Michael Burry’s current holdings

[ValueArb]

2 hours ago, Spekulatius said:

Burry has become a rapid fire swingtrader. I bet his current positions are already different than what was posted on 6/30.

 

He's always been pretty active. I'd have to dig up his investor letters to verify but my impression is that in the Scion Capital days his average holding period was under a year. Unlike Buffett, he doesn't seem to be managing much more money now than then, I suspect its entirely Friends and Family money that got carved out of the previous fund.

[Spekulatius]

52 minutes ago, ValueArb said:

 

He's always been pretty active. I'd have to dig up his investor letters to verify but my impression is that in the Scion Capital days his average holding period was under a year. Unlike Buffett, he doesn't seem to be managing much more money now than then, I suspect its entirely Friends and Family money that got carved out of the previous fund.

my guess is that the average holding period is probably less than 2 month now. He completely redoes his portfolio every quarter and he might even churn it in between, but we only got snapshots every 3 month.

[Xerxes]

5 hours ago, Gregmal said:

I remember last year around this time when it was reported to be a very big deal that Burry “sold all his stocks!!!”. 

… and he put some money private investment in a prison 

[LC]

Found this just now - no claim to its accuracy but just reinforces that, ya know, "some famous guy said so" usually isn't a great foundation for investment research.

 

[Fundmanagerthrwawy]

On 7/1/2022 at 3:35 PM, Gregmal said:

The guy is brilliant and real world useful as evidenced by his doctor status. A lot different than most of the money guys who went to the expensive club schools and did crew and then “landed” their rightful high earning job. 
 

He is also largely using his own money, far different than most as well. I just don’t think you can really extrapolate or emulate much of what he does because it’s a very different style and you don’t know the variables he s using to implement it. 

Brilliantly put!

[Fundmanagerthrwawy]

On 7/2/2022 at 9:17 AM, scorpioncapital said:

Personally I don't think he's very wise. 200m may seem alot, but Cathie Wood is running 23 billion.

This a joke? Cathie Woods is shocking 

[Fundmanagerthrwawy]

On 8/15/2022 at 9:22 PM, Value_Added said:

I remember reading some of his old comments back from his early college days while he was investing as a side hustle in medical school.  If I recall correctly, he uses an EV/EBIDTA screen to find the cheapest companies and then uses a combination of trend charts to catch upward momentum such as simple moving average, MACD, and stochastic slow.  Again, I’m regurgitating this based on memory from a while ago but this is why you see him moving in and out so often.  He’s really looking for a quick trend upwards based on momentum and then exiting.  Obviously there’s more analysis that goes into than these simple metrics but if you analyze most of his holdings and his entry points, you’ll largely find he still sticks to these metrics.

Where can you find these comments? VIC?

[oscarazocar]

He posted on Silicon Investor extensively back in 2000.

 

https://www.valuewalk.com/michael-burry-silicon-investor/

[Fundmanagerthrwawy]

4 hours ago, Xerxes said:

… and he put some money private investment in a prison 

And?

[Fundmanagerthrwawy]

38 minutes ago, LC said:

Found this just now - no claim to its accuracy but just reinforces that, ya know, "some famous guy said so" usually isn't a great foundation for investment research.

 

Yeah, this is rather inaccurate for the most part. But his predictions haven’t been great as of recent. That said I know he made a lot from shorting TSLA.

[Fundmanagerthrwawy]

13 minutes ago, oscarazocar said:

He posted on Silicon Investor extensively back in 2000.

 

https://www.valuewalk.com/michael-burry-silicon-investor/

Much Appreciated

[ValueArb]

1 hour ago, LC said:

Found this just now - no claim to its accuracy but just reinforces that, ya know, "some famous guy said so" usually isn't a great foundation for investment research.

 

 

I don't know how accurate this is. His current short position is a small hedge from 2 months ago that might be closed now.  Same in March 2020, he wasn't specific about how big his bet was other than it had done well.

 

In January when he tweeted "SELL" there was zero context. He could have been telling a friend to give up his superbowl tickets. 

 

Burry makes predictions for fun on twitter, his record is no worse or better than any other macro prognosticator. His real job is stock picking and he's been superlative at it. It was reading a Burry 13F and discovering he had bought a bunch of GME at $3 that got DeepF***ingValue on Reddit to investigate it and make his own huge bet at $5.

[Value_Added]

1 hour ago, Fundmanagerthrwawy said:

Where can you find these comments? VIC?

I think they were in his old MSN money letters but I’m not too sure.  I think I was a bit too specific on the precise technical indicators he uses when buying and selling but he certainly uses technical analysis to find supports and resistance.

 

Those indicators I mentioned are a “decent” tool when looking back to identify entry and exit points but they certainly don’t tell the future and should ONLY be used to aid in entering or exiting a position.  As an example and based on a bullshit guess with HUGE assumptions - using his top 3 holdings (EXPE, CHTR, GNRC), he’s probably exited EXPE & GNRC already but is likely still in CHTR.  If you look at the attached images you’ll see 3 charts each using 3 technical indicators which show 3 viewpoints of the market (Simple Moving Average, MACD, Stochastic Slow) .  Overlayed is a Fibonacci Retracement showing points of support and resistance.  I’ve highlighted my best guess where he likely entered the trades and the down arrows would assume an exit based on how he trades.  CHTR was probably a very recent purchase based on the indicators and I’d guess he’s still in it.  But all entry points are near or at support lines and the up arrows show the market momentum is likely not to allow it to break the support line. This is viewed in a weekly time period.  Again, these are indicators I’ve set up and it’s EXTREMELY likely he uses something way different.  But you get the idea.
 

if you look at each stocks respective EV/EBITDA (I used TIKR) which I didn’t include here, you’ll find that at the end of the March reporting period, all stocks hit their low EV/EBITDA which when paired with some business analysis AND technical indicators is when he buys.

 

Mimicking this way of trading is very difficult because the business analysis likely plays huge part of what he buys…the technical stuff just helps him “time” it so to speak. 

 

 

[ValueArb]

3 hours ago, Value_Added said:

I think they were in his old MSN money letters but I’m not too sure.  I think I was a bit too specific on the precise technical indicators he uses when buying and selling but he certainly uses technical analysis to find supports and resistance.

 

Those indicators I mentioned are a “decent” tool when looking back to identify entry and exit points but they certainly don’t tell the future and should ONLY be used to aid in entering or exiting a position.  As an example and based on a bullshit guess with HUGE assumptions - using his top 3 holdings (EXPE, CHTR, GNRC), he’s probably exited EXPE & GNRC already but is likely still in CHTR.  If you look at the attached images you’ll see 3 charts each using 3 technical indicators which show 3 viewpoints of the market (Simple Moving Average, MACD, Stochastic Slow) .  Overlayed is a Fibonacci Retracement showing points of support and resistance.  I’ve highlighted my best guess where he likely entered the trades and the down arrows would assume an exit based on how he trades.  CHTR was probably a very recent purchase based on the indicators and I’d guess he’s still in it.  But all entry points are near or at support lines and the up arrows show the market momentum is likely not to allow it to break the support line. This is viewed in a weekly time period.  Again, these are indicators I’ve set up and it’s EXTREMELY likely he uses something way different.  But you get the idea.
 

if you look at each stocks respective EV/EBITDA (I used TIKR) which I didn’t include here, you’ll find that at the end of the March reporting period, all stocks hit their low EV/EBITDA which when paired with some business analysis AND technical indicators is when he buys.

 

Mimicking this way of trading is very difficult because the business analysis likely plays huge part of what he buys…the technical stuff just helps him “time” it so to speak. 

 

 

He was an FX trader before he became an investor, and used technicals heavily in FX trading. He mentioned using technical indicators as an investor extremely early in his education process, but AFAIK hasn’t mentioned them at all since. What he has said is he’s a deep value investor. Since technicals and value work at cross purposes I would bet he abandoned technicals over 20 years ago.

[UK]

https://www.wsj.com/finance/investing/how-to-get-rich-and-famous-from-a-stock-market-crash-6914580a

 

 

[Sweet]

On 8/16/2023 at 5:54 AM, ValueArb said:

He was an FX trader before he became an investor, and used technicals heavily in FX trading. He mentioned using technical indicators as an investor extremely early in his education process, but AFAIK hasn’t mentioned them at all since. What he has said is he’s a deep value investor. Since technicals and value work at cross purposes I would bet he abandoned technicals over 20 years ago.

Technicals and value investing do not always work at cross purpose.  They can interact and complement each other if designed that way.  For example, I have heard of some people who use value investing for picking companies and the technicals as exits and entries.

[ValueArb]

On 8/20/2023 at 11:53 AM, Sweet said:

Technicals and value investing do not always work at cross purpose.  They can interact and complement each other if designed that way.  For example, I have heard of some people who use value investing for picking companies and the technicals as exits and entries.

 

They always work against each other.  Anything that tells you not to buy when you have a rare value opportunity, or to not sell when you own something that is fully valued, is degrading your value investing performance.

 

Value investing is based on buying at a large margin of safety to your estimate of intrinsic value. IV estimates are inherently inaccurate, so a 10% discount is simply not enough, very easily you could be off by 20% or more. You need a large MOS and those are rare, if your MOS isn't rare you need to increase it. the larger your MOS the higher your returns and lower your risk.

 

So assume you demand a margin of safety of 40%, which provides an average excess return of 67% and you find a stock that your IV estimate is $100 trading at $60, giving you exactly that MOS.

 

But lets pretend you have a technical indicator that tells you that the stock will decline another 10% to $54, which increases your MOS to 46% and excess return to 85%. The problem, is how accurate does that technical be?  Well if it's wrong, and the stock goes up 10% you've entirely missed out of your opportunity (since you aren't accepting a 34% MOS). So your choice is between a 67% excess return in hand, or taking a chance at a 85% excess return that will cost you your opportunity if its wrong. 

 

So how often does your indicator have to be right? In this case it has to be correct 79% of the time. So how often are technical indicators for individual stocks correct? A lot less than 79%.  In fact, if you can find a technical indicator that is correct even 55% of the time, you should never do any value investing because trading that signal alone should make you the wealthiest person in the world within a few decades.  The reality is that technical indicators that are common and long lasting aren't accurate enough to be tradable, because if they were tradable the market would likely trade them away. The few that hold up under academic scrutiny simply aren't accurate or common enough to be part of an investing process, which is why there isn't a TA version of Warren Buffett in the world.

 

Value investing is about finding investments you can accurately and confidently value, buying them when they are at large discounts to ensure good future returns and selling them when they reach intrinsic value. Any tool that predicts price movements has to be very accurate for it to add value to this process. There would be nothing more catastrophic than valuing META at $165, having it drop to the $90s for eight days but instead of backing up the truck you wait because a "technical indicator" tells you its going to drop to $85. You'll never see that opportunity again, and your next good opportunity is likely months away.

Edited August 21, 2023 by ValueArb

[ValueArb]

On 8/15/2023 at 5:54 PM, Value_Added said:

I think they were in his old MSN money letters but I’m not too sure.  I think I was a bit too specific on the precise technical indicators he uses when buying and selling but he certainly uses technical analysis to find supports and resistance.

 

Those indicators I mentioned are a “decent” tool when looking back to identify entry and exit points but they certainly don’t tell the future and should ONLY be used to aid in entering or exiting a position.  As an example and based on a bullshit guess with HUGE assumptions - using his top 3 holdings (EXPE, CHTR, GNRC), he’s probably exited EXPE & GNRC already but is likely still in CHTR.  If you look at the attached images you’ll see 3 charts each using 3 technical indicators which show 3 viewpoints of the market (Simple Moving Average, MACD, Stochastic Slow) .  Overlayed is a Fibonacci Retracement showing points of support and resistance.  I’ve highlighted my best guess where he likely entered the trades and the down arrows would assume an exit based on how he trades.  CHTR was probably a very recent purchase based on the indicators and I’d guess he’s still in it.  But all entry points are near or at support lines and the up arrows show the market momentum is likely not to allow it to break the support line. This is viewed in a weekly time period.  Again, these are indicators I’ve set up and it’s EXTREMELY likely he uses something way different.  But you get the idea.
 

if you look at each stocks respective EV/EBITDA (I used TIKR) which I didn’t include here, you’ll find that at the end of the March reporting period, all stocks hit their low EV/EBITDA which when paired with some business analysis AND technical indicators is when he buys.

 

Mimicking this way of trading is very difficult because the business analysis likely plays huge part of what he buys…the technical stuff just helps him “time” it so to speak. 

 

 

 

This is a great example. In the week since this post where its said Charter technicals say it's going higher, its has dropped $8 down to $420, and Expedia which technicals indicated is a sell is actually up a buck, and Generac is up $4 since the sell signal was noted.

Edited August 21, 2023 by ValueArb

[Sweet]

41 minutes ago, ValueArb said:

 

They always work against each other.  Anything that tells you not to buy when you have a rare value opportunity, or to not sell when you own something that is fully valued, is degrading your value investing performance.

 

Value investing is based on buying at a large margin of safety to your estimate of intrinsic value. IV estimates are inherently inaccurate, so a 10% discount is simply not enough, very easily you could be off by 20% or more. You need a large MOS and those are rare, if your MOS isn't rare you need to increase it. the larger your MOS the higher your returns and lower your risk.

 

So assume you demand a margin of safety of 40%, which provides an average excess return of 67% and you find a stock that your IV estimate is $100 trading at $60, giving you exactly that MOS.

 

But lets pretend you have a technical indicator that tells you that the stock will decline another 10% to $54, which increases your MOS to 46% and excess return to 85%. The problem, is how accurate does that technical be?  Well if it's wrong, and the stock goes up 10% you've entirely missed out of your opportunity (since you aren't accepting a 34% MOS). So your choice is between a 67% excess return in hand, or taking a chance at a 85% excess return that will cost you your opportunity if its wrong. 

 

So how often does your indicator have to be right? In this case it has to be correct 79% of the time. So how often are technical indicators for individual stocks correct? A lot less than 79%.  In fact, if you can find a technical indicator that is correct even 55% of the time, you should never do any value investing because trading that signal alone should make you the wealthiest person in the world within a few decades.  The reality is that technical indicators that are common and long lasting aren't accurate enough to be tradable, because if they were tradable the market would likely trade them away. The few that hold up under academic scrutiny simply aren't accurate or common enough to be part of an investing process, which is why there isn't a TA version of Warren Buffett in the world.

 

Value investing is about finding investments you can accurately and confidently value, buying them when they are at large discounts to ensure good future returns and selling them when they reach intrinsic value. Any tool that predicts price movements has to be very accurate for it to add value to this process. There would be nothing more catastrophic than valuing META at $165, having it drop to the $90s for eight days but instead of backing up the truck you wait because a "technical indicator" tells you its going to drop to $85. You'll never see that opportunity again, and your next good opportunity is likely months away.

Not ‘always’.  Some value investing opportunities go lower, sometimes much lower.  
 

Applying something like a moving average crossover to enter a position might save you from a significant drawdown in at least some instances.  Not hard to find charts which show exactly that.

 

Use your example Meta, it dropped 50% and then another 50%.  When was the appropriate time to enter?  $95 sure but how many entered much higher to have a significant drawdown?  Few.  Apply a 20 and 5 moving average on Meta to enter and you do well.

 

Technical analysis isn’t necessarily predicting the future for many it’s about position entry and risk control.

[ValueArb]

50 minutes ago, Sweet said:

Not ‘always’.  Some value investing opportunities go lower, sometimes much lower.  
 

Applying something like a moving average crossover to enter a position might save you from a significant drawdown in at least some instances.  Not hard to find charts which show exactly that.

 

Use your example Meta, it dropped 50% and then another 50%.  When was the appropriate time to enter?  $95 sure but how many entered much higher to have a significant drawdown?  Few.  Apply a 20 and 5 moving average on Meta to enter and you do well.

 

Technical analysis isn’t necessarily predicting the future for many it’s about position entry and risk control.

If it’s not predicting the future it’s worthless. 
 

As far as the Meta example, if your intrinsic value estimate was $200, and you were about to buy a full position at $120, it would be great if TA could tell you it’s headed under $100. But it can’t. Look at the TA “predictions” I responded to. Flipping a quarter would be more accurate.

 

The reality is that the greater the discount to IV, the less often it happens. The market is usually efficient. So odds are far more likely that a large discount narrows than it widening even further. Betting on TA telling you prices will continue lower while already at a huge discount is swimming uphill against the current while wearing meat shorts in piraña infested waters.

 

If you “got in too early” and it widens it’s a strong sign your IV estimate wasn’t very accurate, and TA can’t save you from poor analysis. 

Edited August 21, 2023 by ValueArb
Clarity

[Value_Added]

3 hours ago, ValueArb said:

 

This is a great example. In the week since this post where its said Charter technicals say it's going higher, its has dropped $8 down to $420, and Expedia which technicals indicated is a sell is actually up a buck, and Generac is up $4 since the sell signal was noted.

 

Technical indicators don't read the future any better than the the rear view mirror sees the road in front of you.  The key word is indicator...they can act as a gauge as to how the market or particular stock may move.  It's all old data being collected and spewed out in a nice trend/graph that can be useful through the right lenses.  

 

The charts I posted above are in week intervals so swings that you're speaking of (1%-3%) on a given day or week likely isn't going to have enough movement behind it to fall below the moving average, AND change the overall momentum, AND become oversold/overbought.  The daily very likely could but it would depend on the run up or fall it had preceding the change in direction.  Monthly would take a long period of positive or negative movement to change the signal and would probably be the best gauge to use for long term investors. If the monthly has a change in signal it is usually due to a large change in sentiment. 

 

For example, Carvana...a stock I'm in no way interested in and one I'm sure you've seen a lot about because of some value investors who were drawn into it.  You've probably heard that you could've made a killing recently on it if you could've just found the bottom and had the balls to put money into that falling knife.  Using the monthly indicators I used above , it would have had you buying sometime in May 2023.  Because it is plotting old data a month at a time, I can't tell you when in May so lets just assume it was at the high of around $13.15.  Now remember, these aren't telling the future so this would be a complete gamble to enter at this point just based solely on indicators.  IF you had a thorough analysis and knew with relative certainty that you ware right and a comfortable margin of safety exists at $13.15 it would be a great point to enter.  The indicators are telling you the sentiment has now changed and momentum has been building very heavily behind this thing.  Because its on monthly you didn't hit the low but you did find an entry point with positive momentum behind it.

 

Same thing with Alibaba.  You could've looked at the 3 mentioned TI's and saw that the momentum and sentiment was hugely negative and growing more negative (using the monthly's).  It turned negative in Jan 2021 which was the quarter when Munger bought (we didn't find out until April or May).  Just simply waiting until the TI's said the sentiment had changed would've saved you a lot of pain (trust me...I know...but MUNGER BOUGHT IT!!!  lesson learned the hard way).  The TI's say the sentiment and momentum changed in Jan 2023 (2 years later!).  You'd still be down on the investment as of now but again, these are indicators and are only to be used as an aid and are in no way a guarantee it goes up or down.  It also doesn't mean that you won't have +/- 10% - 20% swings in price without flashing another buy/sell signal.

 

Technicals can be useful but should NEVER interfere with a full analysis of a company. Most people shouldn't use them without some sort of mental ruleset that won't allow them to skew your judgement on your hopefully thorough analysis.  

 

Burry uses much shorter periods based on his trading style.  I would say based on his track record - when combining a 'mostly right' analysis of value and using TI's to enter at certain points, they are useful.  

 

Edited August 22, 2023 by Value_Added

[Sweet]

7 hours ago, ValueArb said:

If it’s not predicting the future it’s worthless. 
 

As far as the Meta example, if your intrinsic value estimate was $200, and you were about to buy a full position at $120, it would be great if TA could tell you it’s headed under $100. But it can’t. Look at the TA “predictions” I responded to. Flipping a quarter would be more accurate.

 

The reality is that the greater the discount to IV, the less often it happens. The market is usually efficient. So odds are far more likely that a large discount narrows than it widening even further. Betting on TA telling you prices will continue lower while already at a huge discount is swimming uphill against the current while wearing meat shorts in piraña infested waters.

 

If you “got in too early” and it widens it’s a strong sign your IV estimate wasn’t very accurate, and TA can’t save you from poor analysis. 

Yes TA cannot save you from poor analysis, I’d say TA is worthless if applied randomly.

 

It’s not if it provides you with entry signals and if it saves you from considerable drawdowns if you can position better / time entries better.  There is actually a way to use TA which is complementary with value investing.

 

You are coming at this from the perspective that TA predicts the future - I don’t believe it does or even can.  In my opinion the biggest benefit of TA is letting you know how the trend is doing.

Edited August 22, 2023 by Sweet

[ValueArb]

On 8/21/2023 at 11:20 PM, Sweet said:

Yes TA cannot save you from poor analysis, I’d say TA is worthless if applied randomly.

 

It’s not if it provides you with entry signals and if it saves you from considerable drawdowns if you can position better / time entries better.  There is actually a way to use TA which is complementary with value investing.

 

You are coming at this from the perspective that TA predicts the future - I don’t believe it does or even can.  In my opinion the biggest benefit of TA is letting you know how the trend is doing.

 

Again, if it can't predict the future TA is worthless. That doesn't mean it has to be 100% accurate, but it has to be accurate enough to give you a positive future expectation or it can't help you at all. 

 

What positive expectation means is that your TA "entry signal" has to indicate when the price change you want is more likely to occur than the price change you don't want. That could mean its more likely the stock price increases in the near future than it decreases. So for example, if you find a signal says its more likely the stock price will increase in the next two weeks than it will decrease, if that signal was 55% accurate (55% of the time it occurs the stock price is higher in 2 weeks and 45% of the time it's the same or lower), then you have an actionable entry signal telling you its more likely than not the stock has bottomed out.

 

Problem is signals that strong don't exist. Academia and Wall Street have looked for them for decades and they find nothing but the most tenous relationships that are usually impossible to trade and the exceptions either don't last or don't offer a large enough edge to overcome transaction costs to produce market beating returns.

 

So all TA involves predicting price action, ie the future. That's why Buffett doesn't believe it. But if I'm misunderstanding you, please give me a detailed example of a TA signal you use and explain how it's useful while not predicting the future.

[ValueArb]

On 8/21/2023 at 5:18 PM, Value_Added said:

 

Technical indicators don't read the future any better than the the rear view mirror sees the road in front of you.  The key word is indicator...they can act as a gauge as to how the market or particular stock may move.  It's all old data being collected and spewed out in a nice trend/graph that can be useful through the right lenses.  

 

The charts I posted above are in week intervals so swings that you're speaking of (1%-3%) on a given day or week likely isn't going to have enough movement behind it to fall below the moving average, AND change the overall momentum, AND become oversold/overbought.  The daily very likely could but it would depend on the run up or fall it had preceding the change in direction.  Monthly would take a long period of positive or negative movement to change the signal and would probably be the best gauge to use for long term investors. If the monthly has a change in signal it is usually due to a large change in sentiment. 

 

For example, Carvana...a stock I'm in no way interested in and one I'm sure you've seen a lot about because of some value investors who were drawn into it.  You've probably heard that you could've made a killing recently on it if you could've just found the bottom and had the balls to put money into that falling knife.  Using the monthly indicators I used above , it would have had you buying sometime in May 2023.  Because it is plotting old data a month at a time, I can't tell you when in May so lets just assume it was at the high of around $13.15.  Now remember, these aren't telling the future so this would be a complete gamble to enter at this point just based solely on indicators.  IF you had a thorough analysis and knew with relative certainty that you ware right and a comfortable margin of safety exists at $13.15 it would be a great point to enter.  The indicators are telling you the sentiment has now changed and momentum has been building very heavily behind this thing.  Because its on monthly you didn't hit the low but you did find an entry point with positive momentum behind it.

 

Same thing with Alibaba.  You could've looked at the 3 mentioned TI's and saw that the momentum and sentiment was hugely negative and growing more negative (using the monthly's).  It turned negative in Jan 2021 which was the quarter when Munger bought (we didn't find out until April or May).  Just simply waiting until the TI's said the sentiment had changed would've saved you a lot of pain (trust me...I know...but MUNGER BOUGHT IT!!!  lesson learned the hard way).  The TI's say the sentiment and momentum changed in Jan 2023 (2 years later!).  You'd still be down on the investment as of now but again, these are indicators and are only to be used as an aid and are in no way a guarantee it goes up or down.  It also doesn't mean that you won't have +/- 10% - 20% swings in price without flashing another buy/sell signal.

 

Technicals can be useful but should NEVER interfere with a full analysis of a company. Most people shouldn't use them without some sort of mental ruleset that won't allow them to skew your judgement on your hopefully thorough analysis.  

 

Burry uses much shorter periods based on his trading style.  I would say based on his track record - when combining a 'mostly right' analysis of value and using TI's to enter at certain points, they are useful.  

 

 

Every example of TA predicting something has always been historical, if only you had seen what I saw in Carvana, Alibaba, etc. Its trivial to predict the past, but no one puts out real TA predictions publicly that offer market beating returns. 

 

And I have seen zero evidence Burry has used technicals at any time within the last twenty years. He came from an FX trading background where all he had was TA, then he learned value investing. He still wrote about using technicals a little during his first year or two of value investing but hasn't since. He's clearly a deep value investor and very intelligent. So it's likely he quickly figured out the same math that I already gave you, that waiting on an investment at a large MOS due to a technical indicator carries a huge opportunity cost that can't be recovered.

 

And lastly, Carvana has never been a value investment because you can never trust the financials of a business run by people who have previously committed fraud. Buying Alibaba based on sentiment would have been silly when you had 7 years of deteriorating margins indicating it's growth rate was artificially supportedl and its IV was far lower. 

[Sweet]

20 minutes ago, ValueArb said:

 

Again, if it can't predict the future TA is worthless. That doesn't mean it has to be 100% accurate, but it has to be accurate enough to give you a positive future expectation or it can't help you at all. 

 

What positive expectation means is that your TA "entry signal" has to indicate when the price change you want is more likely to occur than the price change you don't want. That could mean its more likely the stock price increases in the near future than it decreases. So for example, if you find a signal says its more likely the stock price will increase in the next two weeks than it will decrease, if that signal was 55% accurate (55% of the time it occurs the stock price is higher in 2 weeks and 45% of the time it's the same or lower), then you have an actionable entry signal telling you its more likely than not the stock has bottomed out.

 

Problem is signals that strong don't exist. Academia and Wall Street have looked for them for decades and they find nothing but the most tenous relationships that are usually impossible to trade and the exceptions either don't last or don't offer a large enough edge to overcome transaction costs to produce market beating returns.

 

So all TA involves predicting price action, ie the future. That's why Buffett doesn't believe it. But if I'm misunderstanding you, please give me a detailed example of a TA signal you use and explain how it's useful while not predicting the future.

Only if you are using technical analysis to trade and invest.

 

If you are using a fundamental filter, like value, then that’s your predictive tool.

 

In this case, the technicals are NOT trying to predict the future, your valuation is doing that.  The technicals just get you in and maybe out.

 

Edited August 23, 2023 by Sweet