"The Big Short" Star Burry Issues New Warning: US Stock Market May Be Approaching Top, Not Ruling Out 1987-Style Crash

August 5th - Investor Michael Burry, famous for the movie "The Big Short," has once again issued a market bear warning. He stated that despite the recent continuous historical highs of the S&P 500 Index, the market may be approaching a significant top, and he did not rule out a crash similar to the 1987 stock market crash.

Burry wrote on Substack on Tuesday that the market's rise may be forming a self-reinforcing mechanism. With the decrease in volatility, volatility target funds may increase leverage, and momentum strategies may further increase risk exposure, thereby driving funds to continue flowing into the market.

The recent new high of the S&P 500 Index was mainly driven by corporate earnings exceeding expectations and the expectation of the resumption of shipping in the Hormuz Strait pushing down oil prices. The Nasdaq Composite Index rose nearly 5% in the first two trading days of this week.

However, Burry has not changed his skepticism about the AI investment boom. He believes that the current AI infrastructure investment partially relies on a financing model that is difficult to sustain in the long term. He continues to hold multiple short positions, including in semiconductor ETFs, Nvidia, Micron, Tesla, Caterpillar, Palantir, and Applied Materials.

Burry stated that except for the Nvidia short position, the rest of his short positions are currently profitable. But if the market trend continues unfavorably, he will choose to exit with a stop-loss. At the same time, he reminded investors that shorting is not suitable for most people, saying, "I have to short, but most people should not try."