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마이클 버리의 2021년 6월 트윗(FOMO 포물선, 밈주식·가상화폐 급락이 주식시장 전반으로 전이 경고)을 분석한 영상으로, 결론은 버리의 대폭락 예측은 단정할 수 없다는 것이다. 버리는 가상화폐와 밈주식의 급락이 2007년 서브프라임처럼 전체 시장으로 번질 수 있다고 주장했으나, 진행자는 가상화폐 시총이 밈주식보다 훨씬 크더라도 S&P500 흐름에는 거의 영향이 없었다며 이 전이 논리에 이의를 제기했다. 가상화폐는 2021년 1분기 고점 대비 비트코인 약 40%, 이더리움 약 절반 하락했고, 밈주식 바스켓은 2020년 초 대비 여전히 상승 상태였다. 레버리지(마진) 분석: FINRA 집계 마진부채가 2021년 약 8,620억 달러로 급증했고, 과거 2000년 닷컴 버블과 2008년 금융위기 직전에도 마진 부채 급증이 있었다. 다만 2010년, 2013년에도 급증 후 대폭락이 없었으므로 단일 지표로 폭락을 예측할 수 없다고 강조했다. 마진 구조: 미 규제당국 FINRA는 최초 증거금 50%, 유지 증거금 25% 한도를 둔다. 가상화폐는 다른 가상화폐를 담보로 쓰는 경우가 많아 가격 상관성이 높고, 이로 인해 청산 연쇄(liquidity cascade)가 발생할 수 있다. 2021년 5월 비트코인 플래시 크래시가 예시로 언급됐다. 결론: 단기 시장 예측은 불가능하며, 장기 주식 수익률은 예측 가능하다. 폭락 예언은 자기 포지션을 유리하게 만들려는 '말로 시장 움직이기(talking your book)'일 수 있으니 경계해야 하고, 폭락 시에는 매도가 아닌 매수 기회로 볼 수 있다고 정리한다.
다듬은 글
michael bury has just forecast that we're going to see the mother of all crashes now people listen to what he says because he correctly called the bubble in 2001 and 2007 so maybe he's right again this time so in this video we'll look at what he said but also hopefully we'll learn along the way about the dangers of leverage and margin so if you do want to learn more about investing one way to do that is by signing up for our free weekly market roundup there'll be a link beside me and in the description below me so let's look at what michael j bury is saying in a bit more detail so here's the tweet on june the 17th where michael bury says that there's lots of hype and speculation and that's drawing in lots of retail investors that's normal investors like you and i just before the mother of all crashes and he describes the rally in some of these stocks as a fomo parabola so that's a fear of missing out trade where people see markets moving up and they're drawn into the market just before a crash and of course the parabola is one of these exponential increases in share prices that we've seen for some of these meme stocks recently and his point is that these exponential rises these fomo parabolas don't resolve sideways which is his way of saying there's going to be a big crash that's how it's going to end now the two points which i take issue with are to do with contagion from the crypto market into the broader market but also the meme stock market into the broader market because his point in the second half of the tweet is that when crypto falls sharply or mean stocks fall sharply that'll spread to the broad market and that way main street is going to lose huge amounts of money and the analogy he's using here is between what happened in 2007 when a tiny market which was the subprime housing market spread volatility throughout global financial markets in fact there was almost no market that was unscathed by that sell-off and his point is that history hasn't changed we're going to see a widespread sell-off triggered by sell-offs in these smaller markets and then shortly after that he tweeted about crypto and he said the problem with crypto as in most things is the leverage and this i'd kind of agree with and it's not just cryptocurrency which has its own leverage problems as we'll see equity markets may suffer from this as well shortly after michael bury made those tweets he deleted his twitter account so sadly we're not going to see any kind of follow-up on his previous comments unless he creates a new account so let's start off with the cryptocurrency story and we certainly have seen a big sell-off in cryptocurrency this year in 2021 as there's been a succession of negative news stories such as this story in the ft about china cracking down on cryptocurrency mining cryptocurrency peaked in the first quarter of 2021 and in this graph i've scaled the values such that they're equal to 100 on may the 9th that was roughly when the peak occurred and here i've tracked the value of bitcoin which is in red and the value of ethereum which is in green and as you can see beneath me the current value of bitcoin as i make this video is about forty percent down for this year and ethereum over the same period of time has roughly halved and these two dashed red lines you can see are the date of michael bury's tweet that's the first red line and the second line is china clamping down on cryptocurrency mining so it certainly is true that the cryptocurrency market has sold off this year how about meme stocks well here's a basket of those meme stocks again scaled such that their value was 100 at the beginning of 2020 and while it's certainly been a rough ride for many of those meme stocks you can see the one which is fairing worst which is just above me which is blackberry is still up 88 percent since the beginning of 2020.
so these meme stocks certainly haven't sold off at least not yet but the key question is whether the sell-off in these small markets crypto and memes stocks will affect a much broader market which is the s p 500 because that really could make the rest of us poor so let's take a look at how the s p is holding up cryptocurrency peaked in may which is roughly above me on this graph but you can see that it's made hardly any difference the 50 selloff in crypto on what's happening to the s p 500 and the cryptocurrency market is much bigger in terms of market capitalization than those tiny meme stocks so i think it's very unlikely that the tail could wag the dog and those tiny markets could actually drag down the s p 500 if the s p 500 does crash i suspect it'll be other reasons which trigger the sell-off but frankly i think it's unhelpful trying to time these market crashes michael j bury may say he knows when it's going to happen and what the trigger will be but he doesn't just because he timed those market sell-offs in the past doesn't mean he has some special insight but where i think michael j bury has some really interesting things to say is about leverage because that after all was what triggered many of the big sell-offs in the past so let's see what the fundamental problem is with leverage and where we stand with leverage at the moment and to understand leverage and its role in market movements it's good to understand margin now that's the amount of money which a customer deposits with a broker when they want to borrow money to invest money and the reason why they do that is to amplify their returns but the problem is that it amplifies not just the positive returns but also the negative returns to see an analogy with the current market rally let's look back to markets between 2004 and 2007.
this is what they looked like and over that almost four year period equity markets were very strong it was a huge rally of about 9.5 percent per year and this dashed red line you can see extrapolates that line into the future which is typically what we tend to do as investors it's called recency bias when if we've had a recent rally we think that will continue into the future now the longer a rally lasts the more people get convinced that it'll continue and that means that people tend to take more risk towards the end of these rallies so if market returns have been just under 10 for the last four years why not amplify your returns through leverage for many investors it's very easy to do to borrow money from your broker and invest that borrowed money and that amplifies your returns so let's say we have ten thousand dollars to invest but we actually want to invest a hundred thousand dollars how could we do that well maybe we could borrow ninety thousand dollars from our broker our total investment would be worth a hundred thousand dollars but after a strong market rally it's often the case that markets correct very sharply and of course that's exactly what happened in 2008 you can see there was a very sharp fall in equity markets triggered by that subprime market meltdown and if we look at the effect on a hundred thousand dollar investment it would have fallen very sharply to just over forty four thousand dollars now we borrowed ninety thousand dollars but of course we'd still have to pay that back and once we do repay our 90 000 we'd end up under water by 46 000 in other words we'd have lost over four times our initial investment and certainly for some people this would create financial ruin and this is the dark side of leverage which is that it multiplies up our losses as well as our gains so in this case we'd have taken a 56 percent loss and turned it into a 560 percent loss so is it really the case that people get more margin towards the end of a rally than they do at the beginning one of the us regulatory bodies called finra actually collates information from all of the brokers in the united states on how much leverage their customers have and this is the aggregated number for the entire us stretching back to before 2000.
notice how recently during this post pandemic rally the amount of leverage has increased hugely it's now standing at 862 billion dollars and also notice that the peaks in margin tend to happen just before a market peak so here's one in 2000 which is underneath me which was the height of the dot-com bubble and here's another acceleration in the amount of margin debt just before the global financial crisis so in the next graph we'll look at the year-on-year change in that margin debt to see how it varies in relation to market movements so this upper panel which you can see here is the year-on-year change in the amount of margin debt a positive number means there's more margin debt so the amount of margin debt is increasing as people take out more leverage and a negative number means that the amount of margin debt is shrinking year on year and here in the lower panel you can see the peak to 12 full in the s p 500 that's relative to the previous all-time high and sometimes people call this a drawdown graph and now you can see really clearly that acceleration in the growth of leverage came just before the dot-com bubble burst and in the aftermath of that dot-com bubble bursting you can see that equity markets took a huge tumble with a peak to trough loss of around 45 percent and a huge amount of deleveraging taking place while equity markets fell and then the same thing happened again during the global financial crisis an acceleration in the amount of leverage and a very significant fall in equity markets this time by around 50 percent and this is where i agree with michael bury which is that leverage is often a problem when it comes to market sell-offs and particularly worrying is this acceleration we've seen in leverage through this pandomania bubble if it's anything like the previous two crises then we could be about to see a significant sell-off but wait before you run off and sell all of your shares that's certainly not a foregone conclusion just because we've had two previous episodes where equity markets sold off after this acceleration in leverage does not mean that's going to happen again and remember we've really just got two data points here and if you notice there are also smaller accelerations in leverage around 2010 and around 2013 but we didn't have a market crash in those cases in fact equity markets did just fine so don't be convinced by just one number that equity markets are going to crash there is no perfect predictor for equity markets nobody knows over the short term what's going to happen not michael j bury not me and let's be honest not you either now one of the jobs of finra the regulator who provided that brokerage leverage data is to protect investors from hurting themselves with leverage and because of that it protects investors in two ways the first one is called initial margin so finra imposes a constraint which means that brokers can only lend customers up to half of the price of any margin security like shares so that's the cap on the initial leverage you have when you open a position in a trade the second way it protects customers is with maintenance margin you may have heard of margin calls because if the value of your equity falls your broker will ask you to post more margin that way you make small payments to the broker as markets gradually fall so that you don't have one massive shock when there's a very sharp fall and generally those margin calls happen when the equity which is how much of the stock you funded falls below a quarter of its market value so that's a cap on ongoing leverage as the price of the security varies over time now in the case of cryptocurrency something very unpleasant can happen called a liquidity cascade now if you're buying shares on margin you have to post cash as collateral and the nice thing about cash is it doesn't crash unlike equity with cryptocurrency however you can post other cryptocurrencies as collateral and this example beneath me is taken from the kraken website and that's a cryptocurrency broker and they explain how you can fund a fifteen hundred dollars worth position of bitcoin by posting ethereum as collateral so in this case you'd have got three to one leverage when you open the position if you look at the year-on-year change in the price of bitcoin and ethereum you can immediately see the problem which is that the price of those two cryptocurrencies is highly correlated with one another so in the recent cryptocurrency market sell-off you can see that ethereum was falling at the same time as bitcoin which means that the value of your collateral would be falling at the same time as your position was falling that means it's much more likely that your position will be underfunded and you'll get a margin call so this creates a kind of spiral of unwinding positions the value of cryptocurrency falls the value of your collateral falls so many people become forced sellers at the same time that markets are falling and this is what we'd call a liquidity cascade this wouldn't be a problem notice if we'd use some kind of stable coin which is linked to the value of the dollar because that has a much more stable price and it wouldn't be positively correlated with riskier cryptocurrencies like ethereum and bitcoin now in may in 2021 there was a bitcoin flash crash as it was called this is when markets fall very sharply over the space of a few hours and the reason given for it was that bitcoin was used to collateralize bitcoin trades and that means when bitcoin fell heavily leveraged bets were quick to fold so it seems as if the protections which finra has for equity just don't apply to the cryptocurrency market and i suspect what's going to happen over time is that those regulations will be tightened up my final point is a warning about prophecy here's a beautiful painting of the prophet isaiah who's very carefully listening to what god's saying and writing it down in the bible and the weird fact is even though we have huge experience of prophets being unreliable we're still desperate for people to tell us what the future holds i get asked to do this all the time you know what's your forecast for the housing market for the equity market for single stocks but i try to avoid this at all costs and that's because it's not helpful you can't really forecast markets over the short term what you can forecast fairly accurately is what equity markets do over decades because there the gradual increase in earnings drives equity markets higher and over long periods of time equity markets become much more predictable so if somebody does give you one of these short-term forecasts don't believe them nobody can make reliable forecasts over a period of around five years or less and i'll finish with this incredible quote from morgan housel which is that everything is sales so when somebody makes a forecast think why are they doing that so let's say michael j bury says markets are going to fall is that because he's got a short position on the s p if that's the case then he's probably trying to trigger a market sell-off which will work in his favor in investment this is called talking your book and it might be the case that michael bury in saying that there's going to be the mother of all crashes is hoping that's going to be the case once he's made that prediction in other words that it'll be self-fulfilling so i'd be wary of these prophecies because it might just be somebody trying to move markets in their favor and of course if markets do crash that's great because it means that equities are on sale just remember that that's not a time to sell it's a time to buy and it's actually a feature of equity markets that occasionally we do have these sales but what i can guarantee is that nobody knows when those crashes will happen now if you do enjoy these videos why not support us it's as easy as just clicking thumbs up on the video or subscribing to our channel so you don't miss future content and as always thank you for listening
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