Hedge fund investor Michael Burry, best known for being among the first investors to predict and profit from the subprime mortgage crisis that occurred between 2007 and 2010, suggested on Wednesday that “the mother of all (stock market) crashes” is already underway.
Burry, who was made famous in the 2015 film “The Big Short,” gave his warning alongside a graph showing the S&P 500’s heavy drop since hitting an all-time high in January.
The S&P 500 – the broadest measure of US stocks and widely regarded as the benchmark for the US market – dropped over 18% since January. The considerable dip coincided with increasing investor fears that the Federal Reserve’s policy tightening to address decades-high inflation will result in an economic recession.
Is a market catastrophe on the horizon?
Last year, Burry, who was very critical of the COVID-19 lockdowns, warned that irrational “fear of missing out” trading activity around cryptocurrencies and meme stocks would probably end in disaster for overextended retail traders.
“All hype/speculation is doing is drawing in retail before the mother of all crashes,” the investor tweeted. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries.”
Several weeks ago, Burry cautioned that surging consumer debt was yet another sign of economic catastrophe ahead.
“Net consumer credit balances are rising at record rates as consumers choose violence rather than cut back on spending in the face of inflation,” Burry tweeted.
“Remember the savings glut problem? No more. COVID helicopter cash taught people to spend again, and it’s addictive. Winter coming.”Tags: economy, money