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Michael Bury went against the crowd and predicted the 2008 housing market crash . He made $ 725 million for his investors , and Christian Bale played him in the great movie The Downside. He also predicted a crash in 2017 , 2021, 2022, and in January 2023. He wrote only one word: "sell." After that, the market grew by over 60%.
So, which Michael Bury are you following? For the one who saw the inevitable when others didn't, or for the one who has been predicting collapse for 8 years in a row? Friends, here's something almost no one talks about. Everyone knows that one famous deal. Almost no one knows about the 25 years that preceded it.
This was a doctor who worked 16-hour shifts at a hospital, posted stock market ideas for free on a forum at 2 a.m., and he was so spot-on that Joel Greenblatt found him and gave him a million dollars to start a foundation. Today we'll break it all down: every big win, every failure, and be objective about both.
And that's why it's important right now . In November 2025, Bury closed his fund and deregistered with the Securities and Exchange Commission (SEC). He no longer files Form 13F, which means he doesn't have to report his transactions quarterly. You can no longer find out what he owns, what he has sold, or what he has done.
Instead, he began publishing every deal he made in a newsletter , which now has 335,000 subscribers. Now it reports the ticker, purchase price, and reason, and sometimes does so on the same day the deal was made. So, let's figure out what he was right about and what he's buying now. Before we begin, let me say what I always say.
I'm not encouraging you to copy Michael Bury. Don't buy stocks just because he bought them. Don't buy stocks just because I bought them. Don't buy stocks just because Warren Buffett or some guy on the internet with a microphone said so. I want you to see the process itself. Studying the real numbers before spending a dollar or a minute of your time on it.
That's the whole point. This is what distinguishes investing from gambling. And I'll be objective about it today, which means I'll also show what didn't work. Because if you only show someone else's victories, you won't learn anything. So, let's begin. Let 's go back to the very beginning. Michael Bury was born in 1971 in San Jose, California.
When he was 2 years old, he lost his left eye to cancer. He has been wearing an eye prosthesis ever since. He attended the University of California and then Vanderbilt Medical School. He then became a neurology intern at Stanford Hospital. He didn't have an MBA degree. He never worked at Goldman Sachs.
He had no connections on Wall Street. But he was obsessed with stocks. So in November 1996, he joined the online forum Silicon Investor and started writing. And I mean—write. In 4 years, he wrote 3,304 posts. That's more than two a day, every day for four years in a row. He created over 25 different discussion forums on this site.
And he did it after 16- hour shifts at the hospital, mostly between midnight and 3 a.m. He also created his own website called valuestocks.net. And he won Forbes' Best on the Net award for stock picking, not once, but twice. Then he noticed something strange. He started seeing traffic to his site from Fidelity, from Morgan Stanley.
Professional investment managers read free reviews from an intern doctor. Vanguard noticed him. White Mountains Insurance noticed him. And then Joel Greenblatt noticed him. If you're not familiar with the name, Greenblatt is one of the most prominent value investors of the last 40 years. He wrote "The Little Book That Beats the Market," and Greenblatt's firm contacted Burry and offered a million dollars for the fund's seed capital.
So in November 2000, Burry left medicine. He founded the hedge fund Scion Capital, financed by a small inheritance, loans from family, and money from Greenblatt. He named it after a fantasy novel he loved as a child. Friends, I like this part of the story because the guy didn't make his way through connections.
He didn't get a job at a big bank . He simply publicly performed his work for free at two in the morning until it became of such high quality that the money came to him on its own. But you know what? That wasn't even his intention. His intention was to become a doctor. Now let's talk about what he actually chose, because that's the part that's so often missed.
Let's start with Apple in 1999 . While the whole world was chasing dot-coms without profits, Burry was buying Apple. Not as a technological story , but as a value proposition. He looked at the numbers and decided that future growth was a free gift. Then the shares rose almost 30%, and he sold them. Then he went on the forum and publicly berated himself for it.
He essentially said, " Shame on me. I want to go back." Friends, I love this because it's the most human moment in the entire video. One of the greatest investors of our time sold Apple shares in 1999 and immediately regretted it. And what a lesson. He sold because the price changed, not because his strategy changed.
Next example: Avanti Corporation in 2001. It was a software company mired in scandals and lawsuits. Nobody wanted to have anything to do with her . Berry bought it for next to nothing. He recently wrote about this incident. He calls it his strategy of buying companies that everyone else has given up on.
Remember this, because it's very important later in this video. So, the fund, its first full year of operation—2001 . The S&P fell 11.88% that year. The Scion fund is up 55%. Michael Lewis wrote that Scion outperformed the S&P every year during the crash and recovery from 2001 to 2003. It earned about 36% per year, while the S&P fell by a total of 50% and the Nasdaq by more than 80%.
But here's the part I really want you to hear. Berry felt awkward the whole time. He thought the stocks were expensive. He believed the economy was shaky, but still remained fully invested. Back then, he wrote that a smart move is to have no view of the market at all. His point was that absurd prices for individual stocks appear regardless of what the market as a whole does.
Your job is not to predict the market. Your job is to look for undervalued businesses. Friends, this is the principled investing we constantly talk about on this channel. That's all, and that's exactly what we do in the current market. This market is extremely overheated, but we are still looking for profitable options.
At the end of 2004, he was managing $600 million and refusing new money. OK. So what is this famous bet? " The Great Downward Game" during the Great Financial Crisis. I'll speak quickly because everyone knows the movie, but almost no one knows the numbers. By mid- 2005, Scion had grown by 242%. He just tears everyone apart.
And then he starts reading mortgage documents— thousands and thousands of pages. Something that no one reads. And he understands that a huge pile of home loans will explode when interest rates are revised. On May 19, 2005, he buys $ 60 million in credit default swaps from Deutsche Bank. This is his first bet against the housing market.
By October, he tells his investors he has at least a billion dollars of such bets at stake. And here's the part that the movie gets right, but everyone still forgets. He was premature, and prematureness can look like a mistake. This is a great excuse for people to sit around and criticize value investors .
He pays premiums every month at a rate that doesn't work. His investors are furious. They want their money back. They call him a fraud. They say, "We hired you to pick stocks. What the hell are you doing?" He was forced to block the fund so they couldn't get out. Imagine you are in his place. You feel you are right.
You know you're right. And every month your bill says you're wrong. And then everything exploded. And when it did, he made $725 million for investors and $100 million for himself. From November 2000 to June 2008, Scion Capital generated a 490% return after deducting fees. S&P for the same period —2%.
Guys, here's the main conclusion from this entire era. Being wrong and being premature look the same while you're experiencing it. They only separate over time, so you need a process you believe in, because your account balance will tell you you're wrong long before it tells you you're right. This next story is probably my favorite in the entire video, because it's both a victory and a missed opportunity.
GameStop. August 2019, Burry writes a letter to the GameStop board of directors. At that time, the entire company was worth $290 million, and there were $480 million in cash on hand. Listen again. Estimated 290 million, cash—480 million . The company had more cash than the entire business was worth.
So Burry says to the board, " Use the cash. Buy back 80% of your own shares." And he notes in the letter that short positions accounted for about 63% of all shares outstanding. He formed a position of about 3 million shares. Its average purchase price was $3.32 per share before the splits. GameStop did buy back shares.
The number of shares has decreased. The shorts still remained. And at the end of 2020, Burry sold everything for around $15. He earned about four or five times what he invested. A few weeks later, GameStop skyrocketed. He recently wrote publicly about it and was incredibly candid. He said he had no idea what was coming.
He said, and this is a direct quote, "I had no idea there was a Roaring Kitty." He admitted that he could have analyzed the situation better and that he was blinded by the risk that management would not cope. This share would have been worth over 1.5 billion at its peak. So, here is our lesson, and it is an important one.
He was right about business. He was right about the cost. He was right about the balance of power. And yet he left over a billion dollars on the table, because a valuation tells you how much a business is worth. It doesn't tell you how much the crowd is willing to pay for it. These are two completely different ideas, and you should only play with the first one.
Okay, let's quickly lay all the results out on the table. Victories. Apple in '99, before anyone called Apple a value stock. Avanti in 2001, the company is so unattractive that no one wanted to touch it, bought it for pennies. Real estate transaction—725 million. GameStop in 2019 at 3.32 per share for excess cash.
Maxar at 7.60 at the end of 2019 , 19.14 in just 2 months. Sportsman's Warehouse has nearly doubled in size. Charter bought 300, sold 455. Generac priced up to $93. Alphabet on Covid day, and it made 35% of the total fund . Samsung in 2025, when it reached tangible book value, which, he said, has happened eight times in 30 years.
And just this month, he closed out his short positions in Tesla and Applied Materials with a profit. Now about where he went wrong. So, honesty is above all. Let's look at failures. Tailored Brands. He wrote to the board of directors twice. Averaged the position down by $1.29, owned 7% of the company.
She went bankrupt. Bed Bath & Beyond, bankruptcy . His index put options in 2023 closed at a loss. Short positions on Tesla in 2020 are painful. Estee Lauder doubled the bet at 63, and it continued to fall until he gave up. And then January 2023, one word is known: sell. And, guys, he was wrong. And he said it himself.
In March of that year, he wrote: "I was wrong to say sell." And he even congratulated those who bought. He also sold his entire Chinese basket: Alibaba, Baidu, JD, PDD, all in early 2025. So, here is the scoreboard . I will show you both sides because both are real. One tracker analyzed the last 10 years of his elections.
He received about 233% of the profit. The S& P gained about 258% over the same period. It showed a result lower than the index. But if you take a different period, from February 2021 to February 2024 , then following his reports would give you about 21.6% per annum. The S&P showed about 11%. So what is it really like?
Well, friends, both. It works in waves. He focuses on the small. He has both incredible years and complete stagnation. This happens when you only have a few positions, not dozens or hundreds. Now, the main thing I want to teach you, because this is where most people fall into the trap. You've seen these headlines.
Berry is betting $1.6 billion against the market. Berry is betting $1.1 billion against AI. Friends, this is not a real amount. At least not in the sense you think. These are so-called put options, and the amount indicated in the news is the so -called face value. The par value is the total value of the shares to which these options refer.
This is not what he paid. Let me explain it more simply. If a stock is worth $100 and you buy the right to sell a million of those shares, the headlines will say you made a bet of $100 million. Multiply a million shares by $100. But in reality, you could only spend a few million dollars as a premium.
This is real money that you risk losing. Everything else is just the size of the asset you are betting on. Berry repeatedly denied this interpretation. And , frankly, this is one of the main reasons why he stopped reporting at all . He said the media constantly misinterpreted his mandatory reports, causing chaos in the stocks he owned.
So when you see a huge number next to someone's options bet, ask one question. Is this real money? Is this a nominal value? It is almost always a nominal value. Why? Because it sounds much bigger than it actually is. And, to be fair , this is how Berry himself defends himself. He said he had become like the boy who cried wolf, and that he had already become a meme because of how many times he had predicted the collapse.
But then he lists his track record: hitting in 2000, in 2007, in 2019 with a little help from COVID. He predicted a peak in meme stocks in mid-2021, as well as problems for bank stocks in 2023. So take him for what he is : a person with a real strategy who often jumps to conclusions too early and talks about it in real time.
And now the most interesting thing. On November 10, 2025, just last year, Scion Asset Management's registration with the SEC was revoked. End. He told his investors that his view of asset value had long been out of sync with the market, which meant no more 13F reports. For years, every investor in YouTube, including me, has been waiting for this report to see what Berry owns.
Now that's over. And 13 days later, he launched a paid newsletter for $39 per month. Today, it has over 335,000 subscribers, is the second most popular financial publication on the platform, and publishes regularly, every two to three days. And now the moment that no one pays attention to. I believe this is the true story.
Paperwork has disappeared, and transparency has increased. Think about what the 13F report really was. Once a quarter with a delay of 45 days. That is, you received it 45 days after the end of the quarter. It only showed his positions in US stocks and nothing else. He never showed his short positions.
He never showed his cash. He never revealed the purchase price. Now he publishes the ticker, the price he bought at, and the rationale—often on the same day he executes the trade. You get more information from him than his own investors ever did. So what exactly does he have now? His three largest long positions are Lululemon, Molina Healthcare, and Mercado Libre.
None of them are AI stocks. Among the short positions, the largest bets are against Oracle, Palantir and Nevius . Also Nvidia and the semiconductor ETF. He also acquired Flutter Entertainment and DraftKings as a single position, betting that prediction markets will receive stricter regulation than people expect, and that it will help those who are already successful.
But here's a step that caught my attention. On September 9, he said he had reduced the risks. He shortened every position he held. He sold December put options on Nvidia and Palantir, which was his bet against them. He closed them outright instead of rolling them over , and said he now had cash to sit on.
His words: "The market will be interesting this fall." Guys, this is a person who takes chips from the table, from both sides. Oh, and one more thing: back in January he wrote, "I own GME." " I've been buying them lately." He noted that he expects to buy close to tangible book value. He believes in Ryan Cohen, the same guy who said, "Have cash, have stocks." And that he is prepared to hold them for the long term, perhaps even decades , and is not counting on another short squeeze.
Now let me stop and summarize all of this, because I think there's a lesson hidden in this man's 30 years of work that most people will miss. Look at what actually made him money. These were not predictions of a stock market crash. He made dozens of them, and most of them didn't come true. It's not about timing.
He beat the housing market by 2 years and sold GameStop 3 weeks before the biggest short squeeze in history. He made money by purchasing assets cheaper than they were actually worth, every time. Apple in 1999, when everyone was chasing dot-coms; Avanti in 2001 was a company so worthless that no one wanted to touch it.
GameStop in 2019, when the entire business was valued at less than the amount of cash in its bank account . Each of these operations was the same. Determine the cost, pay less for it, and just wait. That's all. This is his entire career. And that's what principled investing is all about. Principles are boring.
That's the point. A principle is something you decide before you feel fear or greed. So when you do feel fear or greed, the decision will already be made for you. The system is already configured. So guys, we have five investing principles that our community and I personally live by. And I want you to see how a 30-year career validates each of them.
First of all, we are investors, not speculators. Berry ran a hedge fund. He used options. He played for the stock to fall. And people look at it and think: "speculator ." But look what he actually did. In 2001, the market was collapsing, and he was completely invested in depreciated companies. We experienced the largest terrorist attack on US soil.
He wrote at the time that the most prudent position is to have no view of the market at all, because absurd prices for individual stocks appear regardless of what the market does. He didn't bet on whether the market would go up or down. He bought businesses for less than their cost and waited . That's what an investor does.
Number two: every investment is the present value of all future cash flows. GameStop in 2019: the entire company was valued at $290 million. There were $480 million in her bank account . You were literally given cash and business for free. Berry didn't need a story about the company's revival . He needed a calculator.
He wrote a letter to the board of directors demanding that this money be used to buy back 80% of the shares. And he clearly outlined how this would affect earnings per share. This is not a guess. It's just math. Number three : if we don't understand something, we don't invest in it . This is what brought him 725 million.
In 2005, everyone on Wall Street had mortgage bonds. Almost no one actually read what was inside them. Berry sat down and read the brochures, thousands and thousands of pages. He was the only one who managed to understand what he was looking at, and that was the whole advantage. He didn't have better information.
He had the same information. He just did the job. He did the reading. Principle number four: in the short term, the stock market is a voting machine; in the long term, it is a weighing machine . No one felt it more acutely than this guy. He opened a housing deal in 2005, and for two years the market voted against him.
His own investors called him a fraud and sued him . They demanded the money back while he paid premiums every month at a rate that looked dead. He had to block the funds so they couldn't get out. The voices indicated that he was an idiot. Then the weighing began, and he turned out to be right. If you buy cheap things, you will sit at a loss, looking ridiculous.
Sometimes it's the price of admission. Number five: A great story becomes a bad investment if you pay the wrong price. And that's exactly what he's aiming for now. Guys, he opened short positions on Palantir and Nvidia, two of the best stories in the market. He's not saying these are bad companies .
He says the price has gone beyond what cash flows can support. Now look at the other side. His biggest positions today are Lululemon, Molina Healthcare, and Mercado Libre. Boring. No history . Guys, the only tweets about Lululemon and the only stories about Lululemon are that the company is dead. These are all bad stories.
That's the point. Five principles, one career. This is no coincidence. Guys, these principles act as protective barriers for us. They protect us from emotional mistakes that destroy people's portfolios. And here's the part you need to hear. Michael Berry doesn't have a crystal ball. He has a process.
He does the work that no one else wants to do. He knows how much a business is worth before he buys it, and is willing to look foolish while he waits to be proven right. I remember reading "The Downside Game" and hearing his investors say, "Michael is the guy who buys stocks, they fall 50%, and then they go up 10 times." You can be like that too .
That's the process. It is available to anyone who wants to learn. So guys, I quickly laid out these five principles, and I know how it goes. You're driving, at the gym, washing dishes, and just nodding your head. And by tomorrow you might only remember two of them. This is not enough, because they only work when you have them in front of your eyes at the right moment.
When the market drops 20% , and your whole being tells you to sell. When stocks go up 300% and everyone in the comments calls you a fool for not owning them. That's when you need a fuse, not somewhere in your memory. We have laid them out for you on paper. I have them on paper in my office and studio.
This is our PDF on principles-based investing. All five principles are written down with explanations of what each one means and how to use them when you are making a real decision with real money. And you know what? It's completely free. So, here's what I want you to do about it. I want you to download this .
I want you to print this out and put it where you actually make decisions. Next to the monitor, in the desk drawer, glued inside the cabinet. I'm not kidding, guys. The people I know who understand this make decisions before emotions even arise. And here's how you can do it. So click on the link in the description or in the first pinned comment.
Enter your email address and you can download this in seconds. And for those of you watching us on TV, I'll bring this up right now on your screen. Now let's look at Berry's two biggest positions through the lens of our own process. So, guys. The first one is LULU. Lululemon makes up 17% of Michael Berry's portfolio.
So we're looking here. Their market capitalization is $11.63 billion. This is the real value of the company. This is not the ticker price. It is simply the number of shares multiplied by their price. But that's exactly how much it adds up to . The next thing I look at is the value of the enterprise.
This is market capitalization plus the company's debt minus cash. So, in essence , the difference here is 2.6 billion, 2.3 billion — this is actually their debt. Sounds like a lot until you look at their cash flow. Cash flow last year was 1.35 billion. The five-year average is 1.09 billion. It sells for eight and a half times their free cash flow.
Guys, this is absurd, just absurdly cheap. If you think this business can at least stabilize and continue to grow. It's still cheap overall, even if business will gradually get worse and worse. After all, guys, if I told you that you could buy a company with a market cap of $100 million, you would make your money back in exactly 1 month.
So of course you would do it. At some point it becomes a good or bad investment depending on the price you pay. Guys, one metric I like here is their return on capital is high. Their five-year figure is 29%, their one-year figure is 20%. This is based on their operating income. This is the return that a company's operating income makes on the money invested in the business.
It is clear that their operating income has been lower recently. They are seeing revenue and profits fall, so that's where the blow is being felt . Guys, they have a high gross margin, 56%. At Nike it's about 40%. So, these guys have the ability to create quality things and charge a lot for them . The question is, do they need to lower it a little ?
And even though their revenue is falling right now, look at this. The three-year revenue growth rate is 8% per year, the five-year rate is 15%, and the ten-year rate is 17.6%. If you just look at it, you'll say, "Hey, this company is still growing." But when you actually look at revenue, and it still looks like it's growing, then you go to the quarterly data.
This is where we have a problem. The second quarter of 2026 was 2.42 billion. The second quarter of 2025 was 2.53 billion. So, there has been a decline over the last year compared to the previous quarter . So let's check out what story the eight pillars are showing us right now. Well, guys, this is actually an eight-pillar action.
This is a thriller about eight pillars. Now, that doesn't mean you should run out and buy it. It simply means that you have to understand that there is either a perception problem, or something brewing inside, or a combination of both. Now, if this is your first time watching this channel, these eight pillars were created because it was just my way of evaluating companies very quickly.
What were their revenue and profit, sorry, profit and free cash flow multiples. Do they have a good return on capital? Have their shares gone up or down in the last 5 years? Have their cash flow, net income, and revenue increased or decreased over the past 5 years? And do they have an acceptable level of debt?
That meant to me, "Okay, this company fits a lot of the criteria." But if the future is very, very bad, that's what you pay for. "Maybe that's not enough." So just keep that in mind before we go any further. Now let's see what the analysts think. Now I want everyone to be careful with analysts. They can be a little misleading, but it's a great way to find a benchmark.
They're projecting that Lululemon will earn $11 per share for the year ending February 2027 and actually grow 3%, 9% and 4% over the next 3 years. So I'm assuming that they're expecting some kind of turnaround. Because the other thing they have is revenue growth. 2.7%, 5% and 8% revenue growth. If that's true, and the company is only selling for 8.5 times its free cash flow, then that's an incredibly good deal because according to the analysts, they're back to growth.
The question is , are the analysts right or wrong? Remember, come back in the 2000s, when they were giving toys.com and mvp.com buy ratings, which had zero revenue, and they were still sitting there saying, "Look what the future holds." So you have to remember that. So , guys, we have a little bit of history, a little bit of numbers.
Let's plug all of that into our stock analysis tool. So, guys, I did a 10- year analysis. Now I'm going to explain how I put those numbers in, because remember, I have low, medium and high assumptions for everything here. My goal is to get somewhere in that range over the next 10 years. So, first of all , remember, guys, the return on capital here is high.
That's a sign of a quality business. Not necessarily one that's going to last a long time, but they've done a good job managing the money that's coming into their business. One, what kind of revenue growth would I project over the next 10 years? Well , guys, I took two, four, and six percent. Now, keep in mind, I want you to remember one thing.
I wouldn't be surprised if in 10 years Lululemon didn't exist, or it got acquired, or it became a completely different company than it is today. I'm making these assumptions based on their stabilization, a little reorganization, a possible downturn, and then a recovery. So, I'm not overly optimistic that they're going to go bankrupt.
I'm assuming that if the company stays in business, here's what I'm hoping for. Profit margin and free cash flow. Although the numbers were much higher in the past, you see that the profit margin for five and ten years is 14%. I've only put in 10, 12, and 14% for both profit margin and free cash flow for the next 10 years.
Next, what is the P/E ratio and the ratio What price to free cash flow would I assign to this company in 10 years? So guys, here's how you do it. And this is probably the most common question I get. How do I know what to put in? It's not based on their current P/E. It's not based on their future P/E.
It's not based on past performance. It's based on whether you think this company will be better than the average company in the S&P 500 or worse in 10 years? The average company in the S&P 500 has been trading at 15, 16, 17 times earnings for a long time. If you think this is a better company based on their return on capital, their growth potential, and the market they're in, then you give them a higher P/ E.
If not, you give them a lower P/E. I gave them a market P/E. I put in 13, 17 and 21. And finally, I've entered a 9.5% return on intrinsic value without a safety margin. That's not the return I really want to get. It's just to get an idea of how much this company is worth if we want to achieve a market return.
That's it. So I click the " analyze" button. The stock is currently at 103. That's why Bury is interested in it. His low price, my low price is 125, my high price is 315, my average is 200. That means, guys, if they can only grow 4% per year, only earn 12% of their earnings, and only sell for 17 times earnings, you're still getting about a 20% return on your money.
If you believe these numbers, don't rush into buying. Make sure you agree with them and understand that these numbers are possible. To me, Lululemon doesn't fit my vision of investing. Because of all the real estate and businesses that I own, my goal is to buy companies that I'm confident are going to be around for the next few decades.
I can't say that about Lulu. If someone told me right now that Lulu was going to be gone in 20 years, I wouldn't be surprised. So I just avoid it. So Michael Berry, his investment goal is to find short-term pricing errors and exploit them. This could be the case. Stock number two, Mercado Libre, is 12% of Berry's portfolio.
It's basically the Amazon of Latin America. I've been buying on Mercado Libre, it's very convenient and easy. We have real estate in Mexico, and when I'm there, if I want to order something, it comes very easily. So this is a business with a market cap of $92.5 billion and an enterprise value of $130 billion.
That's $38 billion in debt. But the good news is that last year they generated $12.4 billion in free cash flow. So they can probably easily afford it. But here's the interesting thing. Last year they had $12.4 billion in free cash flow. Net income was only $1.8 billion . $6 billion a year over the last five years.
Net income was only $1.3 billion over the last five years. So there's a big gap between free cash flow and net income, which is why you see a price-to-free cash flow ratio of 7.5 versus a P/E of 50. That's what you need to understand here. Why do they have such different free cash flow and net income numbers?
Guys, great return on equity. 19% last year, 31% a year over the last five years. Great gross margin, 43%. Look at the revenue growth rate . 10-year growth rate is 48%. 5- year is 45%. 3-year is 40 %. Their margin The return is much lower than we would like. That's okay. Guys, we usually go into a lot more depth, but for this video we're not going to do that .
But the good news is, if you have our software, you can click on our AI in the bottom right corner and click on " view bullish and bearish scenarios," and it will show you three main options according to our AI. And if you don't have our software but you find this interesting and useful, go to everythingmoney.com.
The cost of trying is so insignificant. This is probably the best investment you'll ever make . Just don't quote me on that. Okay, let's move on to the eight pillars. Now, not so great, but here's the thing. Here's an X: the number of shares outstanding has increased slightly, by 0.66% overall over the last 5 years.
Not one per year, so I'm not counting that. And remember, the P/E ratio and the price of free cash flow cash flow is very different because they report higher free cash flow. If their free cash flow is real, I don't even care about the P/E. It can show anything. So this could very well become a five-star stock very, very quickly.
Now let's go to our analyst estimates. Look at this growth rate. Analysts are predicting earnings growth from $38 per share this year to $175 per share over the next four years. These are huge numbers. Huge. Their free cash flow and net income are probably getting much closer. Now look at their revenue growth.
Revenue growth of 45 %, 28%, 25%, 30% and 25%. So what do we have here, guys? Let's go to our stock analyzer. I'm going to take 10%, 18% and 26% revenue growth over the next 10 years. That's a lot, no matter how much you say it. Next: profitability and free cash flow. Remember, we're focused on free cash flow because of how high it is.
And free cash flow is the real lifeblood of the business. So I, so I want a lot more of it. So I'm putting 28%, 32%, and 36% free cash flow margin. As you can see, it's improving. The 10-year average was 29%, the 5- year average was 31%, the 1-year average was 35%. So it's continuing to grow. This may be a conservative projection, but I'm happy with it.
Next, the 10-year P/E . High return on equity, " Amazon Latin America"—I'm putting 19, 22, and 25. And finally, my desired yield of 9.5%. I'm hitting the analyze button. The stock is now trading at 1,831. Guys, look at this. Based on free cash flow, I have a low price of 5,600. A high price of 30,000.
And a mid price of 13,000. Now I have to ask the question: Will they compete with Amazon? Will Amazon come in and replace them? I have no idea. That's probably their biggest problem. Or can Amazon buy them? That's the question to ask. These seem like absurd numbers. We're talking about a 40% yield. The most interesting thing to me is that this looks like a company worth owning for a long time.
And Barry doesn't look like a long-term stockholder. He wants to find short-term price distortions and act on them. Guys, please be careful when you see these numbers and immediately rush to buy. This is an international company. It's in a different market. You have to be sure that you understand and trust their numbers.
So, we finished recording this video and were getting ready to release it, when suddenly Michael Bury did something that I have to come back and tell you about. On September 28th, he posted an update, and I'll read you his exact words. He said, "As of today, my puts have completely replaced my shorts ." Now , remember what I just told you a few minutes ago.
On September 9th, this guy reduced his risk. He reduced everything. He sold his puts on Nvidia and Palantir and said he had cash that he was happy to sit on. 19 days later, he came back and took on more risk than he had before. Here's what changed. He says he spent the weekend doing research, and it convinced him that the AI bubble would burst sooner than he thought.
Back in August, he thought it would take until 2028. Now he says, and I quote, "Basically, I'm accelerating the timeline." In plain language, he said it would happen sooner than he expected. He's referring to a report by a major investment firm firms, where it says that this whole AI spending spree is based on one assumption.
The assumption is that these companies will spend this much money on AI forever, and a lot of it is n't even theirs. It's borrowed. So what did he actually do? Well, now he has puts on Nvidia, Micron, Palantir, Nubia, Oracle , Caterpillar, the semiconductor ETF, and the Nasdaq 100 itself. He closed out his bet on CoreWeave and started a new bet on MetLife, which is an insurance company.
Now, guys, let me explain the difference between a short and a put, because that's the whole story. When you short a stock , you have no time limit. You can sit there forever. But the most you can make is 100%. However, if the stock keeps going up, you keep losing money. He called it death by a thousand cuts.
Puts are different. When you buy a put option, you get the right to sell the stock to someone to someone else at a certain price in the future. Let's say a stock is worth $300, and you think it's going to fall to $50. You can sell a put option for $100—that's a lot lower than the current $300, so the option price won't be very high, but once the price drops below $100, you can get someone to buy the stock for $100.
So if the price drops to $60, you get someone to buy your stock for $ 100, and you've made $40—the difference between the market price and the strike price. That's exactly what it does , but it has a set expiration date . So whatever premium you paid, if the price doesn't fall below your strike price by that date, you lose all of that premium.
So think about what he just did. Michael Burry's entire career is a story of being too early. He predicted the crisis in the housing market 2 years early, when his own investors called him a fraud and sued him. He predicted a dozen market crashes that didn't happen on his schedule. And now he's taken a position that doesn't allow you to be too early.
Guys, he set this deadline for himself. His Micron put options expire in June 2027. His Palantir and Nasdaq options have another year, until September 2027. That's the time window. That's his whole bet. And here's the part I really want you to hear. In the same update, he advised people to avoid borrowing money to invest.
Buying options is a kind of leverage, but he can't lose more money than he put into that option. That doesn't make him a hypocrite. That makes him a professional who only bets money he can afford to lose. You and I are not in that situation. So what do you do with this information? Nothing. You don't do anything about it .
You don't buy put options just because Michael Burry bought them. You don't sell your Nvidia stock because someone on the Internet showed you the headline. You go back to our five principles . A great story becomes a bad investment if you pay the wrong price. That's the lesson, not the deal. Understand what you own, know the true price, and let everyone else guess the dates.
So there you have it, guys. 30 years of Michael Burry. He was a doctor who wrote blog posts for free at 2 a.m. He beat the market for decades by buying companies that nobody wanted. He made $725 million playing against the housing market while his own investors called him a fool and sued him . He gave GameStop a roadmap, then sold the stock before it exploded.
He predicted a dozen market crashes that did. did n't happen. Here's what I want you to take away from all of this. This man's advantage was never that he saw the future. It was that he did the work when no one was looking . He knew the true value of things before he bought them, and he was willing to look foolish while he waited .
So know what you own, know how much it's worth, and never buy on hype, even if it's hype around Michael Burry. So if you want us to take a deeper look at the stocks he bought during his last round, click right here. Thanks for your time.
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