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‘The Big Short’ investor Michael Burry said Wednesday that the stock market’s unusually long stretch without a broad-based selloff is a warning sign that a reversal could be building beneath the surface.
Historic Streak Of Market Calm
Burry shared a CNBC report on X that referenced his Substack post, in which he cited research from BTIG technical strategist Jonathan Krinsky showing Wednesday marked the 182nd consecutive trading session without at least 80% of New York Stock Exchange volume declining.
“That sort of technical factor on its own is easy to ignore,” Burry said in his blog, adding that he has written about fundamental reasons for such a streak since November 2025.
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Krinsky said every year for the past 30 years has had at least five such sessions, so a 2026 without one would be the first in at least three decades.
https://twitter.com/michaeljburry/status/2087697205717053746
‘Avoid the Leverage’
Burry said major market cycles can take months or years to unfold, which makes timing them especially risky for investors using leverage.
“If something revolutionary is going to happen, it will happen,” Burry said, adding that it will “play out over a long enough time period for everyone to be right and for almost everyone to go bankrupt.”
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He said the key is to avoid leverage while the cycle plays out.
“The trick is to avoid stepping into someone else’s folly along the way,” Burry said. “Avoid the leverage, and one is more likely to avoid the folly.”
Last month, Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, was forced to unwind its portfolio after an AI stock selloff, with Citadel LLC acquiring the bulk of its holdings, an episode investor Ross Gerber said showed how “leverage will kill and bury you.”
AI Boom Concerns
Burry warned last week that today’s AI boom could eventually give way to overcapacity, creating what he called tomorrow’s “ghost towns.”
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