Big Short’ investor Michael Burry in a recent tweet has a stern message for the stock market investors. Michael Burry just tweeted ‘Sell’ as a dire warning to investors. The US stocks rallied in January and closed the month on a high. The Nasdaq Composite index climbed 11% in January, marking its highest January performance since 2001, while the benchmark S&P 500 index rose 6.2%.
With the caption “This time is different,” Burry tweeted a chart on February 7 that contrasted the Effective Federal Funds Rate with the S&P 500 Index in 2001 and 2002.
The stocks driving the uptrend in January included some of the worst-hit from the previous year. Elon Musk’s Tesla was the second-highest performer in the S&P 500 in January thanks to a 41% increase, and Cathie Wood’s flagship Ark Innovation fund had its greatest month ever.
Burry has been tweeting about the bearish outlook for the stocks. In January, Burry tweeted a chart of the S&P 500’s decline during the dot-com disaster and highlighted in red the recovery between September 2001 and March 2002, which ended with the index’s bottoming out six months later. No wonder, his followers take him seriously while trading and investing in the stock market.
Michael Burry rose to prominence after correctly predicting the subprime mortgage crisis of 2007, which resulted in billions of dollars being made by betting against mortgage securities. The film The Big Short, based on Michael Lewis’ book about the 2008 financial crisis, depicted the entire sequence of events leading up to the global financial crisis.
Michael Burry, founder of Scion Asset Management, has such a large investor following that traders still chose his Twitter handle as the best one, even after he keeps deleting them. Burry has repeatedly deleted and renewed his Twitter account, most recently last week. Burry is best known for betting against the housing market before the 2008 meltdown and is immortalised in Michael Lewis’s book “The Big Short.”
Burry’s take on inflation seems to be alarming as well. While inflation seems to be cooling down, in an earlier tweet Burry warned that inflation will make a comeback. Although inflation has peaked, according to Michael Burry, it is likely to increase once more in reaction to government intervention. By any standard, the US is in a recession, Burry wrote late Sunday on Twitter. Government will stimulate, while the Fed will slash. And there will be another increase in inflation.
Burry liquidated all but one company’s stock in the second quarter of 2022 after warning owners of meme stocks and cryptocurrencies they were going to experience the “mother of all crashes” and raised the alarm about the “largest speculative bubble of all time in all things” last summer. Burry’s ‘nearly’ complete liquidation of his portfolio was in June 2022 when he only owned Geo Group Inc. equities. Later in the third quarter of 2022, Michael Burry expanded his stakes in US stocks from one to six businesses.