Michael Burry Warns of 1987-Type Crash, Keeps Short Bets

Michael Burry said Tuesday the S&P 500's record high could be the prelude to a crash like 1987. The investor, who gained fame betting against housing before the 2008 crisis, posted on Substack that he continues to hold bearish wagers even as stocks surge.

The S&P 500 jumped 1.9% to its first record close since June. Strong earnings and a drop in oil prices fueled the rally. The Nasdaq Composite rose 2.7%, extending its two-day gain to nearly 5%.

Burry has been a prominent skeptic of the artificial intelligence trade. He argued that demand for AI infrastructure depends on financing that may not hold up. In his post, he said the market's advance creates its own momentum.

"Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play," he wrote.

He said he maintains short positions in the iShares Semiconductor ETF, Micron, Nvidia, Caterpillar, Palantir, Tesla, and Applied Materials. All are profitable except his bet against Nvidia, he said.

Nvidia shares traded Tuesday at $211.90, up 2.55%. The stock carries an Alpha Score of 74 on NVDA stock page, a moderate rating. Nvidia has been a central name in the AI rush.

Burry said he stands ready to cut losses if the shorts move against him. "I must short. Most should not," he wrote.

The market's recovery has been led by technology, with the Nasdaq surging. Burry's warning is a counterweight to the prevailing optimism. The S&P 500 had not hit a record since June; the current rally is built on better earnings and easing crude prices.