quantitative research using Michael Burrys strategy as the base

6월 6일

This trade I've been interested in a while now following Michael burry finding undervalued stocks I've been analysing if GBP is undervalued now using the term history repeats I reckons we are on set to repeat the 93 election.(you can use this to help develop a strategy like this)


Michael burry an extremely good trader his strategy is a rather simple once you get through all the complicated economics maths and data. Simply to put it he finds undervalued securities then does research if there's a catalyst then he can make a trade from there. However finding this undervalued ness is not as easy as picking a random security and hoping for the best (gambling)

Now on to my point the GBP is undervalued at the moment how well the main points to looking at a undervalued currency is due to economic challenges like high inflation, political instability, trade deficits, or lack of investor confidence. Know to conduct analysis. Luckily I have the internet meaning I have all the data I want at a fingertip. Looking at data posted by UK gov we are still above are monetary rates for inflation by currently according to the data. However we are apparently falling towards this goal of 2% but how confident are we on that. This is the question I will solve, when developing a trade like this you have to answer every question you make by using data. At the moment I would say that retail trading and public confidence is not high using data gathered from sources of the back end of the extremely high inflation rates of 2022. now paired with the coming up election could act as a catalyst more about this in a minute, first to further back up my point, political instability the UK well, put simply is about as unstable politically as a racist marrying a black women, from the last serving government (conservatives) we can see a unravelling of instability, whether it was Brexit aka the least smooth exit since the creation of time, or Liz truss lasting shorter than an iceberg Lettice and somehow bumming the GBP into oblivion she did this as Determined to quickly make her mark, Truss announced a radical new economic agenda of tax cuts and spending worth tens of billions of pounds funded by borrowing – the true total of which is still not known. The move, which appeared to also violate public spending curbs, tore apart the orthodoxy established by the three Conservative prime ministers who went before her during 12 years in power that tried to emphasise fiscal prudence.
Truss’s drive for growth proved too radical for traders. The pound was sent spiralling to reach its lowest value against the US dollar, an embarrassing intervention from the central bank – the Bank of England – was made to avoid a raid on pension funds, and rebukes from foreign observers, including the International Monetary Fund (thanks telegraph for letting me plagiarise a little bit). This is just one political and economic instability. Uk trade deficit well put simply fucked but as a wannabe quant I've studied the data and currently the UK has a trade deficit of 109billion just with the EU enough said I'm writing this at 12 I'm tired.

Now to finish off we need a catalyst and currently I think we have the best catalyst the upcoming election to prove my catalyst we were in this situation in 1993 where after the election we saw massive growth in the GBP and we have something coming, so learn from the past.