ClaimsMichael Burry

“The S&P 500 could easily finish the year in the negative, dragging many investment funds – too many of which are crowded into the same “value-but-for-a-dire-economy” trades – down with it.”

Michael Burry, Scion fund manager, quoting 3Q 2007 letter 2007 Scion Funds annual letters compilation (investorkurs.no)

Prediction Economics and markets

The S&P 500 could easily finish 2008 with a negative return, dragging down crowded value-oriented investment funds.

Resolved true The record shows it happened or was so.

Prediction: Statements about events outside the person's control, checked once they fell due: did they come true?

The second judge said mostly true; the verdict shown is the first judge's.

Said for an organisation they lead or work for; it counts on both records.

What would count as true or false

The claim is hedged ('could easily'). It is judged on whether the outcome it describes happened in calendar 2008. The two parts are (a) the S&P 500 finished 2008 with a negative return and (b) crowded value-oriented investment funds were dragged down with it. True: the S&P 500's 2008 return (price return, 31 Dec 2007 close to 31 Dec 2008 close) is negative, and value-oriented funds broadly had negative 2008 returns. Mostly true: the S&P 500 return is negative but the evidence on value-oriented funds is thin or only partly supportive (for example, some prominent value funds fell but the decline was not broad). Mixed: only one part clearly holds and the other is clearly contradicted, for example the index fell but value funds as a group posted gains. Mostly false: the S&P 500 finished 2008 flat or just positive (up 0-2%) while value funds fell. False: the S&P 500 finished 2008 clearly positive (more than 2%) and value funds did not decline.

Set before the research began.

Evidence (4)

  1. E1 Market Closes On Worst Year Since 1931 CBS News · 31 December 2008

    “The Standard & Poor's 500 index, the indicator most watched by market pros, slumped 38.5 percent in 2008 and 44.8 percent from its 2007 high of 1,565.15.”

  2. E2 Markets' fall in 2008 was worst in seven decades ABC News · 2 January 2009

    “After delivering investors a brutal 38.5% loss, 2008 stands as the worst year for the Standard & Poor's 500 since 1937.”

  3. E3 Markets' fall in 2008 was worst in seven decades ABC News · 2 January 2009

    “Shares of large companies with value-priced stocks, generally considered a safer part of the market, lost 38% of their value as measured by the Vanguard Value exchange traded fund.”

  4. E4 Q408 a Dark Time for Equity Investors | PLANSPONSOR PLANSPONSOR · 5 February 2009

    “Value funds outperformed growth funds during the quarter, as the median large cap value fund posted a loss of 21.4% compared to a loss of 23.1% for the median large cap growth fund.”

Reasoning

Two independent reports (E1, E2) say the S&P 500 fell 38.5% in 2008, so the index clearly finished the year negative. E2's report on 2008 (E3) also says large-company value stocks, measured by the Vanguard Value ETF, lost 38%. PLANSPONSOR (E4) reports that the median large-cap value fund lost 21.4% in the fourth quarter of 2008. Together these show value-oriented funds fell in 2008, though the fund evidence is limited to one ETF's full-year loss [E3] and a fourth-quarter median [E4].

Cite this claim

Michael Burry, “The S&P 500 could easily finish 2008 with a negative return, dragging down crowded value-oriented investment funds.” (said 2007). Verdict: resolved true. Reliability API, claim c_028a8b4421a9, method 0.1.0+c876030c, dataset release v1.1.2. https://epistacklabs.com/claims/c_028a8b4421a9

This claim is in dataset release v1.1.2, with the same verdict.

Reply to this claim

For Michael Burry, or someone speaking for them: a correction or counter-evidence. Replies are read before anything is shown; an approved reply shows your name, role, date, statement and link. Your email address is never shown and is deleted 30 days after the decision (privacy).

More prediction claims by Michael Burry

  1. Mostly false Prediction 5 April 2011
    “All personal income taxes collected in a year do not so much as add up to $1 trillion dollars, and yet by 2020 interest expense on our national debt alone could exceed $1 trillion.”

    US interest expense on the national debt alone could exceed $1 trillion by 2020.

  2. Resolved true Prediction 5 April 2011
    “Today, I expect the US government to attempt to continue easy money policies into the next presidential term”

    Burry said he expected the US government to attempt to continue easy money policies into the next presidential term.

  3. Mixed Prediction 2008
    “I imagine the shares of these companies, in most cases, will become very boring before they become attractive again.”

    Burry said he imagined that shares of most of these financial companies would become very boring before they became attractive again.

  4. Mostly true Prediction 2008
    “Less leverage and lower returns on assets are now in the cards.”

    Less leverage and lower returns on assets are now likely for financial institutions.

  5. Mostly true Prediction 2006
    “I expect that rising delinquencies and defaults will continue to drive these ratios higher.”

    Rising delinquencies and defaults will continue to push delinquency-to-credit-support ratios higher on the subprime tranches Scion is short.

All of them

Verdicts are made automatically; how verdicts are made.