After a dismal 2022, U.S. stocks are off to a strong start to the year, with the S&P 500 surging more than 6% in January and technology stocks enjoying their best start to the year since 2001. Hedge fund manager Michael Burry shot to fame by successfully predicting and profiting from the housing market crash of 2007 and 2008. There will be a turning point in the market, he predicts, and the outlook is bleak.
“Sell,” he wrote in a now-deleted tweet Tuesday, which was as short as one word. His tweet came hours before the Fed announced its latest rate decision, with Fed Chairman Jerome Powell holding a high-profile news conference.
While some market watchers believe a new bull cycle has begun, with many investors betting that the worst is over for inflation, which would slow or stop the Fed from raising interest rates and boost stocks, Burry isn’t buying it.
The head of Scion Asset Management has said since 2019 that the stock and bond markets are in bubble territory and on the verge of a crash. He argues that the rise of passive investing — a long-term buy-and-hold strategy that emphasizes continued inflows into index funds and exchange-traded funds (ETFs) — has fueled stock market overvaluation that will eventually A reversal occurs. When that happens, he warns: “There’s a lot of danger.”
In 2021, ahead of the cryptocurrency winter and 2022 bear market, Burry said the rise of passive investing and risky speculation will lead to “extreme crash events” for cryptocurrencies and stocks. He followed his own advice to sell last year, slashing his holdings in Scion Asset Management in the second quarter, retaining only GEO Group, a private prison.
Burry ended up increasing his position in five new companies late last year, according to SEC filings, but the hedge fund manager tweeted after the increase was made public that investors “didn’t know how short I was.” In November, he said markets were still in the “biggest speculative bubble ever,” even after stocks fell nearly 20 percent, while predicting a “multi-year recession” in the U.S.
While Burry’s forecast is more pessimistic than most, he’s not the only expert predicting the stock market will fall. Top Wall Street strategists including Morgan Stanley chief investment officer Mike Wilson and JP Morgan chief global market strategist Marko kolanovic Investors have been warned that the stock market’s recent rally is just another bear trap, with some market watchers believing a full-blown stock market crash is imminent.
Legendary British investor Jeremy Grantham, who runs asset manager GMO, wrote in an outlook letter to 2023 released last week that stocks could be in danger this year as what he calls a “super bubble” has just started to burst. Another 50% drop. (Fortune Chinese website)
Translator: Zhong Huiyan-Wang Fang
After a dismal 2022, the stock market has had a red-hot start to the year, with the S&P 500 soaring over 6% in January and tech stocks having their best month since 2001. But Michael Burry, the hedge fund manager best known for Predicting and profiting from the collapse of the housing market in 2007 and 2008, is predicting a dark turn.
“Sell,” he wrote in a one-word, since-deleted tweet on Tuesday. The missive came just hours ahead of the Federal Reserve’s announcement of its latest interest rate decision, and Chair Jerome Powell’s highly anticipated press conference.
While some market watchers have argued a new bull market is beginning and many investors are betting that the worst of inflation is over, which will enable the Federal Reserve to slow or stop its interest rate hikes and lift stocks, Burry isn’t buying it.
The Scion Asset Management chief has said since 2019 that the stock and bond markets are in bubble territory and set to crack. He believes that the rise of passive investing—a long-term buy-and-hold strategy that emphasizes continuous flows into index funds and ETFs—is fueling massive overvaluation in the stock market that will eventually reverse. And when that happens: “It will be ugly,” he warned.
In 2021, before the Crypto Winter and bear market of 2022, Burry said that the rise of passive investing and risky speculation would lead to the “mother of all crashes” in crypto and stocks. And he followed through on his own advice to sell last year, slashing all of Scion Asset Management’s holdings except for a single private prison stock, the GEO Group, in the second quarter.
Burry eventually added five small new positions near the end of last year, according to SEC filings, but the hedge funder tweeted after the purchases went public that investors have “no idea how short I am.” And in November, he said that even after a nearly 20% drop in stocks, the market was still an example of the “greatest speculative bubble of all time in all things,” while also predicting an “extended multiyear recession” in the US
While Burry’s forecasts are more pessimistic than most, he isn’t the only expert predicting a downturn in stocks. Top Wall Street strategists—including Morgan Stanley chief investment officer Mike Wilson and JP Morgan chief global markets strategist Marko ning Kolanovic—are war The market’s latest rise is just another bear market trap, and some market watchers argue an outright crash is coming.
Jeremy Grantham, the legendary British investor who runs asset management firm GMO, wrote in a 2023 outlook letter published last week that stocks could drop another 50% this year as what he calls the “superbubble” has just begun to pop.
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