Michael Burry warns that “the nonsense has returned” to the markets

Irrational exuberance has returned to stock markets, to use the famous term coined by former Fed Chairman Alan Greenspan at the turn of the last century. Or so thinks the market guru Michael Burry, who believes that “the nonsense is back” in the same way that it happened in previous stock market crises.

“The Toll is back. After 1929, after 1968, after 2000, after 2008, the Toll stress that turned ‘bulls’ into bubbles completely and utterly disappeared. But the familiar Covid-era tom It hasn’t died yet. Like in 2001 before Enron, before 9/11, before WorldCom,” the analyst reviews in a tweet that, as usual, has since been deleted.

— Michael Burry Archive (@BurryArchive)

Burry is known for foreseeing the bursting of the US housing bubble of the mid-2000s – the subprime mortgage crisis – which led him to bet against the housing market and make a huge amount of money. For the general public he is known thanks to the fact that this story was told in a book and a later film, ‘The Big Short’, where Burry was played by Christian Bale.

The founder of Scion Asset Management is one of the usual voices warning of the overvaluation of assets on the stock market. Indeed, in recent weeks Scion has shorted Apple and Burry has questioned the strength of the dollar.

With his new criticism of the stock markets, Burry focuses on the rebound that the markets have suffered since the stock market recovery from the pandemic. Even before the coronavirus, it was noted that the large stock markets were overvalued, and they have not stopped rising except for the crash of February and March 2020, from which the US stock market recovered in a few months.

In fact, the S&P 500 has appreciated 65% since the beginning of 2019, that is, in less than four years. In addition, despite the strong stock market decline in the first half of this year, the US selective is currently moving more than 20% above the pre-covid maximum, while uncontrolled inflation and fears of a recession (which technically is already being produced in the US) have dominated the headlines in recent months.