- Michael Burry issued a grim warning to investors by simply tweeting: “Sell.”
- The “Big Short” legend was likely responding to the stock market’s astounding comeback in January.
- Burry recently compared the S&P 500’s rebound to its short-lived rally throughout the dot-com crash.
Michael Burry appears to have serious doubts concerning the stock market’s stunning begin to the 12 months. He tweeted a single word on Tuesday: “Sell.”
The fund manager of “The Big Short” fame was likely urging investors to not be fooled by the recent rebound in stocks. The benchmark S&P 500 index gained 6.2% in January, while the tech-heavy Nasdaq Composite surged 11%, marking its best January performance since 2001.
A number of the hardest-hit stocks last 12 months have led the charge upward. Elon Musk’s Tesla notched a 41% gain in January, making it the second-best performer within the S&P 500, while Cathie Wood’s flagship Ark Innovation fund recorded its best month ever. Burry’s Scion Asset Management fund placed bets against each the automaker and the tech-focused fund in 2021, and the investor took aim at each Musk and Wood in tweets.
Investors dumped tech stocks years after a historic spike in inflation spurred the Federal Reserve to hike rates of interest from nearly zero to north of 4%, in a bid to curb the pace of price increases. They’ve piled back into them this 12 months, as they consider inflation is waning and the Fed will soon pivot to cutting rates, which could revitalize demand and permit the US economy to flee a recession.
Burry has been pouring cold water on the stock rally this 12 months. On January 23, he tweeted a chart showing the S&P 500’s plunge throughout the dot-com crash, and circled in red its rally between September 2001 and March 2002 before it bottomed six months later. The implication was that the S&P 500’s 17% rally since last October’s low could also prove short-lived.
The Scion chief has been sounding the alarm on asset prices for greater than two years, and warning about an economic disaster because the first half of 2022.
He diagnosed the “best speculative bubble of all time in all things” and predicted the “mother of all crashes in the summertime of 2021. He also took his own advice within the second quarter of last 12 months, selling all but one among the positions in his US stock portfolio.
Burry is one among several top commentators bracing for a catastrophe. GMO’s Jeremy Grantham recently declared the S&P 500 could plummet 50% in a worst-case scenario, while Universa Investments’s Mark Spitznagel diagnosed the “best tinderbox-timebomb in financial history.”
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