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we all know Michael bur is a big name in the investing and hedge fund space his strategy to short the housing market was unusual and most people at that time couldn't even understand his strategy but once he successfully made money by shorting the housing markets everybody started looking up to him whatever he does now is extensively draged by everyone and they try to figure out his strategy and the end goal but did Michael bu always want to be an investor and man manage a hedge fund or did he want to do something else let's see the background journey of Michael bur and how he became a hedge fund manager and ended up making millions but before that please subscribe to the channel to learn more about money and businesses most people who watched the movie have the wrong idea about Michael bur being an honorary doctor but the reality is that Michael bur is a real Doctor Who was allowed to treat patients medicine and Finance are completely different fields and they both require different skill sets and knowledge bases to become a doctor and have success in the financial field requires certain qualities and attributes and Buri had both of them the reason bur had both of these attributes was because of his fake left eye in his childhood to save his life from cancer doctors had remove his left eye and since childhood he used to wear this fake eyeball because of this in his childhood he got bullied and ostracized by other kids from his school so he made no friends and talked very little with other people even though he liked football which is a team sport he chose swimming as his sport as it needed no team when he grew up bur faced issues talking to people in person and everyone used to focus on his fake eye which would make him and other people both uncomfortable so he spent most of his time alone by his late 20s he thought of himself as the type of person who didn't have friends bur himself says my nature is not to have friends and I'm happy in my own head because of this he had more trouble with small talk and faking interest in other people's concerns and hobbies you can see this in the movie when he interviews his assistant since childhood he had spent most of his time alone and because of that he had developed a fantastic ability to focus and learn with or without teachers that's why Michael bur could switch back and forth between English and economics and pick up enough premedical training on the side to get himself admitted to the best medical school he studied medicine because it wasn't hard for him for most people getting into and studying medicine itself is hard but bur was kind of doing it for fun or a hobby bur had no superficial liking for a subject either he liked a subject and was obsessed with it or he was not at all interested in it there was no middle ground all of his abilities developed because of his minimal human interaction and the main reason for the minimum human interaction was his fake left eye so overall all of Michael bur's abilities or analytical superpowers developed because of his fake left eye because of his immense Focus bur was capable of doing a 14-hour shift in the hospital and after that 14-hour shift he used to work on other technical things he liked bur's super fast thinking abilities made his superiors doubt him and even got him treated by the psychiatrist who misdiagnosed him as bipolar after his medicine degree the idea of the actual practice of medicine and treating patients bored him when he was a kid his father used to show him the stock charts and told him that the stock market is like gambling and you can never trust the market but he still had curiosity about the market and kept reading about the stock market when he grew up he understood that there was no logic in these charts graphs and stock tables he studied various investors such as Benjamin Graham and Warren Buffett he figured out that to be a great investor you can't just copy other investors even though he admired Warren Buffett he understood that he couldn't be a carbon copy of him he knew that all these great investors had their own style and he had to have the same he knew investing was something you had to learn how to do on your own in your own particular way so the approach he took was value investing this approach required a tireless search for companies so unfashionable or misunderstood that they could be bought for a much lower price this value investing is what made bur successful and it is also mentioned in the movie that he always looks for Value I look for Value wherever it can be found in the late '90s during the do com bubble one day while working at the hospital during the break he logged into a website called tech.com and there he created a post or thread named value investing at that time this website was used by many real life Silicon Valley investors as a discussion forum bur had already read everything he could about value investing and by creating a post on tech.com he wanted to learn more about value investing from realworld invest ERS initially people on these sites didn't take him seriously in the discussion they thought bur was a doctor and his opinions were not useful but because of his knowledge and understanding of the markets eventually bur used to dominate the discussion among other professional investors on that website after that some of these professional investors used to take his advice and they would make money with it once he figured out he had nothing more to learn from the crowd on tech.com he quit the site and made his own website where he posted his stock market trades and his Arguments for making those trades he used to work 16-hour shifts at the hospital after that between midnight and 3:00 in the morning he used to post his trades on his website eventually people found his website and they were impressed by his trades they used to wonder being from the medicine field how he could make such accurate trads this continued during the dotom bubble as well during the dot bubble everyone was losing money but bur's trades were 50% higher than everyone else's bu couldn't see exactly who was following his website but he could tell which domains they came from in the beginning his readers came from random websites they were just random people but pretty soon people were coming to his site from Mutual Funds like Fidelity and Big Wall Street investment Banks like Morgan Stanley one day he criticized vanguard's index funds and soon after he got a legal letter from vanguard's lawyers telling him to stop bu then found out that serious investors were also watching his trades on his website in short bur was recognizing patterns no one else on Wall Street was able to see when his father died he inherited some money he closed his website took a little more money from his family and friends and started his own fund Scion Capital when he was looking for an office space for for his new fund he received a surprising phone call the call was from a big investment fund Gotham capital in New York City Gotham was founded by a value investment Guru named Joel greenlot in the movie he is shown as Lawrence field he told Buri that his firm was making money off his trade ideas from his websites and they wanted bur to continue to do so so Gotham Capital wanted to invest in the Sion Capital fund they invested $1 million for 25% ownership of his fund that's why in the movie you see Lawrence asking for his money back as a partner in The Firm give me mying money back after that he got another call from a firm named White Mountain this firm was run by a person who was very close to Warren Buffett he told bur that they were also watching his trades and were making money from his strategies so basically Warren Buffett was also watching Buri to make a profit wait Mountain invested $600,000 for some percentage of Scion capital and they also gave $10 million for his fund right from the start cion Capital was very successful in its first year in 2001 the S&P 500 fell 12% but Scion was up 55% the next year the S&P 500 fell again by 22% and yet Scion was up again by 16% the next year in 2003 the stock Market finally turned around and Rose 29% but Scion Capital beat it again and it was up by 50% by the end of 2004 burry was managing $600 million in the fund Michael bu ran the fund differently he didn't take the typical hedge fund manager fee of 2% which was just a fee to collect a huge amount of money from investors Scion Capital charged investors only on its actual expenses and bur charged fees only only when he was capable of growing investors money this unusual approach to hedge funds was unheard of on Wall Street so bur had many investors lined up to invest in his fund but he rejected most of them it didn't matter whether the stock market went up or down Michael bur found stocks that were profitable he used no leverage and avoided shorting stocks this is ironic because the man who was known for making the biggest short on Wall Street initially avoided shorting the stocks Michael bu used to sit in his office alone and read the financial statements of the companies he went to looking for publicly available information court rulings deal completions and government regulatory changes anything that might change the value of a company after he found the value in a company he used to buy the stocks of that company his aim was to focus on stocks which everyone would think of as bad Investments and would right away say no to one such example was a company called Avanti Corporation this company was accused of stealing from its competitor and the executives of the company were serving jail time still the company was making $100 million per year Michael bur started studying this company and by the time he was done he knew more about the Avanti Corporation than anyone else he was able to see that even if the executives went to jail and the fines were paid Avante would be worth a lot more than the market then assumed so to make money from Avon's stock he had to face short-term losses as everyone was selling because of bad publicity of that company but eventually Avanti stock Rose and he made Millions for his investors his investors knew this was a classic michaelb trade style where the stock first goes down by 50% and then goes up by 10 times to avoid short-term panics in the markets it was Michael burry's policy that if you gave Scion your money to invest you were not able to take it out for at least a year after this bur focused on the housing market and we will see the details of that in one of our next videos if you want to learn more about the big short in the 2008 crisis then check out this playlist
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