Every couple of months, for example, we apparently need to know what Michael Burry “of Big Short fame” thinks about where the market is headed. Just this week, the hedge-fund manager – who anticipated the U.S. subprime mortgage crisis in 2008 – made headlines with his US$1.6-billion bet against U.S. stocks. For the past few years, he has been warning of bubbles and crashes with regularity.
One last example. A study published in March looked at a different kind of forecast – surveys. Perhaps the crowd possesses a foresight that eludes the average guru. on that day in 1987, setting off a financial crisis on a global scale. There was certainly no clear fundamental shock to the financial system.
Meb Faber, the chief investment officer of Cambria Investment Management in Los Angeles, tried to illustrate that point in a post on social media this past week.