Burry Sees 1987-Style Crash Lurking Amid S&P 500 Rally
Michael Burry, a well-known short seller, has warned of a potential market crash similar to the 1987 stock-market disaster. In a recent Substack post, he noted that the S&P 500's surge to a record high may precede a sharp decline. The index rose 1.9% on Tuesday, reaching its first record close since June.
Burry argued that the rally contains a self-reinforcing dynamic, where rising stocks bring in new money and trigger more leverage from momentum strategies. He also pointed out that similar surges have only occurred three other times: in March 2000, April 1999, and November 2020.
Despite the broad market advance, Burry's short positions remain profitable, except for his bet against Nvidia stock. However, he emphasized that a decisive move against any of his trades would prompt him to close out those positions.