Prophets of Profit –A Burry & Buffet Playbook of Contrarian Strategies to Win in Uncertainty
In the first week of April this year the US president Donald Trump announced his “Liberation Day” tariffs, sending markets into freefall. Stocks collapsed, with major indices plunging nearly 20% from their February highs. Trump did not just stir an unprecedented global chaos, but also threw up rather interesting winners – Michael Burry and Warren Buffet– who followed dramatically contrarian investment strategies to not just navigate the uncertainty but also profit from it.
While the fabled investor Burry, was reported to have pulled off another Big Short like spectacular profitable move in almost an action replay of his 2008 sub-prime crisis bearish strategy; Warren Buffet the global investor who has achieved folk lore status, stayed steady to grow his wealth steadily and safely. Whereas Burry’s core belief is that markets are irrational; so, one must bet against the crowd,Buffet on other hand follows the mantra of buying wonderful businesses at fair prices.
Buffett’s Way: “Be fearful when others are greedy, greedy when others are fearful.” Which works if you trust the business long-term.Burry’s gameplan is to, “Identify bubbles, bet against them.” This is perfect if you spot overvaluation + catalysts.Michael Burry’s Scion Asset Management had placed bearish bets on Nvidia and a range of Chinese technology stocks, according to a quarterly filing released a few weeks ago by the US Securities and Exchange Commission. This sparked speculation that there could be an AI bubble forming. There is every likelihood that Big Tech would get caught in the tariff war crossfire between the United States, China, and also possibly Europe.
According to reports in the global financial press Burry never runs too large of a portfolio, typically holding about a dozen stocks, plus or minus a few. In the first quarter, he sold nearly all of his holdings. He had been quite bullish on China, owning large Chinese stocks like Alibaba, Baidu, JD.Com, and PDD Holdings. But after selling these stocks, he also purchased put options on these names. Put options are similar to call options but in the opposite direction, essentially betting that a stock price will decline. Burry also purchased put options on Nvidia.
Buffett’s Strategy: Patience Over Hype
In the midst of the ecstatic bull market of 2024, Warren Buffett sold $134 billion worth of equities, choosing safety over speculation. Instead of following trends like AI or crypto, he invested this capital into US Treasury Bills, earning approximately 5% annually—translating to over $14 billion in interest income without engaging in high-risk investments. Currently, Berkshire Hathaway holds around $330 billion in cash, primarily in short-term Treasuries, surpassing the combined market values of major companies like Starbucks, Ford, and Zoom.
Buffett’s decision was based on firm logic and formula that his team has developed over the years that looked for safety first. First, he identified that stock valuations were excessively high, as indicated by his favorite metric, the Buffett Indicator (Total Market Cap to GDP), which had surpassed 200%—a level historically linked to significant market downturns. Additionally, the S&P 500’s price-to-book ratio reached levels reminiscent of the late 1990s, further signaling overvaluation. Second, he believed that Trump would carry out his threats to impose tariffs when he returned to power, which is exactly what happened during Liberation Day.
Buffet’s track record shows that during the dot-com era in 1999 and the financial crisis of 2008, he showed a similar patience, waiting for the right opportunities to invest. His philosophy emphasizes the importance of cash as a tool for both protection and power, allowing investors to remain calm amidst market chaos and seize opportunities when prices drop. As he begins to invest again, particularly in undervalued Japanese stocks, Buffett continues to exemplify the principle of buying value when others are fearful, reinforcing the timeless wisdom of his investment philosophy.
Burry Sees Value in Risks
As geopolitical tensions between the US and China escalated through 2024, Burry held on to his Chinese investments contrary to sentiments, with significant stakes in Alibaba, Baidu, JD.com, and PDD Holdings. While other investors worried about escalating rhetoric, Burry’s positions suggested confidence—or perhaps a longer game.The chess pieces were being repositioned, but the full strategy remained unclear to outside observers.
Q1 2025: The Dramatic Reversal
In January this yearas Chinese tech shares surged following the rise of DeepSeek, Burry’s existing positions gained value. But behind the scenes, something had changed in his calculus. While the market celebrated, Burry began executing a dramatic portfolio transformation. And,in a stunning reversal the very next month Burry’s investment company Scion Asset Management began dramatically reducing its portfolio. From 13 stocks, Burry cut down to just 7—a 46% reduction in diversity that signaled a major strategic shift.
Thereafter in February-March 2025 Burry not only sold nearly all his Chinese tech holdings—the very positions he had built over more than two years—but executed an even more dramatic move: he purchased put options on the same companies he had once been bullish on.
Burry Bets Right on Tariffs
As Trump announced his “Liberation Day” tariffs, sending markets into freefall, Chinese tech stocks and Nvidia were hit particularly hard—the very companies Burry had positioned himself against.Nvidia traded 30% lower at one point, hammered by both the trade war and the Trump administration’s export restrictions on semiconductor chips to China. The Chinese internet stocks that Burry had bet against through put options plummeted in value, likely generating enormous profits for Scion Asset Management. Exactly like in 2008, he had positioned himself ahead of a major market dislocation, executing another “big short” with precision timing.
Agility & Foresight The contrasting stratagems of Burry and Buffett offer invaluable lessons for global enterprises. Burry’s targeted, high-conviction bets—like anticipating tariff impacts on tech supply chains—demonstrate how businesses can turn disruption into opportunity by identifying asymmetrical risks before competitors do. Meanwhile, Buffett’s resilient, long-term holdings in globally diversified assets—from Apple to Japanese industrials—prove that durable competitive advantages and liquidity reserves allow firms to withstand storms and emerge stronger.For multinationals, the takeaway is clear: Agility and foresight (Burry’s edge) must balance with structural stability (Buffett’s discipline). The most successful global players will scan for inflection to capitalize on others’ panic, and diversify beyond single markets to mitigate regional shocks.