Michael Burry, commonly known as ‘Big Short,’ a legendary investor famed for anticipating the 2008 housing market meltdown, is now warning investors that the worst fall in the history of the wider asset markets is imminent.
Burry recently sold all but one of his holdings, signalling that a market collapse is imminent; he also tweeted on August 31 a graphic of the S&P 500 showing an 18% decline from its high in December 2021.
The current alarm bells from Burry are a continuation of his prior warning from June 2021, in which he urged market players against succumbing to the fear of missing out (FOMO) since it is likely to end in tragedy owing to retail traders’ overextension.
Moreover, Burry’s warnings seem prescient in retrospect, since the link between the cryptocurrency markets and the stock market has been growing. He noted that the problem with cryptocurrencies is the irresponsible borrowing used to finance particular coins and that a crisis in one market may possibly cause a catastrophe in another market, making it the mother of all crashes.
Another doomsayer concurred with Burry that a market meltdown is imminent. In his research note titled “Entering the Superbubble’s Final Act,” Jeremy Grantham said that the combination of overvalued assets and the Federal Reserve’s (Fed) battle against inflation might result in a market meltdown.
It is impossible to predict the future precisely, but Burry has a history of making accurate predictions that frequently seem prophetic in retrospect. The wider markets are seeing heightened volatility; consequently, market players should concentrate on businesses with strong cash flows and competitive moats if they want to remain in the markets despite the dire predictions of the doomsayers.
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