Key points:
- Michael Burry of the ‘Big Short’ has recently shorted Apple stock.
- It always pays to track what Burry is doing and follow his moves.
- But, I would not short Apple stock, and neither should you. Here’s why.
Michael Burry, the fund manager who became famous after shorting the US housing market in 2008, is back in the headlines today after revealing that he has shorted Apple stock.
Burry has the uncanny ability to profit from excesses in the financial markets, with his latest successes being buying Gamestop stock last year and triggering the meme stock craze.
Also read: VWAP Trading Strategy Guide & Examples.
However, unlike many retail investors who were burned by buying some of the meme stocks at crazy valuations, Burry profited immensely by launching the meme stock craze in the first place.
Burry also shorted Tesla stock and Cathie Wood’s Ark Innovation fund and could be sitting on significant gains since growth stocks started falling in November 2021, pulling the overall market lower.
Interestingly, Burry has backed meme craze projects such as Dogecoin and Gamestop despite pointing out that these assets were examples of the excesses in the financial markets, given that they almost did not have any real-world value.
Still, the lack of intrinsic value in the meme craze assets did not stop Burry from profiting from these cray trends that made savvy investors a lot of money by timing their entries and exits well.
Burry is now shorting apple stock and had put options on 206,000 Apple shares on March 31, 2022. It always pays to track what Michael is doing, given that he had sold most of his US stock positions by the end of last year in a move that has paid off significantly this year as stocks sold off due to the hawkish Fed interest rate hikes.
Scion Asset Management, Micheal Burry’s fund, has recently bought stocks, including stakes in Discovery, Bookings Holdings, Bristol-Myers Squibb, and Alphabet. The move could indicate that US stock markets could be about to bottom.
However, I am not sure about shorting Apple. There is a reason why the tech giant is worth $2.36 trillion. It has done many things right, and the trend will likely continue. However, the recent decline in Apple shares does not give me confidence in a short trade.
Your gains are limited when you short a stock, while you take on unlimited risks. Therefore, shorting should be left to professional traders, given the risks.
*This is not investment advice. Always do your due diligence before making investment decisions.