Farm land, gold are good investment options:
Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, said he is investing in farmable land, small technology companies and gold as he hunts original ideas and braces for a weaker dollar. “I believe that agriculture land — productive agricultural land with water on site — will be very valuable in the future,” said Mr Burry in a Bloomberg Television interview.
“I’ve put a good amount of money into that,” Mr Burry, as head of Scion Capital, prodded Wall Street banks in early 2005 to create credit-default swaps to bet against bonds backed by the riskiest home loans. The strategy paid off as borrowers defaulted, letting his investors more than quintuple their money from 2000 to 2008, according to Michael Lewis’s book “The Big Short”.
It’s possible to find opportunities among small companies, because large investors and government officials focus on bigger ones, he said. He is particularly interested in small-technology firms. “Smaller companies in Asia, I think, are neglected,” he said. “There are some very cheap companies there.”
Investing in Gold
Gold is also a favoured investment as central banks issue debt and devalue their currencies, he said. Governments haven’t adequately addressed the causes of the financial crisis and maybe sowing the seeds for future problems by borrowing, he said.
In the US, lawmakers showed they didn’t understand how to prevent another crisis when they gave the Federal Reserve and chairman Ben S Bernanke additional authority, he said.
Background in Medicine
Originally, investing was a hobby for Mr Burry, who as a resident neurosurgeon at Stanford Hospital in the 90s typed his ideas onto message boards late at night. It’s possible Mr Burry is part of “an extremely small group” of economists and investors who are “really exceptionally adroit” at forecasting, former Fed chairman Alan Greenspan had said in April. Mr Burry has been critical of the role Greenspan played in fuelling the crisis with low interest rates.
Goldman Sachs
Mr Burry said Wall Street i-banks such as Goldman Sachs Group shouldn’t trade on their own account and don’t always act in the best interests of their clients. The firm is disbanding its principal-strategies business, one of the groups that make bets with the company’s own money, two people with knowledge of the decision said last week.
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