Michael Burry, famed for predicting the 2008 financial crisis, is maintaining his bearish stance despite the S&P 500 hitting record highs, warning that the market rally could still end in a steep sell-off.
"I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market," "The Big Short" investor said in a Tuesday Substack post.
Burry said rising markets and lower volatility encourage volatility-targeting and momentum funds to increase leverage, which can further fuel the market rally.
Despite the rally, Michael Burry said he continues to hold short positions in the iShares Semiconductor ETF (NASDAQ:SOXX), Micron Technology Inc. (NASDAQ:MU), Nvidia Corp. (NASDAQ:NVDA), Caterpillar Inc. (NYSE:CAT), Palantir Technologies Inc. (NASDAQ:PLTR), Tesla Inc. (NASDAQ:TSLA), and Applied Materials Inc. (NASDAQ:AMAT).
The investor said he remains confident in his long-term positions but would exit if the trades turned decisively against him. All remain profitable except his bet against Nvidia.
"Again, shorting is not for everyone," Burry wrote. "I must short. Most should not."
Notably, the 1987 stock market crash, known as Black Monday, occurred on Oct. 19, 1987, when the Dow Jones Industrial Average plunged 22.6% in a single day, marking the largest one-day percentage decline in its history. The sell-off spread across global markets and was fueled by a combination of program trading, investor panic, and market illiquidity.
Burry Doubles Down on AI Bear Bets
On Tuesday, the S&P 500 closed 1.8% higher, while the Nasdaq surged 2.6%, driven by strong earnings and falling oil prices amid hopes the Strait of Hormuz would reopen.
Last week, Michael Burry expanded his bearish bets on AI-related stocks by increasing put options on NVIDIA Corp. and the Invesco QQQ Trust (NASDAQ:QQQ), while also adding to outright short positions in Micron Technology Inc. and the iShares Semiconductor ETF. The moves deepen his negative stance on the AI-driven semiconductor rally while limiting risk on his options positions to the premiums paid.
Earlier, Burry said Wall Street has sent a clear message on AI spending, with investors favoring Big Tech companies delivering stronger returns over those making the largest capital investments in artificial intelligence. According to a chart he shared, the biggest AI spenders have fallen out of favor with the market.
In June, tech investor Dan Niles had said that he was trimming his positions in hyperscalers, chip stocks, and other “Magnificent Seven” companies, warning that soaring AI infrastructure spending could hurt future returns despite the sector’s recent rally. He expects a near-term “speed bump” and is reducing exposure after strong gains.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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