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Today we're going to learn about Michaelry, and he truly is a legend in the stock market. This is something no one can dispute. And in recent months, he has made a prediction that the bubble in tech companies' assets is now too big . He also argued that the increase in revenue and profits is an illusion, not a reflection of the true potential of technology companies.
And we can then ask the question: why are we in Vietnam? Why should we care about bubbles? What is the US financial sector doing? Clearly, in the short term, the VNX (Vietnam Stock Exchange) is not significantly affected by the stock market, but in a downtrend cycle, sometimes once every 10 years, the impact of the US economy will definitely affect Vietnam, especially since Vietnam exports a large amount to the US.
So when the US economy and stock market go down, Vietnam certainly won't be able to export to Russia or India; it will definitely decrease and may even be significantly affected. This is a bit like Michael Burry's biography, which I took from CHPT (a Vietnamese online publication). You can see that he was one of the few people who recognized the US real estate bubble in 2008.
He placed short positions and made a lot of money from it. His investment fund, Screen Capital, was established in 2000, and he dissolved it in 2005. Michael Burry's philosophy is value investing, not speculation, but value investing. He delves deep into financial reports and is extremely patient. He is heavily influenced by two legendary investors, Benjamin Graham and WFET.
His accurate prediction of the 2008 bubble is so famous that it was even adapted into a film, The Big Shot, in 2015. In short, Michael Burry is an investor who saw the 2008 crisis and made billions of dollars from it. He went into the crowd, and here's a sample film – Microbury's film. You can watch it; I found it quite good.
Anyone with free time can watch it. I highly recommend it. All the data I've gathered is from Microbury's site X, which used to be Twitter . So, as you can see in this title, this is the official X account of The Big Shot Michael Burry, also known as Cassandra, named by WF. There's a slightly funny story, a slightly amusing anecdote, that back in 2008, Warren Buffett said that Michael Burry and a group of other investors— he called them Cassandra.
Cassandra, in ancient Greek, refers to a prophet, and the prophet was indeed Michael, a group of investors. However, Michael has since identified himself as Cassandra. Michael's nickname, "Cassandra," is quite interesting; he named him Cassandra, meaning a prophet who predicts events and has been freed from constraints.
That's a pretty cool name. Without further ado, before we get to the video, I'll give you a warning: Michael Berry often makes predictions about seven months before an event occurs, and not all of his predictions are correct. This is what everyone can see: in the year 2022, this is what we're looking at.
When he made this prediction, he set a prize for this sale. Then, at the bottom of this, he said that this whole ordeal would be resolved very quickly and that I didn't feel there was too much danger anymore. And at this point, he said I was wrong to talk about the sell order. And when he makes those predictions, they always have a time lag.
It's somewhere between 6 and 7 months. Because his fund is extremely large, and when a fund is large, they can't short sell in a single session; they have to sell gradually and spread their positions across multiple sessions. So it's not like if he says today is your day, we have to sell immediately.
We can only refer to his arguments and how he analyzes a business . Because I find his business analysis extremely insightful. He has now sold two positions. First, there's the company Plantia. Well, the second one is Nvidia. So, Plant is selling 5 million shares at this price, which is equivalent to about 5 x 160, or approximately $800 million.
This is about another $174 million, so the total would be around $1 billion. These are one or two very large short positions held by Michael Gy. Now we will go through each point one by one . The first point I want to make is that technology companies nowadays are increasing the depreciation period .
This is one of the tricks that can increase profits in a completely legal way. Because if we imagine a company has an asset that we depreciate over 10 years, and the asset is worth 100 units of currency, then the annual expense would be approximately 10 units of currency. But instead of depreciating it over 10 years, if we only depreciate it over 2 years, the cost increases by 50 dong.
So, do nothing. Naturally, the profit margin will decrease by 40 dong. That's just because of one year of increased depreciation. And we see this throughout 2022 to 2025 when the US stock market was incredibly bad, the leading tech companies were all using a mathematical technique, which was to increase the depreciation year.
Previously, in 2020, the depreciation period was 3 years, but by 2025 it will be 5 years. Google's timeframe has been extended from 3 years to 6 years. It has been changed from 5 years to 6 years. 3 years to 6 years and 4 years to 5 years. All the top tech companies are here, from Facebook, Google, Oracle, Microsoft, Amazon.
And when they do this, the system will indirectly increase the company's profits tremendously. But these profits are not the core profits. Do you all understand what I mean ? This profit is only a profit on paper and it cannot be sustained in the long term. And when we invest in technologies, and we see that the profits of these technology companies are growing by 20% a year, we say that the nature of the business is doing better.
But that's not the true nature of these businesses. For example, companies and businesses, even though they are better, are not as good as what the mainstream report says, and when Michael Burry says this is a piece of garbage in the mainstream report . He used the phrase "fa à faudd from," which means "to get out of here." And when we know that as technology continues to advance, the depreciation period for computer equipment must gradually decrease, right?
It can't possibly increase, but tech companies are all increasing the depreciation period . That's clearly absurd. And he also gave everyone an example, which was the company Alibaba. If I remember correctly, it's Alibaba. Well, everyone can see this. In 2021, when the company increased the depreciation period from 4 years to 5 years, the depreciation expense decreased by approximately 982 million and the profit increased by 814 million.
Do you all see? Just one accounting entry, reducing the depreciation period from 4 years to 5 years, results in a 900 increase in costs, a 900 reduction in expenses, and an 814 increase in profit. Similarly, in 2024, reducing depreciation costs from 5 years to 6 years reduces depreciation costs by 1.4 billion yuan (equivalent to $198 million) and increases profit by 1.2 billion yuan (equivalent to $171 million).
So, what do you all see ? Just one small line in a financial report can change a company's profitability. But this profit isn't actual profit; it's just an accounting figure. And this profit cannot be sustained indefinitely. Do you all understand what I mean ? It only lasted for the last few years. Now, people ca n't just jump from 4 years to 10 years all at once .
It can't be that long. So he said this was a pigsty for administrative corruption. It's completely different from other companies. For example, take the NT2 model . As you can see, the current quarterly depreciation for this asset is approximately 172 billion. But in the second quarter of 2025, the company will receive approximately 120 billion VND in depreciation, and this depreciation will only be 50 billion VND.
And this depreciation can extend over the long term, but the depreciation for these companies can no longer be extended. So this is a completely different matter . And once this NT2 project is fully depreciated, the company's annual profit will increase by approximately 480 billion VND. And this is real profit that will definitely flow into the company within the term.
So this is one of the pretty cool piggy banks in tech companies. I'm not using the word "cheating," okay? I used cheats in the dual gem system. So here's the first point, which is to increase the depreciation amount over the useful life of technological equipment. The second factor I want to mention is that technology companies are currently storing this data segment in large quantities.
And the size of this data segment has already started to decline. This is computing. We can understand it simply like this. As AI develops, the amount of data stored, which is a major concern, must increase significantly. However, this upward trend has slowed down significantly. Especially in 2023, let's look at the period from 2018 to 2022 (represented by the black column) and from 2023 to 2025 (represented by the red column).
The growth rate has decreased significantly, from 36% for Amazon to 17%, from 45% to 29% for Alphabet, and from 22% to 20% for Microsoft. These three companies are the leading providers of data, for example, Amazon's combined share is around 66%. So, 66% can represent an entire industry. As you can see, the reduction is extremely rapid.
However, I'm not in the IT industry, so if anything I say about IT is wrong, please feel free to comment below and enlighten me. Yes, I should use the word "enlightenment." When it declines like this, he makes the argument that the foundation of today's AI technology companies comes from the past, not from the current increase in usage.
So, this is just the result of a previous development. And while it's showing signs of decline, the AI industry will also show signs of further decline. And for example, companies like Open AI, such as CH GPT Zini, are currently being established, which is just a consequence of what happened before.
Therefore, the fact that AI technology companies are growing like crazy is not very logical. This is his point of view, you know. My perspective on this point is slightly different: when technology companies achieve success and generate more and more profit, that's sometimes a good thing, not necessarily a bad thing.
Because when they use it this way, they clearly invest more, and when they see results, the data usage decreases. But when they continue their research, they will increase the amount of data used, so they will make a profit. It's possible that I don't fully understand this part because I'm not an IT in-house professional, so my explanation might be a little confusing.
I hope everyone will understand, and if anyone truly understands, please feel free to leave a comment . Okay, now for the third part, before we get to that part, if you enjoyed it, please remember to leave a like and subscribe! It's simple, because it's free. Then, the third part is that he said that tech companies today are using a strategy to increase revenue.
But this increase in revenue is only happening within this technology sector. And when it only caters to this specific technology group, it will almost certainly inflate revenue and profits artificially. We can take an example: these companies frequently purchase services from each other, and when they frequently purchase services from each other, it's similar to how companies operate in Vietnam.
For example, companies within an ecosystem are constantly increasing their virtual capital. For example, let's take rooting FLC as a case in point. That event is perfectly clear. Companies within an ecosystem, for example, the FLC root, raise their capital virtually, right? And when you increase capital like that, the company's market capitalization increases, its profits increase, and its revenue also increases.
But essentially, it remains the same, right? So, looking at this chart , the red line represents hardware and the blue line represents software , while the blue line represents investment. Now, that blue section represents the use of various services. That green color represents venture capital. So, looking at this, we see that essentially all the companies revolve around Nvidia.
For example, MVDA agreed to invest $100 billion in Open AI. Then Open AI signed a $300 billion hosting deal that was a huge success for Oracle. Oracle is once again using $10 billion from its NVIDIA chip purchase. So it's clear that these companies are essentially just trading with each other, and it doesn't create any external value for other companies.
And if a company fails to create value for other companies, then if just one company breaks free in this chain, it will immediately collapse. It's like a domino effect. And when these companies only create value within a single value chain, it's like an ecosystem of companies within an ecosystem, for example, FLC root, where they pump capital into each other, but it doesn't come from the inherent nature of the businesses themselves, which is why it's better this way .
He presented that argument, so I gave everyone an example: like ANB 100, BNC 100, and then CNA 100, it seems that these companies don't owe each other anything, right? But when they give it to each other, their revenue will obviously increase. Do you all understand what I mean? When they introduced this, their revenue increased.
Each revenue stream is essentially the same. So people might say, "Oh, for example, two businesses buy and sell with each other, like DGC P for example." DGC sells apatite ore to P, and P then sells yellow phosphate back to DGC. But everyone needs to understand that the nature of this is completely different from that of technology companies.
These technology companies use each other's services and also provide value to each other . But P and DGC, even though they use these raw materials and then sell the finished product, they are selling it to a third party, creating value for that third party, which is Mitsubishi Corporation of Japan, right?
And it creates its own product and it creates its own value. But here, it only creates value within the ecosystem of these companies. So he said that when things are created that way, the revenue and profits of these companies are essentially illusory. And then, one final point he mentioned was the PNI ratio, which he said is currently too high.
As we can see, during the Great Depression years—I'm referring to the Great Depression of 1929-1950—the PI (Profitability Index) of the US stock market only fell to around 30 . But when we are in 2025, we can't possibly compare ourselves to the crises of the 1920s . Because we know that in the 1970s, or maybe 1971 if I remember correctly, the Fed abandoned the white paper and when they switched to the yellow paper, they pumped out an enormous amount of money.
So the price level P will definitely go up, but that upward movement must also have a peak. The peak of the global stock market economy was around 45. That's when, according to bongbong.com, it was in the 2000s. Currently, he's also issuing a warning that the PE ratio of the US economy is extremely high, around 40, almost reaching the peak of 44-45 during the bubble burst period.
He's saying that the current value has exceeded the potential health of the US stock market, and that the US stock market is currently overvalued. However, I wanted to point out this to everyone: when he makes his predictions, he usually makes them about 6 months to a year earlier than expected. And we also see that in the decade, for example, the decade of 1929-1930, the years 28 and 29 had already reached a high level.
But from the height of its flight until it explodes, it's an extremely long period of time. So, when we watch this video, we should only analyze his perspective . As for how the buying and selling process will be carried out, we will need to consider many factors. For example, technical analysis. Because when they sell and distribute goods, there will inevitably be extremely long periods of sideways movement, giving them enough time and sufficient volume to distribute the goods.
And if we look at the current US stock market, it's still experiencing an incredibly strong upward trend and shows no signs of leveling off. Personally, I think the US stock market is unlikely to fall in the short term. But this gives everyone a perspective that I think, the perspective of a legendary investor, is definitely quite interesting.
Especially what I've learned is that some of the fraudulent practices in financial reports involve increasing the depreciation amount, right? Or perhaps it's about looking at it from an overall ecosystem perspective. If it's just about ecosystems creating value for each other, then sometimes the revenue and profit figures can be viewed from a rather interesting point of view.
Thank you everyone for watching and see you in the next videos. Goodbye everyone!
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