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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TwoBear who wrote (8941)	11/14/1999 12:23:00 AM
From: Michael Burry	Respond to of 78627

With the returns from the last five years, you could at least break even with a major crash. Scott, I hope you realize how cocky and wrong-headed that statement might look in hindsight. It's now been recorded for posterity when I or Jim write the book. But realize it takes only a 33% fall to wipe out a 50% gain. And a 50% fall wipes out a 100% gain. And if you don't think any of these scenarios are possible, well, all it takes now is a mid-high single digit PE on the S&P 500 (something that seems to recur through history) to create a 80% loss. Got any clue what that wipes out? (hint: everything) Don't even get me started on the leveraged households that will participate in this. And if history is any guide, inflation can as much as quintuple the damages during the down times. Of course, you'll be one of the first out the door, not the last, right? Good investing, Mike