🐯The Man who bet against the DotCom Bubble, and missed it by a whisker.

The unfortunate story of the Hedge Fund who saw that coming, but still lost Billions.

Julian Robertson, the man in charge of the hedge fund Tiger Management, gained notoriety in the late nineties for “transforming” a starting capital of only 8 million in over 7 billion dollars in about 15 years.
In short, one who knew how to deal with (and beat) the market.

🔑His strategy was simple: keep calm, invest in undervalued stocks and sell the over-valued ones, a trivial yet not-so-trivial strategy that allowed the fund to manage, in its best days, something around 21 Billion Dollars.

In the late nineties — early 2000, during the ridiculous upward sprint of the tech stock in the US market, Robertson gained popularity by doing exactly the opposite of the crowd: instead of taking part in what seemed to be the new financial era, he decided to Short a multitude of stock deemed excessively overvalued by the fund; they were aware that a sector so devoid of financial results, based on hope rather than the good old cash, was bound to be corrected.

The question was not if, but when.

In the following two years, opposite to his forecasts, the technology sector continued its upward trend, against any logical sense nor real result or achievement.

Which led investors to withdraw all their capital from the fund.

Which, in turn, was forced to shut down any sort of speculative positions, with monstrous net losses: in only two years the assets went from 21 billion to only 6.5 billion.

Julian Robertson, feeling now defeated by the market, decided to close the fund and liquidate the capital left in the unfortunate portfolio, and then return it to their investors after losing their trust.

It was the first days of March 2000, and just a week later broke out the now infamously well known Dot-Com Bubble.

Robertson was right, but it was already too late.

Maybe, as I did, you have already associated him somehow with Michael Burry, one of the protagonists of The Big Short, who shorted the subprime mortgage market against the wishes of his investors, with the difference that he came out with a return of 489.34%.

I wonder what would the outcome be if we switch the number around: what if the Dot-Com bubble exploded a few weeks before the Tiger Management investor fled out en masse, what if the subprime market collapsed just few months, weeks, or even days after Burry’s investors withdrew their money.

We would have a completely different stories.

And protagonists.

What distinguished these two characters (beyond their personality) was the timing factor.

One lost everything and the other hit jackpots, and as much as we like these stories you have to keep in mind that during a financial crisis, for every Michael Burry there are 100 Julian Robertson, and both parties are willing to lose the entire capital.

An investor can not afford to go all-in on a market bet, just to lose the entire capital; the only real way to withstand market downturns, unexpected or not, is to create a strategy to diversify your investments.

The richest investor of today know this very well, and you’ll never see them completely exposing their wealth to “make it big”.

NEVER

Wonder why…