Famed investor Michael Burry, renowned for his prescient bet against the US housing market profiled in “The Big Short”, has issued a fresh market warning. Acknowledging his “boy who cried wolf” image, Burry maintains he was accurate with past crash calls in 2000, 2007, 2019, and concerning the 2021 meme stock and 2023 bank stock runs. He clarifies that many “crash” calls attributed to him were media misinterpretations, asserting he has predominantly held long positions throughout his career, apart from his famous short in 2005-2008.
Today, Burry expresses strong conviction that the Nasdaq 100 index is poised for a steep reversal. He highlights its 27 per cent parabolic surge since late March, driven almost entirely by a narrow group of computer chip and memory stocks amidst the artificial intelligence infrastructure mania. Burry contends the Nasdaq 100’s reported 30 times earnings multiple is closer to 43 times, citing significant overestimations of key tech stock earnings. He describes the market as “the scene of the bloody car crash, minutes before it happens,” a warning amplified by data showing just ten companies now account for 40 per cent of the S&P 500, mirroring concentration levels from early 2000.
Despite Burry’s dire outlook, Wall Street largely shrugged off his missive, with key indices like the Nasdaq 100 and S&P 500 setting fresh records. This robust bullish sentiment is exemplified by market strategist Ed Yardeni, who raised his year-end S&P 500 target, citing expectations of a resilient US economy and strong earnings growth. Yardeni envisions a “Roaring 2020s” driven by technological progress and economic strength, where even potential crises are viewed as buying opportunities fuelled by artificial intelligence spending. Burry himself, while warning of an inevitable correction, notes the dangers of shorting the market given current conditions.
