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Michael burry is selling all of his US
stocks and the reason why is terrifying
but I'm not here to tell you to sell all
your stocks you might know bur for
betting against the housing market
before the 2008 recession at that time
bur was bearish on the entire economy
but things are different this time
around because he isn't just bearish on
the market as a whole rather he has
found a certain sector in the market
that he believes will make him hundreds
of millions of dollars you see in the
2008 recession Michael bur was able to
achieve a monstrous 696 return in a
single year during this Peri period of
time he made $700 million for his
clients and $100 million for himself
most recently in 2021 he made boatloads
full of money by shorting Cathy Woods
Ark invest ETF Michael bu makes money by
betting on the world economy and
recently he's found himself on the cusp
of a trade that will be on par with his
prediction of the 2008 recession but
don't take my word for it take bur's
word for it bur actually left the clues
to his new trade back in 2023 in 2023
bur left a cryptic tweet on X before
leaving the platform entirely since this
tweet bu has remained silent in that
time he has reorganized his portfolio to
take advantage of this new change in the
world economy bury doesn't want to make
this reorganization public but he has to
because of SEC regulations and because
of his cryptic tweet I figured out what
his new thesis is in this video I'll
uncover bur's cryptic message and show
you exactly what bu is buying and why
he's doing
it Michael bur is once again making a
huge bet on the world economy he's
noticed an economic Trend that almost
everyone has ignored but luckily for us
he's left some Clues to point toward his
thesis before leaving X Michael bu left
a tweet saying in ascendant China seems
eerily similar to the Ottomans Beijing
believes that the United States is
decadent undeserving of its affluence
living beyond its means on the fumes of
the past and very soon vulnerable enough
with this tweet Michael bur is referring
to the rise and fall of the once Mighty
Byzantine Empire which he believes
strongly predicts the events we will see
in the coming months you see while
technology has drastically evolved human
behaviors never change since human
behavior is highly predictable history
serves as a strong indicator of future
events Michael bur has dug into the
history books to find a situation
similar to what is going on with the US
and China similar to the US the
Byzantine Empire flourished for
centuries in fact the Byzantine Empire
was much more dominant than the US in
terms of time for over a thousand years
the Byzantine Empire was at the
Forefront of scientific advancements
they invented brilliant inventions like
flamethrowers and complex sewer systems
which gave them a Monumental advantage
over their enemies each generation of
the Byzantine inherited and improved on
the previous generations but just when
it seemed like the Byzantine Powerhouse
was set to continue for another Thousand
Years the entire Empire's cracks began
to form the Byzantine Empire began to
fail to maintain their borders and
invest in their army and Military the
final generations of the byzantines were
very complacent with the previous
generation successes because they
inherited a global reputation they did
not earn not only that but the Byzantine
Empire also fought meaningless battles
amongst themselves these battles were
often done over obscure doctrines and
vocabulary which is REM remarkably
similar to the two- party divide in the
US today to fuel short-term economic
Prosperity the Byzantine Empire began
increasing the supply of their own
currency while all of this was happening
a different Empire was on the rise and
challenging the byzantines that Empire
was the Ottoman Empire an Empire that
draw significant parallels to China
today by taking control of important
trade routes the Ottomans were able to
prioritize economic and Military
expansion after seizing the capital of
the Byzantine Empire Constantinople the
Ottoman Empire became the Hub of
Commerce China is now actively becoming
the Hub of Commerce just like how the
Ottomans did in the
1400s China is currently in the process
of creating new trade routes through an
initiative called the belon road
initiative this initiative was proposed
in 2013 By president xiin ping and aims
to connect Asia Africa and Europe
through two new trade routes initiatives
like this are giving rise to China's
economy as China solidifies themselves
as the most dominant manufacturer in the
world while the US Still Remains a hub
for Innovation the US now faces
stagnation in key Industries like
manufacturing the US has been
Outsourcing critical Technologies and
industries to China which mirrors the
Byzantine decline in economic and
technological leadership like the
byzantines the US risks overconfidence
in its past successes while Rivals like
China invest heavily in future oriented
Industries Michael bu isn't the only
hedge fund manager drawing this
conclusion many others are doing the
same and are positioning themselves to
take advantage of the opportunity one of
the most notable hedge fund managers
that have noticed this is Ray doio who
runs one of the biggest Hedge funds in
the world Bridgewater Associates in his
book The Changing World Order he
explains how there is a cyclical nature
of Empires rising and falling Doo
emphasizes how Rising Powers often seize
control of critical economic and trade
systems China is doing this as they
modernize and take control of key global
trade networks apart from manufacturing
China's focus on technology such as 5G
Ai and green energy position itself as a
rising power this is seen with companies
like Alibaba Buu byd and jd.com which
are all innovating in their respective
technolog iCal Industries Doo believes
that we are currently in a potential
turning point where the us could lose
its dominant position to China outside
of the byzantines he has drawn many
other comparisons in history such as the
Dutch Empire in the 17th century the
British Empire Chinese dynasties such as
Tang Song Ming and Ching the Roman
Empire and the Soviet Union in every
occurrence economic Innovation and trade
dominance Prov to be the roots of power
decline always occurs when a nation's
productivity stagnates and debt becomes
unmanageable these patterns have
repeated over and over again and fund
managers like doio have been trying to
position themselves to keep their
Capital safe from the madness doio
talked about this with the current Ai
and crypto are David saaks last year
where he expressed his concerns about
the financial problem in the US so Ray I
think I fundly agree with your critique
that America uh is looking more and more
like a late stage Empire like a late
stage Roman Empire we have this massive
dead and we're debasing our currency
like the Roman Empire we have all these
you know far-flung
uh military Wars which we lose you know
all over the world uh were racked by
internal divisions so I think I agree
with with that part of it at the same
time we do seem to be really good still
at technological innovation you know in
the last year we've had this
breakthrough with you know AI with large
language models I'm wondering is that
well first of all is is that a mirage or
do you agree with that and then if you
do agree that we're still really good at
technology is there anything in the
historical pattern that's like that
where you have a you know an Empire
that's declining in every visible way
except for the one that really underg
guards our power which is technology
well the late 20s in the United States
was such a good classic example we had
more Innovations more techn you know all
of these Cycles if I was to go back to
the Industrial Revolution late um 1800s
and then you turn then you create when
there's a lot of debt and a big wealth
Gap you have the 19 1907 you have the
panic panic of 1907 boom you have the
Civil uh you have this internal conflict
and you had the first world war in the
20s you had the same kind of late 20s it
was an era of great inventiveness the
other things matter president Trump is
now feeling this pressure from China
especially considering that China has
dominated the US in terms of
manufacturing Goods his proposal is to
impose significant tariffs on China
which he believes will encourage
American consumers and businesses to buy
domestic products in particular he's
worried about certain us Industries like
steel aluminum and technology which have
been undercut by cheaper Chinese Imports
for years your critics are saying that
you're going to start another trade war
with it's not a trade War I did great
with China with with everything look
China came in they were going to destroy
our steel industry and I put tariffs big
tariffs you're talking about 60% tariffs
on Chinese Goods is that in the cards no
I I would say maybe it's going to be
more than that because we're going to
have look I want China to do great I do
and I like President sh lot he was a
very good friend of mine during my ter
well look co co cover up intellectual
property death the list is long from our
number on adversar I don't know if he's
a friend when no but I got along with
him great but with all that being said
how are fund managers like Michael bu
positioning themselves to profit from
this changing world order and how do
regular individual investors like
ourselves do the
same Michael bur has been making
significant strides to profit from the
rise of China ever since the third
quarter of 2023 Michael has been selling
US stocks and deploying that Capital to
add to his positions in Chinese stocks
as of the third quarter of 2024 25.5% of
his portfolio is in Alibaba 24.8% of his
portfolio is in jd.com and 15.85% of his
portfolio is in Buu but why is he
purchasing these three Chinese stocks
out of all the Chinese stocks available
on the US market as I mentioned earlier
China is attempting to expand its trade
initiatives with Africa Asia and Europe
with the belt and Road initiative
Alibaba and jd.com are at the Forefront
of these initiatives and are rapidly
expanding into other countries this is
fueling substantial growth in their top
and bottom line all of this is happening
as the US market is undervaluing these
stocks relative to the rest of the
market Alibaba is trading at a forward
PE ratio of just 8.55 if we take one and
divide it by 8.55 we get
11.6% this means that Alibaba has a
forward earnings yield of 11.6 basically
this implies that for every dollar
invested in Alibaba stock the company is
expected to make 11.6 cents in in the
next 12 months that's a massive return
especially since most stocks are
overvalued today buy do is also
similarly undervalued at a forward PE
ratio of 7.95 and a forward earnings
yield of 12.5% jd.com is also trading at
a forward PE ratio of 8.45 which implies
a forward earnings yield of 11.8% but
why are these stocks trading at such a
low value and why does bur think that
these stocks will appreciate in the
coming months a huge issue with Chinese
stocks is the inherent structure of them
being listed on the US Stock Exchange
Chinese laws restrict foreign ownership
in Chinese companies that are in their
key sectors but many Chinese companies
want to raise Capital by listing their
company on foreign stock exchanges the
way that Chinese companies currently get
away with this is by setting up offshore
entities that issue shares to foreign
investors this structure is called a
variable interest entity structure or
viie structure and it's been under Fire
for quite a while investors are afraid
of the possibility of a delisting of
Chinese stocks from the US Stock
Exchange if the tensions between us and
China become too heated but why is bu
not afraid of this then to answer this
question I dug deep into bur's strategy
and found this document he wrote back in
the early 2000s in this document bu
States my strategy isn't very complex I
try to buy shares of unpopular companies
when they look like roadkill and sell
them when they've been polished up a bit
management of my portfolio as a whole is
just as important to me as stock picking
and if I can do both well I know I'll be
successful bur later expands on this by
saying I have found however that in
general the market Delights in throwing
babies with the bath water so I find out
of f industry is a particularly fertile
ground for best of breed shares at steep
discounts the fact that Chinese stocks
have this VI structure makes it a strong
candidate for bur to purchase them the
market has essentially thrown Chinese
stocks in the bathwater because
investors are scared of the structure
this is especially true after an
incident in 2021 where China took the
entire private tutoring sector under
State Control this led to a decline in
Chinese education stock prices by over
90% in stocks such as tal education
group this fear is not just on China's
side though there is also a fear of the
US delisting Chinese companies on us
exchanges this fear began when Chinese
companies were officially announced to
be at risk of being delisted by the SEC
this delisting will happen if Chinese
companies don't have independent
Auditors verify the quality of their
accountants audits investors believe
that verification from independent
Auditors will be tough China doesn't
want independent Regulators auditing
Chinese companies because they claim to
be afraid of national security so this
creates the possibility of a delisting
all of this fear is actually seen as an
opportunity by bu though if if you do
further research into the subject you'll
find that the situation isn't as fearful
as it's made out to be at least on
China's side on March 31st 20123
legislation came into play from the
Chinese Securities Regulatory Commission
or csrc essentially the legislation
states that any viie structured
companies starting on March 31st 2023
seeking an IPO on offshore Capital
markets must conduct a filing with csrc
the csrc mentioned that there is a
possibility of VI structured companies
going through with the csrc this
indicates that the Chinese government
government is actually relatively
comfortable with the vi structure and
that the chance of the structure being
removed is substantially lower than what
the market is pricing in with all that
being said investing in Chinese stocks
is a risky decision but bu is clearly
comfortable with it what do you think
about bur's investment do you agree that
Chinese stocks are undervalued despite
the risks