Episode summary
Michael Burry Is Short Micron. Here's the Lesson He Forgot.
Summary
Dylan Grice says Michael Burry’s short thesis on Micron makes logical sense: memory chips are cyclical, commoditized, and vulnerable to falling prices if China adds DRAM and NAND capacity at scale. He says Micron’s high valuation depends on tight supply, and that when supply loosens, earnings and prices should come down. He even agrees that memory companies like Micron are likely overvalued and could eventually get crushed.
But Grice argues that being right on fundamentals is not the same as making money. His caution comes from remembering Larry Tisch, the founder of Loews, who famously shorted the market from 1996 to 2000 and lost $2 billion. Grice says Tisch was right on valuation but wrong on timing, because markets can stay irrational longer than a short seller can stay solvent.
That is why Grice says he is not shorting the market now, even if he agrees with the bearish thesis. He says the only trade he would consider is long-dated puts on Micron, since he does not want to fight a market that can remain euphoric far longer than expected.
Key takeaways
- Grice agrees with Burry that Micron looks vulnerable because memory chips are cyclical and commoditized.
- Grice says China adding DRAM and NAND capacity could eventually push memory prices lower and hurt Micron’s earnings.
- Grice’s main objection to shorting is timing: he says markets can stay irrational longer than a short seller can stay solvent.
- He cites Larry Tisch’s $2 billion loss shorting the market from 1996 to 2000 as the warning example.
- Grice says the only bearish expression he would consider is long-dated puts on Micron.
Notable quotes
“Memory is a very cyclical business. Okay, we recommended Micron did very very well with it, but we sold it”
“China is expanding their drram and nan production capacity at massive rates so we know micron's valuation right now”
“markets can stay irrational longer than his solvency permitted. Okay? He didn't understand that”
“The only play that I think I would make is longdated puts on Micron”
How the episode opens
Good morning. This is Dylan Joy with Behind the Markets. Happy Friday.
Today is Friday, September 25th, TGIF. I'm excited for the weekend. My son's basketball game.
We have a lot going on. Today, I'd like to talk about Michael Bur. You know, he's going short.
Famously, a buddy of mine was asking me, you know, I read about Michael Bur going short. Why aren't you going short? You know, that he seems pretty logical in why he's going short.
And I said to him, Michael, you're right. He does seem like he My friend's name is Michael, too. He does seem like he's logical for going short.
And you know, Bur and I have a few things in common. You know, we both ran money on Wall Street. We're both about the same age.
We both called the 2008 2009 financial crisis well before it happened. Both made a ton of money on that. Big differences.
And we both publish our ideas online now, which is kind of cool. Big difference is he was interviewed in a book that really became a big book and a big movie and all this other stuff. But my buddy said to me, I see Michael Bur's going short.
Why aren't you going short? Why aren't you advising us? He's a member of behind the markets.
Why aren't you advising us to go short? And I said, look, I understand why he's going short. First, let's analyze why Bur's going short.
He has a great point. Take Micron for example. Memory is a very cyclical business.
Okay, we recommended Micron did very very well with it, but we sold it because what I we recommended selling it because what I have discovered over the years that I've been doing this 35 years almost is that the chip business is very cyclical.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- micron short thesis
- memory cycle
- market irrationality
- valuation vs timing
- put options strategy
Companies and tickers mentioned
- MU
- L
- Micron Technology
- Loews Corporation
Watch the episode
Watch “Michael Burry Is Short Micron. Here's the Lesson He Forgot.” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Behind The Markets Podcast
-
Nvidia CEO Out: 4 Reasons I’m Not Panicking About Nvidia -
The Mag 7 Sell-Off: My 3 Secrets to Picking Stocks -
Morgan Stanley’s AI Winners List Is Full of Bank Stocks -
Anthropic IPO: Why I’m Not Rushing to Buy at $1 Trillion -
Chip Stocks Sell-Off: Why the AI Build-Out Just Went From 3 to 5 Years -
Midterm Election Results: The Stock Market’s Winners and Losers
Behind The Markets Podcast, this episode and its artwork belong to their owners. Octagon is not affiliated with the show; this page is an independent summary.
