RichardGibbons Posted December 8, 2025 Posted December 8, 2025 1 hour ago, This2ShallPass said: You might already know this, but the 2x or 3x shares are only for short time periods. Volatility drag will eat into returns over the long term (anything over a month), even if you're right. He said he'd be short PLTU, which is the 2x Bull shares. So in this case, volatility drag will actually help him. (But obviously this would be factored into the cost of borrowing the shares.)
TwoCitiesCapital Posted December 8, 2025 Posted December 8, 2025 Burry disclosed sizable long positions in Fannie/Freddie commons on his substack.
This2ShallPass Posted December 8, 2025 Posted December 8, 2025 11 minutes ago, RichardGibbons said: He said he'd be short PLTU, which is the 2x Bull shares. So in this case, volatility drag will actually help him. (But obviously this would be factored into the cost of borrowing the shares.) I don't think it does. I wondered about that as well and checked. If it did, then if you short the S&P 500 2x or 3x bull shares, it'll be like free money.. I was curious and checked PLTR and PLTU, for 1Y PLTR is up 150% and PLTU is up 250%..so I guess it worked in this instance.
RichardGibbons Posted December 8, 2025 Posted December 8, 2025 What makes you think that it it's different than any other short? I think should be free money, except that you need to be able to handle the volatility, always find shares to borrow, and pay for the borrow. I think the way that it shouldn't be "free money" is that the cost of borrowing should be greater than or equal to the expected loss in the shares as a result of volatility drag. Am I missing something?
This2ShallPass Posted December 9, 2025 Posted December 9, 2025 21 hours ago, RichardGibbons said: What makes you think that it it's different than any other short? I think should be free money, except that you need to be able to handle the volatility, always find shares to borrow, and pay for the borrow. I think the way that it shouldn't be "free money" is that the cost of borrowing should be greater than or equal to the expected loss in the shares as a result of volatility drag. Am I missing something? You are correct. I was thinking about the 2x bear shares (diff ETF). Yes, volatility drag should help the short if it hurts the long on the same ticker. That begs the question, why would anyone be long these ETFs? If you want to leverage your returns on S&P 500 for example - isn't the easier play just short the 2x bear ETF (to be long) or short the bull ETF (to be short)? Seems like you can make volatility drag work for you.
RichardGibbons Posted December 9, 2025 Posted December 9, 2025 (edited) Yeah, I was thinking that it would all shake out in both the borrow cost and the difficulty in borrowing. And that the lent shares might be taken back right at the worst time. But now, looking at IB's cost to borrow, the costs don't seem that unreasonable, assuming that the numbers given are annualized percentages. e.g. TQQQ had a cost of 0.48, and UPRO was something like 0.25. So I don't know what's going on there. Edited December 9, 2025 by RichardGibbons
UK Posted December 10, 2025 Posted December 10, 2025 8 hours ago, RichardGibbons said: So I don't know what's going on there. Perhaps there is still this situation that the AI themed music is still playing and it could get even louder for some time? Difficult to time this?
This2ShallPass Posted December 10, 2025 Posted December 10, 2025 13 hours ago, UK said: Perhaps there is still this situation that the AI themed music is still playing and it could get even louder for some time? Difficult to time this? Definitely difficult to time PLTR, these could keep going up for no reason. On the specific comment you responded to, that's a discussion on the mechanics of buying these 2x / 3x leveraged ETFs. One of the big drawbacks has always been the volatility drag, you might end up being right and still not make money. But for most of the index leveraged ETFs you have a bull and bear equivalent (SSO / SDS as an example). If you short these, then volatility drag becomes an advantage..
UK Posted December 17, 2025 Posted December 17, 2025 https://open.substack.com/pub/michaeljburry/p/foundations-the-big-short-squeeze?utm_campaign=post-expanded-share&utm_medium=web
Parsad Posted February 4 Posted February 4 https://finance.yahoo.com/news/michael-burry-warns-cascading-effects-001910407.html Cheers!
Spooky Posted February 4 Posted February 4 5 hours ago, Parsad said: https://finance.yahoo.com/news/michael-burry-warns-cascading-effects-001910407.html Cheers! Only $75k more to go now to reach fair value.
TwoCitiesCapital Posted February 4 Posted February 4 17 minutes ago, Spooky said: Only $75k more to go now to reach fair value. $150k was also roughly my estimate. Glad to see were in alignment
dealraker Posted February 4 Posted February 4 16 minutes ago, Spooky said: Only $75k more to go now to reach fair value. I would argue that it has a negative value.
Spooky Posted February 4 Posted February 4 6 minutes ago, TwoCitiesCapital said: $150k was also roughly my estimate. Glad to see were in alignment
73 Reds Posted February 4 Posted February 4 9 minutes ago, dealraker said: I would argue that it has a negative value. Speculation aside, I'd like someone to explain quantitatively how to value it and why any number makes sense.
longlake95 Posted February 4 Posted February 4 But wait - it's on a four year cycle, it will come back! I was told this recently by a 30 - something crypto-bro.
dealraker Posted February 4 Posted February 4 6 minutes ago, 73 Reds said: Speculation aside, I'd like someone to explain quantitatively how to value it and why any number makes sense. +1
73 Reds Posted February 4 Posted February 4 1 minute ago, longlake95 said: But wait - it's on a four year cycle, it will come back! I was told this recently by a 30 - something crypto-bro. LOL, they're probably right. The best argument I've heard is the usage argument. Yet the one commodity that demands the most usage all the time - O2 - commands no price.
TwoCitiesCapital Posted February 4 Posted February 4 (edited) 6 minutes ago, 73 Reds said: LOL, they're probably right. The best argument I've heard is the usage argument. Yet the one commodity that demands the most usage all the time - O2 - commands no price. Precisely because it isn't scarce. Same with water. But most people would pay anything for a small amount of oxygen in space if your suit is leaking. Or for a glass of water in a desert. Usefulness + scarcity = value Either unto itself is worthless. There have been plenty of posts in the crypto thread about varying ways to model/value Bitcoin. It doesn't all have to be rehashed again. Read the thread. Edited February 4 by TwoCitiesCapital
73 Reds Posted February 4 Posted February 4 Just now, TwoCitiesCapital said: Precisely because it isn't scarce. Same with water. But most people would pay anything for a small amount of oxygen in space if your suit is leaking. Or for a glass of water in a desert. Usefulness + scarcity = value Either unto itself is worthless. There have been plenty of posts in this thread about varying ways to model/value Bitcoin. It doesn't all have to be rehashed again. Read the thread. Pet rocks today are even more scarce.
Milu Posted February 4 Posted February 4 7 minutes ago, 73 Reds said: Speculation aside, I'd like someone to explain quantitatively how to value it and why any number makes sense. There isn't any way to quantitively value an asset without cashflows, this is the same for Gold, Silver, Rembrant paintings, vintage wine, collectables etc. It's more subjective and relative, but unfortunately can't boil it down to a scientific number, and anybody who says they can is lying. I still hold it though and have previously held gold which also isn't possible to value. Both of these are assets with some degree of scarcity that should trend updwards (in fiat currency) terms as long as governments continue to print load of a non-scarce assets (dollars, euros, yen etc)
Gregmal Posted February 4 Posted February 4 Man, Burry just cant help himself. What an embarrassment. I remember early in my career being impressed by guys whom were generally introduced as "the guy who called.....". Then I began following those guys who "called it"....and realized...well, no shit you called it, all you do is call shit. Can you please just shut up? Now I kinda have an initial bias towards considering the guys whom are defined by a "call" as being lousy investors and egomaniacs.
73 Reds Posted February 4 Posted February 4 Just now, Milu said: There isn't any way to quantitively value an asset without cashflows, this is the same for Gold, Silver, Rembrant paintings, vintage wine, collectables etc. It's more subjective and relative, but unfortunately can't boil it down to a scientific number, and anybody who says they can is lying. I still hold it though and have previously held gold which also isn't possible to value. Both of these are assets with some degree of scarcity that should trend updwards (in fiat currency) terms as long as governments continue to print load of a non-scarce assets (dollars, euros, yen etc) I largely agree with you - hence the value is all speculation. The issue for me is utility; some see it, I don't.
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