Still Skeptical: Michael Burry Warns of a 1987-Style Market Crash

Michael Burry warns of a market crash reminiscent of 1987, despite a new S&P 500 high. The index rose 1.9% on Tuesday, and the Nasdaq gained 2.7%. Burry holds short positions on tech companies, including Nvidia, and warns of an AI bubble.

Michael Burry, the hedge fund manager who predicted the 2008 financial crisis, continues to hold a bearish outlook on the market, even as the S&P 500 climbed to a new high this week. According to a CNBC report, Burry warns that the rally could end in a sharp sell-off reminiscent of the 1987 market crash. He said: "I believe we may be close to a significant peak, and possibly even a 1987-style fall. However, the new highs the index keeps setting will likely attract new money into the market." On Tuesday, the S&P 500 rose 1.9% and hit a new high for the first time since June, amid better-than-expected quarterly results and a drop in oil prices following reports of a potential US-Iran deal. The Nasdaq climbed 2.7%. Burry, a vocal critic of the AI wave, argues that demand for AI infrastructure is fueled by financial arrangements that could be unstable. He added that the gains create a self-feeding mechanism, and the decline in volatility encourages systematic investors to increase exposure. Burry continues to hold short positions on Micron, Nvidia, Caterpillar, Palantir, Tesla, and Applied Materials, which he disclosed in November. He emphasized that all positions are profitable except the one on Nvidia, and concluded: "Short positions are not for everyone. I have to short. Most people should not do this."