"The rules of the game have changed": what is Michael Burry doing with his portfolio after Maduro's collapse?
Cult investor avoids Chinese stocks due to risk of sanctions and considers increasing investments in oilfield services business
Legendary investor Michael Burry, whose bet against the mortgage market before the 2008 crisis was the subject of the book The Big Short, analyzed the consequences of the US operation in Venezuela in his blog and discussed which stocks he is currently considering buying and which he considers overly risky.
Burry notes that in the short term, investors have shown little reaction to the capture of Nicolás Maduro and Venezuela's de facto transition to Washington's control. But the market's outward calm should not be misleading: Burry is confident that in the long term, "the rules of the game have changed."
China: Which stocks are at risk?
The events in Venezuela are a "warning shot across the bow" for China, which is losing some of its leverage, Burry believes. Beijing provided Venezuela with loans as part of its Belt and Road infrastructure strategy, including against future oil supplies — but now both oil and Chinese investments are partly under US control, Burry writes. He also points out that Maduro was captured shortly after meeting with a Chinese diplomat and receiving promises of protection. After his success in Venezuela, Trump threatened Colombia, which also recently became a partner of China. "If the US takes action against Colombia <...> China will get the hint — this is a clear signal that joining the Belt and Road Initiative may have consequences," Burry writes.
In addition, Beijing may see the events in Venezuela as a blueprint for its own actions regarding Taiwan, he continues.
"I believe that Chinese stocks have become somewhat riskier in terms of the possibility of being subject to sanctions."
Alibaba and Baidu "have already been mentioned as potential targets for sanctions due to their ties to the Chinese military or government," the investor adds. In addition, any escalation in the region could cause Chinese tech giants to face a collapse in their stock prices, he says.
At the same time, Burry notes that the Hong Kong market opened calmly after the holidays, and he still has confidence in his assets in this region: "I own shares in Kuaishou, JD, and Meituan — all of which tend to have a low risk of being subject to sanctions."
Russia: a threat to oil
Burry believes that the US operation in Venezuela came as a shock to the Russian leadership, demonstrating a huge gap in capabilities.
Putin must have been stunned. The US has just demonstrated that what Russia has been unable to achieve in Ukraine over the past three years, they can accomplish in a matter of seconds. It's not even comparable — it's a completely different level, a different universe of possibilities.
But the main blow is economic: Russian oil is losing its value in the long term. "With the arrival of American oil giants in Venezuela — given the relative proximity of refining facilities — there will be a fundamental shift in global energy geopolitics," Burry is convinced. He believes that Venezuela's full return to the market will take 5 to 7 years, but ultimately it will deprive Moscow of both money and influence.
Canada and Mexico: how can you earn money?
Events in Venezuela will also affect the United States' closest neighbors, Canada and Mexico, Burry writes. These countries risk losing their main bargaining chips in trade negotiations with the US: as soon as Venezuelan oil returns to the American market, it will begin to displace raw materials from its neighbors, depriving them of their former influence.
American plants on the Gulf Coast were originally designed for heavy oil from Venezuela and have been operating on less suitable raw materials in recent years. Once they return to using their "native" raw materials, production costs will decrease. Over time, this will lead to higher margins in the production of jet fuel, asphalt, and diesel fuel, Burry notes.
I have owned shares in the American oil refiner Valero Energy since 2020, and after this weekend, I am even more determined to hold on to them. It is also worth paying attention to small, struggling oil refiners such as PBF, HF Sinclair, and others, although it will take several more years for Venezuelan oil to return."
Another beneficiary of the US operation in Venezuela will be American oil services companies, writes Burry. All of the country's infrastructure, from pipelines to factories, is in decline, and it will be restored by US contractors: Halliburton, Schlumberger, and Baker Hughes.
Chevron is already there. Exxon and other companies have been involved in legal battles for decades and may now see justice served—provided that the US actually takes control of Venezuela, as many now believe it will. I own Halliburton shares and may buy more securities or long-term options.
USA: Long-term tailwind
Burry believes that the operation in Venezuela will be a powerful stimulus for the US economy: in the long term, access to Venezuelan oil will lead to a fall in fuel prices, help curb inflation, and reduce costs across the entire supply chain: "The US economy will get a long-term tailwind, even if the fruits of this don't ripen until 2026 or 2027. Diesel fuel was in short supply precisely because of sanctions against Venezuelan oil. By 2028, prices for gasoline, diesel, and jet fuel will fall — you get the picture. All other things being equal, this will have a disinflationary effect and benefit consumers, especially those with low incomes.
American indices are currently at the peak of a three-year bull market, and the market has barely noticed the change of regime in Venezuela, but Burry is confident that investors simply have not yet realized the scale of the changes. In his opinion, it will take 2–5 years before businesses can make plans: "As the situation becomes clearer, businesses will be able to make plans with greater confidence, and securities markets will begin to factor long-term results into prices—especially in industries that depend on the cost of oil and minerals."
This article was AI-translated and verified by a human editor
