The investor of "The Big Short" took a shot at the US dollar. The currency is only strong on a relative basis, and it is being eroded by inflation.
"If you see mention of the strong dollar, the almighty dollar, please remember it's only in relation to other currencies," he said. The dollar is not strong. We all see it on a daily basis.
The US dollar index hit a 20 year high in May. Its surge reflects the greenback's appeal as a haven in volatile markets, and investors bet the Federal Reserve will continue hiking interest rates in an effort to curb inflation.
The soaring prices of food, gas, housing, and many other goods and services make it hard for a dollar to be worth more in a foreign currency than it already is.
Other top flight investors have made the same arguments. Warren Buffet, who studied closely as a budding investor, recently said that inflation hurts the person who keeps their cash under their mattress. Ray Dalio has urged investors to gauge their wealth not in dollars but in buying power, or they'll make a mistake holding cash.
It was suggested in April this year that rising costs will lower companies' profit margins and reduce their valuations as a result of the pandemic.
Americans are saving less, borrowing more, and could run out of money by the end of the year, according to him. He said that the trend threatens to cut consumer spending and put more pressure on corporate earnings.
The book and movie "The Big Short" chronicled the story of the billion-dollar wager against the mid-2000s housing bubble.
The hype and reckless gambling in financial markets have been called out by Burry many times. He warned owners of meme stocks and cryptocurrencies that they were on the verge of the "mother of all crashes" last summer.
Since the start of the Pandemic, stocks have looked cheap. He shares some names that investors should be concerned about.
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