Michael Burry, the hedge fund investor made famous in the 2015 film “The Big Short,” suggested Wednesday that a long-feared stock market crash is already underway.
Burry, who predicted more than a year ago that stocks were headed for “the mother of all crashes,” delivered his latest warning alongside a graph showing the S&P 500’s sharp decline since hitting an all-time peak in January.
“And yet I keep getting asked ‘wen crash?’” Burry said in a now-deleted tweet captured by the @BurryArchive Twitter account.
The S&P 500 – the broadest measure of US stocks – is down more than 18% since January. The sharp decline coincided with mounting investor fears that the Federal Reserve’s policy tightening to address decades-high inflation will result in an economic recession.
Burry has frequently warned of an impending market catastrophe. In June 2021, he cautioned that irrational “fear of missing out” trading activity around cryptocurrencies and meme stocks were likely to end in disaster for overextended retail traders.
“All hype/speculation is doing is drawing in retail before the mother of all crashes,” the investor tweeted. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries.”
Stocks had rallied since June on investor optimism that the Fed could ease its policy stance. But indices gave back their gains after Fed Chair Jerome Powell indicated rate hikes would continue even though it would cause “some pain” for US households.
Burry’s Scion Capital Management, dumped its entire stock portfolio in the second quarter in anticipation of a collapse. The firm sold off its long positions on 11 stocks, including Google parent Alphabet, Facebook parent Meta, Bristol-Meyers Squibb and Nexstar Media Group, while taking a stake in Florida-based private prison operator Geo Group.
Burry’s bet against the housing market just before its 2008 collapse was chronicled in “The Big Short.” He has built a massive social media audience in recent months while tweeting his views on the stock market, amassing more than 1 million followers on Twitter.
The enigmatic investor usually deletes his tweets shortly after they are posted.
Earlier this month, Burry warned that surging consumer debt was yet another indicator of economic trouble ahead.
“Net consumer credit balances are rising at record rates as consumers choose violence rather than cut back on spending in the face of inflation,” Burry tweeted.
“Remember the savings glut problem? No more. COVID helicopter cash taught people to spend again, and it’s addictive. Winter coming.”
When the S&P 500 posted its worst first-half performance since 1970 earlier this year, Burry warned the selloff was “maybe halfway” over.