Why Is Michael Burry Investing In Water?
Michael Burry made his name during the 2008-9 crisis betting against, or shorting, the housing bubble. As manager of Scion Capital hedge fund, Burry applied his expertise in value investing to generate extraordinary returns for investors. In less than a decade, Scion recorded aggregate returns of 489.34% net of fees and expenses.
When the housing bubble imploded, Burry’s contrarian bets on credit default swaps paid off so well that he was featured in The Big Short, a movie inspired by a Michael Lewis book. It featured stories of the economic crisis through the lens of a few investors who bet against the housing bubble.
At the end of the movie, viewers got a hint of where Burry was turning his attention to next. The final line of the movie was emblazoned with his bold next investment:
“Michael Burry is focusing all of his trading on one commodity: Water” – The Big Short
If an investor with proven returns who, like Warren Buffett, is a student of Benjamin Graham and David Dodd’s famous book, Security Analysis, is focusing on investing in water, then maybe you should consider it too?
Why Invest In Water
Although investors typically think of gold and silver as precious resources before water springs to mind, the reality is water is so valuable that it has even led to serious conflicts.
In 2017 alone, the list of conflicts relating to water include:
- Nearly 3 million people left without access to reliable water supplies in Ukraine
- Clashes in Darfur between farmers and herders over water access
- Attack on Islamic State forces controlling the Tabqa dam
And water related illnesses are responsible for approximately 80% of all illnesses and deaths in the developing world. In fact, over 2 billion people lack access to adequate sanitation according to the United Nations.
Sewage and waste are causes of water pollution that leads to disease but another huge factor is limited fresh water on earth. While it’s easy to think of the earth as having a plentiful supply of water – after all 71% of the earth is covered in water – the reality is fresh water makes up only 0.76% of all water.
“Fresh, clean water cannot be taken for granted. And it is not — water is political, and litigious” – Michael Burry