He Banked On the Last Crash, Now He's Doing it Again

[Intelligent Income Daily]( Welcome to Intelligent Income Daily, the free daily newsletter from wealth and income expert Brad Thomas. Brad’s experience spans three decades of real estate and stock market booms and busts. Today, he and his team focus exclusively on the safest and most predictable ways to earn sustainable and growing income in any market condition. You can find all past issues [here](. And if you have any questions, please contact Brad and his team [here](mailto:memberservices@widemoatresearch.com). He Banked On the Last Crash, Now He's Doing it Again By Adam Galas, Analyst, Intelligent Income Daily [Adam Galas] Michael Burry was a neurologist in residency with Asperger’s syndrome and a glass eye when his meticulous and data-driven skill set was first discovered by investors. After posting a message on an investing blog about how he was sick of medicine and wanted to switch career fields, he was contacted by two major stock market investors. Over the course of the next few years, Burry’s market predictions were so accurate that he gained recognition, picking up on key details that others had missed. This gave him an extreme edge when analyzing stocks. His success and the following he gained, led him to build the connections that enabled him to found Scion Capital in 1996. And in 2003 and 2004, an unexplainable anomaly made him begin pouring over housing loan data. Something did not add up mathematically, and he couldn’t rest until he figured out what was going on. The data and the messages being portrayed to the public contradicted each other. And it soon became obvious that many of these subprime loans were not what they appeared or pretended to be. Burry’s two years of research led him to believe that an unprecedented national housing crash would destroy many of Wall Street’s most leveraged and reckless banks. Obsessed with his discovery, in 2005 Burry invested his entire hedge fund into credit default swaps or CDSs. These are insurance policies that let him bet against the subprime mortgages. He was predicting a meltdown. If a subprime bond based-security defaulted, he would get a major payday. Burry was 100% convinced by the data. But his investors were not so certain. In fact, many began suing him to get their money back. Because in 2005, the mortgage market didn’t melt down. U.S. housing prices kept rising. They also kept rising into 2006. And insurance policies, like CDSs, cost money. So throughout this time, Burry began losing money. And his clients paying 2% management fees, were not happy about it. This caused extreme stress for Burry, but he could not back down. For Burry this was a matter of 2 + 2 = 4. He could not change course. Finally, late in 2006, his data driven prediction started coming true. Home prices started to fall. In 2007, 25 home mortgage originators went bankrupt in the first quarter alone. But there was a problem. All his money was in CDSs. And the value of the CDSs are not tracked like stock prices. They are marked daily by the banks that originate these loans and insurance policies against them. Burry couldn’t make any money unless the big banks he was betting everything against – admitted these loans were failing – and that his insurance policies were increasing in value. But what did the big banks do in 2007? They lied. They claimed their loans were just fine, and that they didn’t have to pay off the insurance policies. The same ones Burry had spent years buying. Going into 2008, as the housing crisis became undeniable, Burry was faced with a war on two fronts. His clients hated him for three years of losses. And the big banks that lied, altered their accounting so that he could not receive the money he was owed. But finally, later in 2008, everything changed. Goldman Sachs flipped on the subprime loan market, shorting the heck out of it… Just like Burry. This opened the floodgates. Soon, Morgan Stanley was banging on Burry’s door, begging to buy his portfolio of subprime CDSs for $800 million. In 2008, Burry had $150 million in his hedge fund. And decided to take the offer. He gave his clients $700 million in profits, and was able to keep $100 million for himself, making a nearly 500% return in eight years (when the market was flat). But sadly, Burry was not treated as a hero by his investors. And the amount of vitriol Burry had received over the course of those three years was too much for him. He closed the fund, and decided to simply manage his own money. Until 2013… Recommended Link [Chevron’s little-known investment: "Project Infinity" unveiled]( [image]( Bloomberg reported that Chevron is pumping money into ["Project Infinity"]. So are oil giants Shell, Equinor, and Eni. Why? Because "Project Infinity" packs more power than 10 million barrels of oil! What is "Project Infinity"? Why is Nomi Prins calling it the investment of the decade? And how can YOU get in on the ground floor for $2? [Nomi digs into the details in her new special broadcast (click here now to instantly sign up)]( -- An Excellent Change in Strategy So why am I telling you this story today? Last week, Michael Burry came back into headline news when he made a $1.6 billion dollar bet that the stock market is going to crash. But this time he’s not putting all his money into one big bold conviction bet. Burry is combining it with high-quality dividend blue chips. In addition to betting $900 million against the S&P 500 and $700 million against the Nasdaq, he’s buying deep value high-yield dividend blue chips like CVS and Stellantis (the old Chrysler). Who knows when his prediction will come true. Eventually another stock market crash is bound to happen. But what I find more fascinating and credible is that he’s learned the power of high-quality dividend blue-chips. These stocks pay you to get rich, which is the ultimate luxury and the basis of our income-oriented investment strategy at Wide Moat Research. And best of all, it doesn’t involve years of waiting on a major conviction to play out. Instead, you can live your life without stressing about every headline news article. So today, in celebration of another convert to our Wide Moat Research strategy, I want to give you a free recommendation from our Fortress Portfolio service. The pick is TC Energy (TRP). And it is the largest pipeline utility in North America, supplying 25% of the continent's oil and gas. Right now, TC Energy is yielding almost 8%. That’s the highest yield in 23 years, and is more than twice the yield of CVS that Michael Burry is getting. Its cash flow is 96% contracted or regulated, making it rock solid. That’s why it has raised its dividend for 23 consecutive years. Even when the Great Recession caused oil to fall 75%, TC Energy kept collecting its fees and paying dividends. During Pandemic, when oil hit -$38, TC Energy kept collecting fees, paying its dividend, and even raised it. And the last time TC Energy was this undervalued, it soared 700% when the Nasdaq was cut in half from 2000 to 2010. This is just one of the many picks in our Fortress Portfolio service. To find out more about this service and learn the names of our other portfolio picks, [click here](. If Michael Burry had learned this strategy sooner, those three years of sleepless nights could have been prevented. We can’t all be stock market mathematical geniuses like Michael Burry, but you can sleep well at night when your portfolio is paying you to get rich. Safe Investing, Adam Galas Analyst, Intelligent Income Daily IN CASE YOU MISSED IT… [Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse – reveals his strategy:]( The One-Ticker Retirement Plan How to make all the money you need – in any market – using a single stock. [Click here for the name of the ticker…]( [image]( [Wide Moat Research]( Wide Moat Research 55 NE 5th Avenue, Delray Beach, FL 33483 [www.widemoatresearch.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Wide Moat Research welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. 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