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" Credit-default swaps remedied the problem of open-ended risk for me. If I bought a credit-default swap, my downside was defined and certain, and the upside was many multiples of it. "
Michael Burry
Problem
Certain
Many
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" Lost dollars are simply harder to replace than gained dollars are to lose. "
Michael Burry
Than
Replace
Lost
" In early 2005, I really studied the prospectuses of these mortgage pools that were tranched out into different-rated slices rated by agencies like S&P and Moody's. They had names like Park Place and People's Choice. It was clear to me that many of the buyers of these repackaged subprime mortgages were doing little analysis. "
Michael Burry
Me
Place
People
" In June 2005, mortgage rates were at 40-year lows, and risk premiums on mortgage securities were at all-time lows. Once the banks migrated to the subprime area, there was little else that could be done to send housing prices higher. "
Michael Burry
Risk
Mortgage
Housing
" The post-crisis perception, at least in the media, appears to be one of Americans being held down by Wall Street, by big companies in the private sector, and by the wealthy. Capitalism is on trial. I see it a little differently. If a lender offers me free money, I do not have to take it. "
Michael Burry
Media
Capitalism
Me
" Americans have so much natural entrepreneurial drive. The caveat is that it is technology that should be a tool making lives better in the real world, and in line with the American spirit of getting better and better at something, whether it's curing cancer or creating a better taxi service. "
Michael Burry
World
Technology
Service
" I seek individual investments that will allow me to target total portfolio returns of at least 20% annually after fees and expenses on an annual basis over a period of years, not months. "
Michael Burry
Me
Will
Over
" At one point, I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham but, rather, set out on his own path and ran money his way, by his own rules... I also immediately internalized the idea that no school could teach someone how to be a great investor. "
Michael Burry
Great
School
Path
" It is a tenet of my investment style that, on the subject of common stock investment, maximizing the upside means first and foremost minimizing the downside. The deleterious effect of permanent capital loss on portfolio returns cannot be overstated. "
Michael Burry
Investment
Loss
Style
" I try to buy shares of unpopular companies when they look like road kill and sell them when they've been polished up a bit. "
Michael Burry
Try
Look
Like
" I will always choose the dollar bill carrying a wildly fluctuating discount rather than the dollar bill selling for a quite stable premium. "
Michael Burry
Dollar
Will
Always
" Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, 'Scion Capital', that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy. "
Michael Burry
Letters
Back
Down
" What you want to watch are the lenders, not the borrowers. The borrowers will always be willing to take a great deal for themselves. It's up to the lenders to show restraint, and when they lose it, watch out. "
Michael Burry
You
Want
Watch
" In essence, the stock market represents three separate categories of business.They are, adjusted for inflation, those with shrinking intrinsic value, those with approximately stable intrinsic value, and those with steadily growing intrinsic value. "
Michael Burry
Growing
Stock Market
Three
" Government policies and regulations in the postcrisis era have aided the hollowing-out of middle America far more than anything the private sector has done. These changes even expanded the wealth gap by making asset owners richer at the expense of renters. "
Michael Burry
America
Wealth
Changes
" Sadly, in the highest levels of economic thought in government, questions are not tolerated. It is as if we're dealing with the binary thinking of a fundamentalist religion. "
Michael Burry
Government
Thought
Thinking
" Regardless of what the future holds, intelligent investment in common stocks offer a solid route for a reasonable return on investment going forward. "
Michael Burry
Intelligent
Future
Forward
" I believe that agriculture land - productive agricultural land with water on site - will be valuable in the future. "
Michael Burry
Water
Agriculture
Believe
" Common hedging techniques include shorting stocks, buying put options, writing call options, and various types of leverage and paired transactions. While I do reserve the right to use these tools if and when appropriate, my firm opinion is that the best hedge is buying an appropriately safe and cheap stock. "
Michael Burry
Right
Writing
Opinion
" The major reform legislation, Dodd-Frank, was named after two guys bought and sold by special interests, and one of them should be shouldering a good amount of blame for the crisis. "
Michael Burry
Two
Special
Guys
" Subprime mortgages, typically defined as those issued to borrowers with low credit scores, make up roughly the riskiest one-third of all mortgages. "
Michael Burry
Make
Mortgages
Credit
" If you are going to be a great investor, you have to fit the style to who you are. "
Michael Burry
You
Great
Investor
" The idea that growth will remedy our debts is so addictive for politicians, but the citizens end up paying the price. "
Michael Burry
Growth
Politicians
End
" I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers - those with the weakest credit. "
Michael Burry
Worry
Back
Credit
" Innovation, especially in America, is continuing at a breakneck pace, even in areas facing substantial political or regulatory headwinds. The advances in health care in particular are breathtaking - so many selfless souls are working to advance science, and this is heartening. "
Michael Burry
America
Health
Innovation
" Fresh, clean water cannot be taken for granted. And it is not - water is political, and litigious. Transporting water is impractical for both political and physical reasons, so buying up water rights did not make a lot of sense to me, unless I was pursuing a greater fool theory of investment - which was not my intention. "
Michael Burry
Political
Investment
Fool
" I think a lot of hedge funds get their trades from Wall Street and get their ideas from Wall Street. And I just like to find my own ideas. I'm reading a lot; I read a lot of news. I'm addicted to it. I basically - I follow my nose on news stories. "
Michael Burry
Reading
Own
Think
" My natural state is an outsider, and no matter what group I'm in or where I am, I've always felt like I'm outside the group, and I've always been analyzing the group. "
Michael Burry
Always
Natural
Matter
" One of the risks for anybody in the lending business is that being conservative can harm your competitiveness. "
Michael Burry
Business
Conservative
Risks
" Throughout the universe of public and private funds, managers are measured quarterly against one index or another, defined by statistics, and corralled into this category or that category so that fund of funds, pensions, and other institutions can make comforting - if not necessarily prudent - asset allocation decisions. "
Michael Burry
Statistics
Universe
Decisions