Innovation vs. ‘The Big Short’: Cathie Wood and Michael Burry's Battle Frames the Potential Futures of Markets

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 18 August 2021

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

Investors Cathie Wood and Michael Burry are predicting opposing outcomes for the recent high inflation rate. On this episode of “The Breakdown,” NLW explores: Michael Burry’s background and principles Cathie Wood’s ARK Investment and its strategies Burry’s bet against ARK Michael Burry, the main subject of “The Big Short,” has built his career betting on bubbles. Notably, he shorted Tesla in 2020 and took a negative stance against Elon Musk’s bitcoin boasts. He predicted an upcoming “mother of all crashes” for crypto, which has yet to occur. On the other end of the spectrum is Cathie Wood, long-time Tesla supporter and champion of bitcoin on Wall Street. Her fund, ARK Investment, focused on disruptive tech innovation and 2020 saw her flagship exchange-traded fund rise to become the world’s largest. Their opposing strategies have reached a critical point as news broke that Burry has shorted ARK, prompting Wood to launch into a Twitter thread to defend her fund’s beliefs. Only time and markets will be the judge of which investor’s fundamentals win in the end. Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW “The Breakdown” is written, produced by and features NLW, with editing by Rob Mitchell and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Only in Time” by Abloom. Image credit: Astrid Stawiarz/Stringer/Getty Images Entertainment and Alex Flynn/Bloomberg/Getty Images, modified by CoinDesk.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.1	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:16.2	The breakdown is sponsored by Nidig and produced and distributed by CoinDesk.
0:22.5	What's going on, guys? It is Tuesday, August 17th, and I have sort of a fun one for you today.
0:28.4	So one of the things that makes being in markets so fascinating and just more enjoyable in many ways is that unlike in, say, politics, when people have disagreements,
0:39.2	there is actually a way to tell who's right. Ultimately, it's the market. The market will
0:44.9	at some point demonstrate who is correct and who isn't. Right now, there is a delightful
0:50.7	disagreement going on between two figures who loom large in the market's imagination.
0:56.0	The champion of disruptive innovation herself, Kathy Wood on the one hand, and Michael Burry on the
1:00.8	other, who you might recognize as the main character in the big short.
1:05.7	The reason it's interesting isn't that it's just two big personalities going head to head.
1:13.0	Instead, it reveals quite a bit about the very different expectations people have about inflation, growth, and what happens next
1:20.6	in markets. Let's start with Michael Burry. First, a little background on Burry for those of you
1:26.4	who might not know.
1:28.1	He's best known in pop culture as the main subject of Michael Lewis's book, The Big Short,
1:32.7	and the movie of the same name.
1:34.5	He was the guy played by Christian Bale.
1:37.3	Bury ran a hedge fund called Cyan Capital that he started in 2000 with inheritance money
1:42.3	and loans from family. Right from the beginning, you'll see a common
1:46.4	thread, which is Burry building his whole career in betting on bubbles. When he started
1:51.9	Cyan in 2000, he immediately started shorting internet stocks, which, as we know, the world would
1:57.5	soon come to see as highly overvalued. In 2001, the S&P 500 fell around 12% while Sion
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