Famed “Big Short” investor Michael Burry isn’t letting go of his bearish views towards Wall Street.
“The stock market is quite obviously in its first stage of grief, denial,” Burry recently wrote on X. “Per 2000 and 2008, this stage lasts 6-9 months.”
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Burry’s comments emphasize his pessimistic views on the stock market, even as major financial indexes keep ascending to new heights on the back of eye-popping AI-related spending from the tech sector. Such a prediction coming true would mean financial market turmoil setting in during the first or second quarter of 2027.
On Oct. 6, the S&P 500 reached 7,830 points, a record high on the heels of a 0.7% increase from the prior day. It previously set the record for the 28th time this year alone on Aug. 13.
The 2008 financial crisis was triggered by the collapse of the housing market once defaults had spread on risky subprime mortgages. In 2001, there was a brief recession brought on by a wave of speculative investing going bust in the dot-com boom. There was a stretch of remarkable financial and economic growth leading up to both of these recessions.
Burry’s contrarianism
Burry is most famous for betting against the American housing market in the run-up to the 2008 financial crisis. Since then, he’s taken positions against chipmakers Micron and iShares Semiconductor ETF, among other companies involved in the AI buildout.
“Fundamentally, I am moving timelines up,” Burry said in a recent investment newsletter. “As such, I want more leverage in my short positions. Better timelines make leverage more palatable.”
He said he replaced stock shorts with puts on his Nvidia, Palantir, and Micron positions that expire at fluctuating points next year. These three companies are key players in the AI boom.
For now, Wall Street has managed to shrug off inflation and bond market turmoil even as policymakers grow concerned about price hikes erasing Americans’ wage growth for much of this year.
Investors are also tracking whether the Federal Reserve will raise interest rates later this month for the second time this year, a step that would increase corporate and individual borrowing costs across the economy.
