Michael Burry — the investor known for forecasting the 2008 mortgage crisis and depicted in the film The Big Short — warned in a recent Substack post that the current stock market rally could end in a crash similar to 1987. The warning, reported by CNBC, came as the S&P 500 reached a new record high.
Market context and his short bets
On the day of the post, the S&P 500 rose 1.9% and closed at its highest level since June, supported primarily by better-than-expected corporate earnings and a decline in oil prices. Despite these gains, Burry wrote that he believes the market may be near a significant peak and that a severe decline is possible.
Burry said he continues to hold short positions including the iShares Semiconductor ETF (SOXX) and individual stocks such as Micron Technology, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials. He noted that all of his positions are profitable except for the Nvidia short; he also said he would cut losses immediately if price action decisively moved against him.
Why he is concerned: AI demand and leverage
Burry is one of Wall Street’s more vocal artificial intelligence skeptics. He argues that the demand for AI infrastructure is being supported by financing structures that may not be sustainable over the long term. He also warned of a feedback loop that could increase market risk: falling volatility encourages volatility-targeting funds to raise leverage, while momentum-based strategies can add further leverage and fresh capital to the market — a dynamic that can amplify price moves.
Risks and final notes
Burry emphasized that shorting is not suitable for most investors — "I have to short, but most shouldn't," he wrote. His warnings and existing short positions may serve as a caution for market participants sensitive to systemic risk, but his post does not constitute investment advice.
