- Michael Burry sounded the alarm on the stock market over the weekend.
- The “Big Short” investor said extreme speculation and debt could cause a crash.
- Burry said his warnings were being ignored as they were during the housing bubble.
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Rampant speculation and widespread betting with borrowed money have driven the stock market to the brink of collapse, Michael Burry said over the weekend.
“Speculative stock #bubbles ultimately see the gamblers take on too much debt,” the investor tweeted along with a chart showing the S&P 500 index and levels of margin debt both soaring in recent months.
“The market is dancing on a knife’s edge,” Burry added.
Burry said the flow of cash from actively managed funds to index trackers and the boom in day traders sharing tips on social media and touting meme stocks had helped to fuel the market upswing.
“Passive investing’s IQ drain, and #stonksgoup hype, add to the danger,” he said.
In another tweet, the Scion Asset Management chief highlighted a “massive spike” in the volume of bullish call options being traded. He added the hashtags #cautiontothewind and #blowofftop to emphasize his view that those types of wagers are propelling stocks to extreme levels.
Burry is best known for his billion-dollar bet on a crash in the US housing market in the mid-2000s, immortalized in “The Big Short.” Christian Bale portrayed him in the movie adaptation of the book.
Burry tweeted on Sunday that his latest warning was being ignored just as Wall Street dismissed his warnings during the housing bubble.
“People say I didn’t warn last time,” he said. “I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned.”
Burry doubled down on his view by adding that quote to his Twitter bio. His display name is Cassandra, a reference to the priestess from Greek mythology who was cursed to share true prophecies but never to be believed.