Michael Burry Warns U.S. Stocks May Be Near a Peak, Citing 1987-Style Crash Risk

Huoxing Finance reports that on August 5, Michael Burry, the investor known for his role in the film "The Big Short," issued another bearish warning on the market. He stated that despite the S&P 500 recently setting new all-time highs, the market may be nearing a significant top, with even a crash similar to the 1987 stock market crash not being ruled out. On Tuesday, Burry posted on Substack that the market rally may be forming a self-reinforcing mechanism: as volatility declines, volatility-targeting funds may increase leverage, while momentum strategies could further expand risk exposure, driving continued inflows into the market. The recent rise in the S&P 500 has been primarily driven by stronger-than-expected corporate earnings and expectations of restored shipping through the Strait of Hormuz, which have helped push oil prices lower. The Nasdaq Composite rose nearly 5% over the first two trading days of this week. However, Burry has not wavered in his skepticism toward the AI investment frenzy. He believes that current infrastructure investments in AI rely partly on financing models that are unsustainable in the long term, and he continues to hold multiple short positions, including in semiconductor ETFs, NVIDIA, Micron, Tesla, Caterpillar, Palantir, and Applied Materials. Burry noted that, aside from his NVIDIA short position, all his other short positions are currently profitable. However, if market conditions continue to deteriorate, he intends to exit these positions with stop-losses. He also cautioned investors that short selling is not suitable for most people: "I have to short; most people should not try."