In a year already fraught with volatility and economic uncertainty, it’s always reassuring to see our thesis confirmed by none other than the legendary Michael Burry. In his latest 13F filing, Burry’s portfolio adjustments echo what many of us have been preparing for: a recessionary reset, an asset repricing, and a rare opportunity to make serious money if you’re positioned right.
In this post, we break down:
- Key takeaways from Burry’s 13F
- What Buffett and BlackRock’s Larry Fink are signaling
- Actionable strategies to optimize your portfolio
- How to hedge risk, earn swaps, and profit from market chaos
📌 Key Takeaways from Michael Burry’s 13F Filing (Q1 2025)
Burry has trimmed exposure and taken a sharply defensive stance. Here’s what stands out:
- ✅ Fewer total holdings – indicating caution
- 🛡️ Defensive sectors (healthcare, utilities) are up
- ⚠️ Put options and hedges still in play – suggesting he expects more pain ahead
He’s not alone. Warren Buffett has raised cash, and Larry Fink is leaning heavily on bonds and ESG resilience. Big money is playing defense.
📉 Recession Indicators You Can’t Ignore
1. Inverted Yield Curve
This recession classic has been flashing red for over 12 months — historically a clear precursor to contraction.
2. LEI Index (Leading Economic Index)
Steep and consistent declines in this index are signaling weakening business confidence and slowing economic activity.
3. Consumer Debt Crisis
With rising credit card balances and growing delinquency rates, consumers are stretched thin — a recipe for demand destruction and asset repricing.
💄 Lipstick Effect & Changing Consumer Behavior
When people cut back, they still splurge on small luxuries — a phenomenon known as the lipstick effect. But this signals trouble:
- Mid-tier retail is hurting
- Premium brands see temporary support
- Discretionary spending is collapsing under debt pressure
🧟♂️ Time to Cut the Zombies
Higher rates are suffocating “zombie companies” — those dependent on cheap debt to survive. Their fall will be sharp and painful… but it’s also a generational buying opportunity in real assets and healthy balance sheets.
📊 Sample Recession-Ready Portfolio Allocation
Here’s how to position your portfolio over the next 3–9 months:
| Asset Class | Weight | Purpose |
|---|---|---|
| 💵 Cash / Short-Term Bonds | 20% | Dry powder & safety |
| 🛡️ Defensive Equities | 15% | Recession resilience (e.g. JNJ, KO, XLU) |
| 💎 High-Quality Value Stocks | 10% | Buffett-style buys |
| 🥇 Commodities | 15% | Hedge inflation, supply shocks |
| 📉 Inverse ETFs & Puts | 10% | Bear market hedge |
| 🌍 Swap Hunter FX Positions | 10% | Earn yield & hedge currency risks |
| 📈 EM Equities (Targeted) | 5% | High risk/reward bets |
| ⚠️ Speculative / Event-driven | 5% | Distressed tech, TLT, etc. |
| 🪙 Gold Miners / Crypto Hedge | 5% | Crisis alpha |
🧠 Pro tip: Don’t hold inverse ETFs forever. Rotate and hedge tactically.
🔄 Recession Scenario Stress Test
| Scenario | Equities | Commodities | Portfolio Impact |
|---|---|---|---|
| Mild Recession | -10% | +5–10% | +2–5% overall |
| Hard Landing | -25% | -10% | Flat to slightly down |
| Inflation Spike Returns | +5% | +15% | +7–10% gain |
🧩 Bonus: Options Hedge Strategy
Build a recession collar:
- ✅ Long Puts on SPY/QQQ
- ✅ Short Calls on KO/JNJ (income)
- ✅ Long VIX Calls (spike protection)
✅ Conclusion: Don’t Just Survive—Position to Thrive
We’re entering a once-in-a-decade macro reset. Whether you’re following Burry’s lead, watching Buffet’s trims, or managing Swap Hunter FX trades — this is not the time to sit still. Position yourself defensively, keep dry powder ready, and don’t fear the correction — embrace it.
🚀 Ready to Take Action?
Want help building this portfolio, rebalancing your FX swaps, or optimizing your hedges? Let’s talk. Drop a comment, or reach out directly for custom strategy guidance.
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