As a result, the current market price of the company is not a good guide to its long-term value, and it was possible, as Burry did, to beat the market.
That doesn’t sound right. That tactic doesn’t make you more (or less) likely to beat the market than any other tactic.
The current price isn’t an accurate representation of its actual long-term value, but it’s an accurate representation of the average of its possible long-term values weighted by probability (from the market’s point of view).
So you might make a bet that wins more often than it loses, but when it loses it will lose a lot more than it wins, etc. You’re only beating the market when you get lucky, not on average; unless, of course, you have better insights than the market, but that’s not specific to this type of trade.
That doesn’t sound right. That tactic doesn’t make you more (or less) likely to beat the market than any other tactic.
The current price isn’t an accurate representation of its actual long-term value, but it’s an accurate representation of the average of its possible long-term values weighted by probability (from the market’s point of view).
So you might make a bet that wins more often than it loses, but when it loses it will lose a lot more than it wins, etc. You’re only beating the market when you get lucky, not on average; unless, of course, you have better insights than the market, but that’s not specific to this type of trade.