Closely followed investor Michael Burry is warning of a potential stock market crash reminiscent of “Black Monday” in 1987.
In his latest Substack post, Burry writes: “I continue to believe it is possible we are near a major top, and possible 1987-type fall…”
Black Monday occurred on Oct. 19, 1987, when the Dow Jones Industrial Average plummeted 22.6% in a single trading session, the largest one-day percentage drop in stock market history.
Burry’s comments come as both the benchmark S&P 500 index and the blue-chip Dow Jones Industrial Average hit record highs on the back of strong corporate earnings.
However, Burry remains skeptical of the artificial intelligence (A.I.) boom, arguing that demand for A.I. infrastructure is being fueled by financing arrangements that may prove unsustainable.
As such, the investor continues to short leading technology stocks tied to the A.I.-trade such as Nvidia (NVDA), Micron Technology (MU), and Palantir (PLTR).
The investor said he remains confident in the long-term outlook for his short positions, though he added that he would cut his losses quickly if the trades move against him.
Burry is best known for his bet against the U.S. housing market ahead of the 2008 financial crisis, an event chronicled in the book and film “The Big Short.”
Short bets are wagers that a stock’s price will decline over a set period of time.
In his latest Substack post, Burry cautioned investors from shorting too many stocks, too aggressively.
“Shorting is not for everyone,” wrote Burry. “I must short. Most should not.”
