"This letter concerns your relationship with Tiger Management LLC. It is important that you read it and the enclosures carefully and thoroughly.
In May of 1980, Thorpe McKenzie and I started the Tiger funds with total capital of 8.8 million dollars. Eighteen years later, the 8.8 million had grown to 21 billion, and increase of over 259,000%.
Our compound rate of return to partners during this period after all fees was 31.7%. No one had a better record.
Since August of 1998, the Tiger funds have stumbled badly and Tiger investors have voted strongly negatively with their pocketbooks, understandably so.
During that period, Tiger investors withdrew some 7.7 billion dollars of funds. The result of the demise of value investing and investor withdrawals has been financial erosion, stressful to us all. And there is no real indication that a quick end is in sight.
And what do I mean by, ”there is no quick end in sight”? What is ”end” the end of? ”End” is the end of the bear market in value stocks.
It is the recognition that equities with cash-on-cash returns of 15 to 25% regardless of their short-term market performance are great investments.
”End” in this case means a beginning by investors overall to put aside momentum and potential short-term gains in highly speculative stocks to take the more assured, yet still historically high returns available in out-of-favor equities.
There is a lot of talk now about the New Economy (meaning Internet, technology and telecom). Certainly the Internet is changing the world and the advances from biotechnology will be equally amazing.
Technology and telecommunications bring us opportunities none of us have dreamed of. ”Avoid the Old Economy and invest in the New and forget about price,” proclaim the pundits. And in truth, that has been the way to invest over the last eighteen months.
As you have heard me say on many occasions, the key to Tiger’s success over the years has been a steady commitment to buying the best stocks and shorting the worst.
In a rational environment, this strategy functions well. But in an irrational market, where earnings and price considerations take a back seat to mouse clicks and momentum, such logic, as we have learned, does not count for much.
The current technology, Internet and telecom craze, fueled by the performance desires of investors, money managers and even financial buyers, is unwittingly creating a Ponzi pyramid destined for collapse.
The tragedy is, however, that the only way to generate short-term performance in the current environment is to buy these stocks. That makes the process self-perpetuating until the pyramid eventually collapses under its own excess.
I have great faith though that, ”this, too, will pass.” We have seen manic periods like this before and I remain confident that despite the current disfavor in which it is held, value investing remains the best course.
There is just too much reward in certain mundane, Old Economy stocks to ignore. This is not the first time that value stocks have taken a licking. Many of the great value investors produced terrible returns from 1970 through 1975 and from 1980 to 1981 but then they came back in spades.
The difficulty is predicting when this change will occur and in this regard I have no advantage. What I do know is that there is no point in subjecting our investors to risk in a market which I frankly do not understand.
Consequently, after thorough consideration, I have decided to return all capital to our investors, effectively bringing down the curtain on the Tiger funds. We have already largely liquefied the portfolio and plan to return assets as outlined in the attached plan.
No one wishes more than I that I had taken this course earlier. Regardless, it has been an enjoyable and rewarding twenty years. The triumphs have by no means been totally diminished by the recent setbacks.
Since inception, an investment in Tiger has grown eighty-fivefold net of fees; more than three times the average of the S&P 500 and five-and-a half times that of the Morgan Stanley Capital International World Index.
The best part by far has been the opportunity to work closely with a unique cadre of coworkers and investors.
For every minute of it, the good times and the bad, the victories and the defeats, I speak for myself and a multitude of Tigers past and present who thank you from the bottom of our hearts."
For those who are missing the point, March 2000 is literally the month the dot com bubble started to burst. Robertson missed it by days, if not hours. The analogue is perfect. Thanks for the comment buddy.
Exactly that. On that date, Berkshire Hathaway began a recovery and the QQQ got annihilated. When everything seems to be working for no good reason, you need humility; when everything seems to be failing for no good reason, you need fortitude. Robertson's portfolio was perfectly poised for what came next but he capitulated at the precise moment that the market did too. Timestamp Scion's close... (with huge respect to Robertson and Burry who both made all the money that they needed and in Robertson's case then gave much of it away generously and astutely).
Wondering if Burry is simply tired of having to report and telegraph his positions to the world at large. By taking his firm back to a family office he can fly under the radar and not have people riding his coat tails driving up the cost the options he's buying...
" ... this is not a market that has transcended reality. This is a market that has been postponing reality for a really long time ...". I laugh. I cringe. I laugh some more, and wonder what I'm doing - dancing near the door while Burry has gone out through it.
Yes, yes, yes, it used to be "buy low sell high" "do your research" buy and hold" "look at earnings calls" "look for dividends". Now it is " watch MSNBC and Fox Business to keep your finger on the pulse of the narrative."
“””And frankly, these moves feel like the kind of thing you see near tops, not bottoms. They feel like the sigh of exhaustion that happens when the people who understand the mechanics best finally stop fighting the tide. Because at the end of the day, this is not a market that has transcended reality. This is a market that has been postponing reality for a really long time — and postponements end.“””
Too much cash. So the Fed solves the problem by producing more cash. It's like trying to put out a fire by spraying it with gasoline.
I've asked myself why there's any market at all for crypto, given that there is no there there. And it didn't catch on right away. Once upon a time, people were cautious. They put money in that they could afford to lose. Now it's a market in it's own right, and it's made out of NOTHING.
There is too much money going toward producing absolutely nothing. We should all have learned our lesson back in 1637, with the Tulip bubble collapse.
Definately a ripe candidate you would think but they just seem to keep the scheme going somehow. High new prices and the click to buy generation are helping them keep the windows dressed.
Time is the major factor...even a stopped clock (for those who can still remember seeing hands on a clock) is right twice a day...For every Winner there are multiple losers...Why? because most times the winners have some form of inside information...Similar to "the house never loses" in Vegas we used to say the Banks never lose...There are not too many of the informed who appreciate all of your insight as it is usually spot on...But unfortunately there are those who follow the crowd...albeit late...and therefore late to get out...Jon Paulsen was not ahead of the crowd...didnt he place a trade through Goldman to short the same instruments GS was selling? The fundamentals are cooked and so long as the Fed is in their role you have to play the cards they are dealing...
Creatine??? It’s like the market is on Winstrol, deca-durabolin, insulin, the Clear and whatever else meatheads and professional athletes we’re using in the 90s to get huge. Seems to me it’s time to double down shorting this BS market (in a reasonable way of course). Is Tesla shareholders approving a potential $1 trillion pay package not the peak of complete insanity? Burry capitulating? The Epstein files being released? We live in interesting times my friends.
Yep, the market structure is broken, has been since 2009. It’s centralized planning now. There is no going back, gov and fed are balls deep in keeping the ponzi inflated at any and all costs. you can fight it or you can ride it… overthinking it has been the wrong thing to do. Unfortunately free markets and real price discovery is dead.
"This letter concerns your relationship with Tiger Management LLC. It is important that you read it and the enclosures carefully and thoroughly.
In May of 1980, Thorpe McKenzie and I started the Tiger funds with total capital of 8.8 million dollars. Eighteen years later, the 8.8 million had grown to 21 billion, and increase of over 259,000%.
Our compound rate of return to partners during this period after all fees was 31.7%. No one had a better record.
Since August of 1998, the Tiger funds have stumbled badly and Tiger investors have voted strongly negatively with their pocketbooks, understandably so.
During that period, Tiger investors withdrew some 7.7 billion dollars of funds. The result of the demise of value investing and investor withdrawals has been financial erosion, stressful to us all. And there is no real indication that a quick end is in sight.
And what do I mean by, ”there is no quick end in sight”? What is ”end” the end of? ”End” is the end of the bear market in value stocks.
It is the recognition that equities with cash-on-cash returns of 15 to 25% regardless of their short-term market performance are great investments.
”End” in this case means a beginning by investors overall to put aside momentum and potential short-term gains in highly speculative stocks to take the more assured, yet still historically high returns available in out-of-favor equities.
There is a lot of talk now about the New Economy (meaning Internet, technology and telecom). Certainly the Internet is changing the world and the advances from biotechnology will be equally amazing.
Technology and telecommunications bring us opportunities none of us have dreamed of. ”Avoid the Old Economy and invest in the New and forget about price,” proclaim the pundits. And in truth, that has been the way to invest over the last eighteen months.
As you have heard me say on many occasions, the key to Tiger’s success over the years has been a steady commitment to buying the best stocks and shorting the worst.
In a rational environment, this strategy functions well. But in an irrational market, where earnings and price considerations take a back seat to mouse clicks and momentum, such logic, as we have learned, does not count for much.
The current technology, Internet and telecom craze, fueled by the performance desires of investors, money managers and even financial buyers, is unwittingly creating a Ponzi pyramid destined for collapse.
The tragedy is, however, that the only way to generate short-term performance in the current environment is to buy these stocks. That makes the process self-perpetuating until the pyramid eventually collapses under its own excess.
I have great faith though that, ”this, too, will pass.” We have seen manic periods like this before and I remain confident that despite the current disfavor in which it is held, value investing remains the best course.
There is just too much reward in certain mundane, Old Economy stocks to ignore. This is not the first time that value stocks have taken a licking. Many of the great value investors produced terrible returns from 1970 through 1975 and from 1980 to 1981 but then they came back in spades.
The difficulty is predicting when this change will occur and in this regard I have no advantage. What I do know is that there is no point in subjecting our investors to risk in a market which I frankly do not understand.
Consequently, after thorough consideration, I have decided to return all capital to our investors, effectively bringing down the curtain on the Tiger funds. We have already largely liquefied the portfolio and plan to return assets as outlined in the attached plan.
No one wishes more than I that I had taken this course earlier. Regardless, it has been an enjoyable and rewarding twenty years. The triumphs have by no means been totally diminished by the recent setbacks.
Since inception, an investment in Tiger has grown eighty-fivefold net of fees; more than three times the average of the S&P 500 and five-and-a half times that of the Morgan Stanley Capital International World Index.
The best part by far has been the opportunity to work closely with a unique cadre of coworkers and investors.
For every minute of it, the good times and the bad, the victories and the defeats, I speak for myself and a multitude of Tigers past and present who thank you from the bottom of our hearts."
Julian Robertson
March 2000
For those who are missing the point, March 2000 is literally the month the dot com bubble started to burst. Robertson missed it by days, if not hours. The analogue is perfect. Thanks for the comment buddy.
Exactly that. On that date, Berkshire Hathaway began a recovery and the QQQ got annihilated. When everything seems to be working for no good reason, you need humility; when everything seems to be failing for no good reason, you need fortitude. Robertson's portfolio was perfectly poised for what came next but he capitulated at the precise moment that the market did too. Timestamp Scion's close... (with huge respect to Robertson and Burry who both made all the money that they needed and in Robertson's case then gave much of it away generously and astutely).
I was waiting for the punchline. Date at bottom. Classic.
Now this is why a subscription is well worth it! Incredible insight, thank you!
"a liquidity-driven hallucination."
The best one-line description of today's market I have ever heard or read or seen!
Truly.
I had written mushroom trip, then deleted and replaced with hallucination. Didn't want to give a bad name to mushroom trips.
😂😂
Wondering if Burry is simply tired of having to report and telegraph his positions to the world at large. By taking his firm back to a family office he can fly under the radar and not have people riding his coat tails driving up the cost the options he's buying...
“Everything ends badly, otherwise it would not end.”
- Lou Holtz
" ... this is not a market that has transcended reality. This is a market that has been postponing reality for a really long time ...". I laugh. I cringe. I laugh some more, and wonder what I'm doing - dancing near the door while Burry has gone out through it.
Excellent article! Thank you
Yes, yes, yes, it used to be "buy low sell high" "do your research" buy and hold" "look at earnings calls" "look for dividends". Now it is " watch MSNBC and Fox Business to keep your finger on the pulse of the narrative."
More like Twitter and r/WallStreetBets - but you've got the point.
That crap is pure short squeeze pump and dumps. Somehow I really can't stomach that crap. I guess I am too old. Like stocktwits. Don't forget Reddit
“””And frankly, these moves feel like the kind of thing you see near tops, not bottoms. They feel like the sigh of exhaustion that happens when the people who understand the mechanics best finally stop fighting the tide. Because at the end of the day, this is not a market that has transcended reality. This is a market that has been postponing reality for a really long time — and postponements end.“””
Fantastic
Too much cash. So the Fed solves the problem by producing more cash. It's like trying to put out a fire by spraying it with gasoline.
I've asked myself why there's any market at all for crypto, given that there is no there there. And it didn't catch on right away. Once upon a time, people were cautious. They put money in that they could afford to lose. Now it's a market in it's own right, and it's made out of NOTHING.
There is too much money going toward producing absolutely nothing. We should all have learned our lesson back in 1637, with the Tulip bubble collapse.
The fact that there's no "there" there is what allows it to be worth anything you can imagine -- as per SBF.
Agree 100 percent. I was looking into downside opportunity in a certain lender...until I saw it's a GMAC rebrand.
Staying far away from that shit. Rigged all the way.
That one could still fall, but I'm staying away. I'm not saying I won't short CVNA though...
Definately a ripe candidate you would think but they just seem to keep the scheme going somehow. High new prices and the click to buy generation are helping them keep the windows dressed.
"The AI boom looks like the dot-com bubble on creatine."
Maybe it's me, but I find gallows humor hilarious.
Great column.
Is Burry right? Jury’s still out but I think over the long term, yes he’s right. JMO though.
If previous capitulations are any barometer then we’re probably near a break.
Time is the major factor...even a stopped clock (for those who can still remember seeing hands on a clock) is right twice a day...For every Winner there are multiple losers...Why? because most times the winners have some form of inside information...Similar to "the house never loses" in Vegas we used to say the Banks never lose...There are not too many of the informed who appreciate all of your insight as it is usually spot on...But unfortunately there are those who follow the crowd...albeit late...and therefore late to get out...Jon Paulsen was not ahead of the crowd...didnt he place a trade through Goldman to short the same instruments GS was selling? The fundamentals are cooked and so long as the Fed is in their role you have to play the cards they are dealing...
Creatine??? It’s like the market is on Winstrol, deca-durabolin, insulin, the Clear and whatever else meatheads and professional athletes we’re using in the 90s to get huge. Seems to me it’s time to double down shorting this BS market (in a reasonable way of course). Is Tesla shareholders approving a potential $1 trillion pay package not the peak of complete insanity? Burry capitulating? The Epstein files being released? We live in interesting times my friends.
Burry leaving at the top is pure reverse Jim Cramer. He'll be missed.
Yep, the market structure is broken, has been since 2009. It’s centralized planning now. There is no going back, gov and fed are balls deep in keeping the ponzi inflated at any and all costs. you can fight it or you can ride it… overthinking it has been the wrong thing to do. Unfortunately free markets and real price discovery is dead.