move back into my own head").

He admits he originally cooperated with Michael Lewis for The Big Short book as a defensive measure. He knew Wall Street would hate him for betting against the American economy, so he gave Lewis all his emails to prove he didn't do anything illegal—he just did the math when no one else would.