Michael Burry Says Stocks Near Peak, 1987-Style Crash Risk Still Looms

Michael Burry, the investor known as the real-life inspiration for The Big Short, warned that a sharp correction in U.S. stocks remains possible even as major indexes hit fresh records.

In a Substack post, Burry said the market may be nearing a major top and that the possibility of a crash similar to 1987 still remains, CNBC reported on August 4.

He also said fresh money could flow into the market as the S&P 500 pushes to new highs.

The S&P 500 rose 1.9% that day to a record high for the first time since June, helped by strong corporate earnings and lower oil prices on expectations that the Strait of Hormuz would reopen. The tech-heavy Nasdaq Composite climbed 2.7%, bringing its gain this week to about 5%.

Burry also stuck to his skeptical view of the artificial intelligence investment boom. He wrote that demand for AI infrastructure is being supported by a funding structure that is not sustainable, while lower market volatility is encouraging greater leverage among systematic funds and momentum-driven strategies.

He said he continues to hold short positions in the iShares Semiconductor ETF, or SOXX, as well as Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials.

Most of those short positions are still profitable, with only the Nvidia short currently showing a loss, he said. He added that he plans to close positions to limit losses if his investment thesis clearly proves wrong.

"Short selling is not a strategy suited to every investor," Burry said. "I have to short, but most investors should not."