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Michael Burry: ‘Near a Major Top’ — Bets Big Against Rally
Michael Burry Still Betting Against the Market — Even as Stocks Hit Record Highs
TL;DR: The famous investor from The Big Short thinks the stock market might be near a dangerous peak. He’s keeping his bets that certain big tech and industrial stocks will fall — even though the market just hit new all-time highs.
Who Is Michael Burry?
Michael Burry is a hedge fund manager who became famous for predicting the 2008 housing crash and making huge profits by betting against subprime mortgages. His story was told in the movie The Big Short (played by Christian Bale).
These days, he runs Scion Asset Management and shares his thoughts on Substack (a newsletter platform). He’s known for being a contrarian — someone who goes against the crowd.
What’s Happening Right Now?
The Market Is Rallying
- S&P 500 jumped 1.9% on Tuesday → first record close since June
- Nasdaq Composite soared 2.7% → nearly 5% gain in just two days
- Driven by strong corporate earnings and lower oil prices (hopes that the Strait of Hormuz will reopen)
But Burry Isn’t Buying It
In his latest Substack post, Burry said:
"I continue to believe it is possible we are near a major top, and possible a 1987-type fall…"
He thinks the rally could suck in more money — but that doesn’t mean it’s safe.
Why Is Burry So Worried?
1. The AI Boom Might Be a Bubble
Burry has been skeptical of the AI hype for a while. He argues:
- Companies are spending billions on AI chips and data centers
- But much of that demand is financed with debt or creative accounting
- That kind of spending might not be sustainable
2. Falling Volatility = Hidden Danger
This is a key technical point — but here’s the ELI5 version:
When the market goes up calmly (low volatility), computer-driven funds (called vol-targeting funds) automatically borrow more money to buy more stocks.
It’s like a self-driving car that speeds up when the road looks smooth — until it hits a cliff.
Burry’s warning:
"The market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play."
Translation: The calmer the rally, the more borrowed money piles in — making a crash more violent when it comes.
What Stocks Is Burry Betting Against?
He holds short positions (bets the price will fall) in these companies:
| Company | Ticker | What They Do |
|---|---|---|
| iShares Semiconductor ETF | SOXX | Basket of chip stocks |
| Micron Technology | MU | Memory chips |
| Nvidia | NVDA | AI chips (GPUs) |
| Caterpillar | CAT | Construction & mining equipment |
| Palantir | PLTR | Data analytics / AI software |
| Tesla | TSLA | Electric vehicles |
| Applied Materials | AMAT | Chip-making equipment |
All positions are profitable — EXCEPT Nvidia (which has kept going up).
Important Callout: Shorting Is NOT for Most People
BURRY’S OWN WARNING:
"Again, shorting is not for everyone. I must short. Most should not."
Why shorting is dangerous:
- Unlimited losses — a stock can go up forever, but only down to zero
- Margin calls — you might be forced to close at the worst time
- Timing is everything — you can be right about the direction but wrong on timing → still lose money
- Emotional stress — watching a losing short position is brutal
Burry is a pro with deep pockets and risk controls. You probably aren’t.
Summary: What Should You Take Away?
| Point | What It Means for You |
|---|---|
| Market at highs ≠ safe | Record highs can happen before a crash (like 1987, 2000, 2007) |
| AI hype may be overdone | Just because everyone talks about AI doesn’t mean every AI stock is a buy |
| Low volatility ≠ low risk | Calm markets can hide growing leverage (borrowed money) |
| Burry’s track record is strong | But he’s also been early/wrong before (e.g., 2021 inflation bets) |
| Don’t copy his trades | Shorting is high-risk, high-stress, and not suitable for most investors |
FAQ: Your Questions Answered
What does “shorting” a stock mean?
Shorting = borrowing shares, selling them now, hoping to buy them back cheaper later.
Profit if price drops. Lose if price rises.
What was the 1987 crash?
Black Monday (Oct 19, 1987): The S&P 500 fell 20.5% in ONE DAY — the biggest single-day % drop in history.
It happened after a long rally, fueled by program trading and leverage — exactly the kind of setup Burry warns about today.
Why is Nvidia the only losing short for Burry?
Nvidia has been the poster child of the AI boom. Its stock has surged on massive demand for its AI chips.
Burry thinks the demand is overfinanced — but so far, the market disagrees.
Should I sell my stocks because Burry is bearish?
No. One smart investor’s opinion ≠ a signal to panic.
Instead:
Review your risk tolerance
Make sure you’re not over-leveraged
Keep a long-term plan
Don’t invest money you need soon
Where can I read Burry’s actual posts?
He writes on Substack under “Scion Asset Management” or similar.
Note: He often deletes posts after a while — so screenshot or save if you want to keep them.
Final Thought
Markets can stay irrational longer than you can stay solvent.
— Often attributed to Keynes (and lived by Burry)
Burry is planting flags. Time will tell if he’s early, wrong, or prescient again.
For now — stay informed, stay diversified, and don’t bet the farm on anyone’s prediction.
