‘Big Short’ investor Michael Burry compared the meme-stock craze to the dot-com and housing bubbles – and warned of an impending crash

Michael Burry Getty
Michael Burry.

  • Michael Burry said the meme-stock craze reminded him of the dot-com and housing bubbles.
  • “The Big Short” investor predicted the buying frenzy would end in a brutal crash.
  • Burry also explained why becoming a meme stock can be a huge boon for a company.
  • See more stories on Insider’s business page.

Michael Burry warned the frenzied buying of meme stocks reminded him of the dot-com boom and housing bubble in a recent Barron’s interview, and predicted the social-media favorites would plummet in value soon.

The Scion Asset Management chief noted the people who went all-in on technology stocks at the turn of century, and those who took out massive loans to buy multiple homes in the mid-2000s, didn’t expect the good times to end. Meme-stock investors are falling into the same trap and risk getting burned, he said.

“We probably do not have to wait too long, as I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails,” Burry told Barron’s in an email. “We’re running out of new money available to jump on the bandwagon.”

Burry is best known for his billion-dollar bet against the housing bubble in the mid-2000s, which was immortalized in the book and the movie “The Big Short.” He also took a stake in GameStop in 2019 and underscored the video-game retailer’s potential in letters to its board, emboldening retail investors to execute a short squeeze of the meme stock at the start of this year.

The Scion chief told Barron’s that Wall Street professionals are now tracking social-media chatter and cashing in on the latest meme stocks.

“They are in a better position than retail to participate, sniff out and start gamma squeezes in the options market,” he said. A “gamma squeeze” refers to buying call options on a stock to force market makers to purchase the underlying shares to hedge themselves, which in turn pushing the stock price up even more.

Burry, who has been warning of an historic market crash for months, also trumpeted the success of his GameStop wager. While he exited the position before the stock skyrocketed in January, he still turned a sizeable profit. “If I get within years of a thesis coming true, I’m happy,” he said.

Finally, the investor emphasized that for an ailing business like GameStop or AMC Entertainment, being picked as a meme stock is like hitting the jackpot. They can issue shares at inflated prices to rake in huge sums, allowing them to pay off their debts, invest in their operations, and revitalize their prospects.

“This is a Godsend for these companies,” Burry told Barron’s. Indeed, GameStop went from spending nearly $200 million to repurchase 37% of its outstanding shares in 2019, to raising over $1.6 billion from share sales in the first six months of this year.

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‘Big Short’ investor Michael Burry warned against buying meme stocks and crypto and predicted the ‘mother of all crashes’ during his brief Twitter return. Here are the 10 best tweets.

Dr. Michael Burry
Michael Burry.

  • Michael Burry returned to Twitter for eight days after deleting his account in April.
  • “The Big Short” investor rang the alarm on meme stocks, crypto, inflation, and the Federal Reserve.
  • Burry also warned of an unprecedented market bubble and predicted the “mother of all crashes.”
  • See more stories on Insider’s business page.

Michael Burry returned to Twitter for eight days this month after deleting his account in early April. The investor of “The Big Short” fame issued dire warnings about meme stocks, cryptocurrencies, inflation, a wrongheaded Federal Reserve, a sprawling market bubble, and a historic crash before taking down his profile again this week.

The Scion Asset Management boss, who famously predicted the US housing-market collapse that precipitated the global financial crisis, has pointed to Tesla, Robinhood, dogecoin, GameStop, and SPACs as demonstrating signs of rampant speculation and dangerous excess in recent months.

Here are Burry’s 10 best tweets from his brief Twitter homecoming:

1. “People always ask me what is going on in the markets. It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360.”

2. “All hype/speculation is doing is drawing in retail before the mother of all crashes. #FOMO Parabolas don’t resolve sideways; When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain’t changed.”

3. “The problem with #Crypto, as in most things, is the leverage. If you don’t know how much leverage is in crypto, you don’t know anything about crypto, no matter how much else you think you know.”

4. “Easiest riddle you’ll ever get from me. What do Troy Polamalu and #Bitcoin have in common?” – “Neck not broken yet on either,” he explained in a follow-up tweet about the former American football player with an enormous head of hair, and the leading cryptocurrency.

5. “Knowing saves half the battle. Got it? It’s not hard. Analyze, think independently, be informed, find the data, and you’ll know a lot that no one else does.”

6. “Some stocks, funds cannot own, for now. Maybe 1x book, 1x sales. Growing fast. But, pink sheets, federal laws, clients in certain jurisdictions… some cases there is a path to funds gaining the ability to own such. Knowing saves half the battle, #capisce?” – underscoring the opportunity for investors to buy stocks now that institutions might own in the future.

7. “Re: RMBS CDS, ancient history, but… because my investors revolted, I was completely out of the trade before any bailouts. And I hated the bailouts too! AIG should have been allowed to fail, and @GoldmanSachs with it. Today’s narratives would be very different.” – commenting on the government bailouts of major banks and insurers during the financial crisis.

8. “Everywhere and anywhere you see #shortages – things, people, places, experiences, and services – you know the price is just not high enough, yet.” – suggesting that a national ammo shortage is evidence of upward pressure on prices.

9. “Micro-hoarding. Millions and millions micro-hoarding. The secret to longevity… of the inflationary mindset. And since #PlungeProtectionTeam mentality infiltrated the Greenspan #Fed after the ’87 crash, it has compounded and compounded. And become today’s misguided monster.” – accusing the Federal Reserve of fueling inflation by focusing too much on shoring up financial markets.

10. “Who could’ve seen this coming?” – Commenting on a news report that supply-chain disruptions, labor shortages, and a post-pandemic demand surge are stoking inflation. Burry flagged the risk of inflation spiking after the economy reopens as early as April 2020.

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‘Big Short’ investor Michael Burry deleted his Twitter profile again – days after warning of a massive bubble and epic market crash

Michael Burry Getty
Michael Burry.

  • Michael Burry deleted his Twitter profile again after issuing a slew of dire warnings.
  • “The Big Short” investor warned of a huge market bubble and predicted a brutal crash.
  • Burry rang the alarm on crypto, meme stocks, inflation, and the Fed in tweets over the past week.
  • See more stories on Insider’s business page.

Michael Burry deleted his Twitter account on Monday after sounding the alarm on a colossal bubble in asset prices and predicting the worst crash in history.

The investor of “The Big Short” fame only rejoined Twitter last week after deleting his account in early April. During his brief return to the platform, his tweets ranged from investing advice to song lyrics, and he also commented on cryptocurrencies, stocks, inflation, and government bailouts.

“Greatest Speculative Bubble of All Time in All Things” was his description of the state of markets last week. “All hype/speculation is doing is drawing in retail before the mother of all crashes,” he tweeted a couple of days later.

The Scion Asset Management boss cautioned in now-deleted tweets that bitcoin is overpriced and a dangerous borrowing binge has fueled the crypto boom. He also described the Federal Reserve as a “misguided monster” for focusing so much on preventing market declines. Moreover, he highlighted news reports of supply shortages and hoarding as evidence of a mounting inflation threat.

Burry offered some tips for investors, too. “Analyze, think independently, be informed, find the data, and you’ll know a lot that no one else does,” he tweeted.

The fund manager highlighted the opportunity to pinpoint stocks that institutions can’t own currently because of their size, client base, or federal regulations, but where there’s a path to future ownership.

Burry revealed that he wasn’t a fan of the US government stepping in to save banks and insurers during the financial crisis. “I hated the bailouts too!” he tweeted, adding that AIG and Goldman Sachs should have been allowed to collapse.

Notably, the value investor isn’t as bearish on “big tech” stocks as might be assumed. He tweeted that recent stock-price gains for Google parent Alphabet and Facebook were “for very good reasons that completely #trump my own personal distaste.”

Meanwhile, one of Burry’s followers asked him whether he’d been approached about making a new movie, presumably on the meme-stock boom this year. “Believe it or not, yes,” he tweeted in response.

Burry is best known for his starring role in “The Big Short,” a book by Michael Lewis that chronicled his billion-dollar bet against the US housing bubble in the mid-2000s. The fund manager was played by Christian Bale in the movie adaptation.

The Scion chief laid the groundwork for the GameStop short squeeze in January by investing in the video-game retailer back in 2019, and underscoring the company’s untapped potential in several letters to its bosses.

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‘Big Short’ investor Michael Burry warns the ‘mother of all crashes’ is coming – and predicts crypto and meme stocks will plummet

Dr. Michael Burry
“The Big Short” investor Michael Burry.

  • Michael Burry predicted meme stocks and cryptocurrencies will plummet.
  • “The Big Short” investor warned the “mother of all crashes” is coming.
  • Burry pointed to excessive leverage as a major problem for crypto.
  • See more stories on Insider’s business page.

Casual investors buying meme stocks and cryptocurrencies are signing up for devastating losses, Michael Burry warned on Thursday.

“All hype/speculation is doing is drawing in retail before the mother of all crashes,” the investor tweeted. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries.”

Burry added that people’s fear of missing out has propelled asset prices to unsustainable levels. “#FOMO Parabolas don’t resolve sideways,” he cautioned.

The Scion Asset Management boss also sounded the alarm on crypto fans borrowing recklessly to buy their favorite coins.

“The problem with #Crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”

Burry returned to Twitter this week after deleting his profile in April. He’s previously used the social-media platform to issue warnings about Tesla – which he’s short – as well as GameStop, bitcoin, dogecoin, Robinhood, inflation, and the wider stock market.

The Scion chief has attracted a cult following since he anticipated the housing-market crash that precipitated the global financial crisis. His billion-dollar bet against the bubble was chronicled in the book and the movie “The Big Short.”

Burry also helped pave the way for the GameStop short squeeze in January, which kicked off the meme-stock boom. He bought a stake in the video-game retailer in 2019 and wrote several letters to its board, emboldening retail investors to bet on the stock.

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‘Big Short’ investor Michael Burry is back on Twitter – and warning of the biggest market bubble in history

Michael Burry big short
Michael Burry.

Michael Burry on Tuesday warned of the biggest market bubble in history, suggesting that his concerns about rampant speculation only grew during his 10-week hiatus from Twitter.

“People always ask me what is going on in the markets,” the investor tweeted. “It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360.”

The hashtag was likely a reference to a famous saying in investing: “Bulls make money, bears make money, but pigs get slaughtered.” Burry has repeatedly told investors that they’re being too greedy, speculating wildly, shouldering too much risk, and chasing unrealistic returns.

The Scion Asset Management chief deleted his Twitter profile in early April after sounding the alarm on Tesla stock – which he’s short – as well as GameStop, bitcoin, dogecoin, Robinhood, SPACs, inflation, and the broader stock market. He resumed tweeting on Monday.

Read more: These 5 stocks are prime candidates for an explosive AMC-style short squeeze right now, according to data from Fintel

Burry is best known for his billion-dollar bet against the US housing bubble in the mid-2000s, which was immortalized in the book and the movie “The Big Short.” He also helped lay the groundwork for GameStop’s comeback this year, as he bought a stake in the video-game retailer in 2019 and wrote several letters to its board.

The investor, who has complained many times about his warnings being ignored, has “Cassandra” as his display name on Twitter, a reference to the priestess from Greek mythology who was cursed by the gods to share true prophecies but never to be believed.

Burry’s latest tweet echoed his other cautions. For example, he’s compared the hype around bitcoin, electric vehicles, and meme stocks to the dot-com and housing bubbles and said earlier this year that the stock market was “dancing on a knife’s edge.”

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‘Big Short’ investor Michael Burry trolls Elon Musk by backing a SpaceX rival

Michael Burry with Elon Musk
Michael Burry and Elon Musk

  • Michael Burry bet against two of Elon Musk’s companies last quarter.
  • “The Big Short” investor bought Tesla puts and backed Rocket Lab, a SpaceX rival.
  • Burry may be trolling Musk with his Rocket Lab wager.
  • See more stories on Insider’s business page.

Michael Burry is betting against Elon Musk, one of the world’s richest and most powerful men, on two fronts. The contrarian investor didn’t just buy options that pay off if Tesla’s stock falls, he also backed one of SpaceX’s biggest rivals.

Burry’s Scion Asset Management revealed this week that it bought bearish put options against 800,100 Tesla shares last quarter. It also snapped up 462,000 shares in Vector Acquisition that were worth $5.5 million at the end of March.

Vector is a special-purpose acquisition company (SPAC) that struck a deal in March to buy Rocket Lab, a business that designs and manufactures rockets to carry satellites and other cargo into space. Rocket Lab’s flagship Electron rocket is second only to SpaceX’s Falcon 9 in annual launches, and the upstart is venturing further into Musk’s sphere by developing reusable and crewed rockets.

Read more: SPACs are racing against the clock to strike a deal, and some will likely have to settle for a less-than-ideal business to buy

Burry might be genuinely bullish on Rocket Lab’s prospects, but it’s much more likely that he’s trolling Musk. The Scion chief is skeptical of SPACs, mostly invests in value stocks like Kraft Heinz, and probably isn’t on board with Rocket Lab’s targeted public valuation of $4.1 billion – an astounding four times its projected revenue in 2026.

The investor has also targeted Musk before. He announced he was short Tesla in December, and suggested Musk capitalize on the automaker’s “ridiculous” stock price by issuing more shares. He later compared the hype around Tesla to the dot-com and housing bubbles, telling shareholders to “enjoy it while it lasts.”

Burry also dismissed Tesla’s $1.5 billion purchase of bitcoin earlier this year as “digital confetti,” intended to distract from the company’s clash with Chinese regulators over car-quality issues.

Read more: Arrival’s chief led its hot $13 billion SPAC but now predicts the Wall Street craze will slow down after the initial frenzy

The Scion boss shot to fame after his billion-dollar bet against the US housing bubble was featured in the book and the movie “The Big Short.” Burry also helped pave the way for the meme-stock boom earlier this year – his GameStop investment in 2019 and letters to the company’s board stoked enthusiasm among retail investors.

Burry warned of mass speculation in markets earlier this year, highlighting Tesla, the GameStop buying frenzy, bitcoin, and Robinhood as examples. He vowed to stop tweeting in mid-March, citing a visit from federal regulators, and deleted his Twitter profile in April.

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‘Big Short’ investor Michael Burry predicted the inflation spike a year ago – and sounded the alarm multiple times in February

Michael Burry big short

  • Michael Burry predicted post-reopening inflation back in April 2020.
  • “The Big Short” investor warned prices could surge earlier this year too.
  • Burry trumpeted the value of profitable companies during inflationary periods.
  • See more stories on Insider’s business page.

Michael Burry warned the post-pandemic reopening could cause inflation to spike as early as April last year – mere weeks after the first lockdowns in the US. His prediction was proven right this week by data showing consumer prices jumped 4.2% year-on-year last month, the sharpest increase in 11 years.

“When we start working and playing again, inflation may be in store,” the investor told Bloomberg for a story published on April 7 last year.

Burry is best known for anticipating the collapse of the US housing market in the mid-2000s, and making a billion-dollar bet on that outcome. That episode of his career was immortalized in the book and movie “The Big Short.” He also helped lay the groundwork for the meme-stock frenzy earlier this year by investing in GameStop and pushing for changes at the retailer back in 2019.

The Scion Asset Management chief ramped up his inflation warnings in February of this year. He cautioned that stimulus checks, the Federal Reserve’s continued pumping of liquidity into markets, and the reopening of large parts of the economy were likely to drive prices higher.

“Prepare for #inflation,” Burry tweeted on February 19. “#Inflation pressure building. The Fed is monetizing $80 billion of Treasury debt per month, and now comes $Trillions in stimulus/debt + reopening,” he tweeted four days later.

Burry highlighted America’s inflation woes in the 1970s, as well as Weimar Germany’s hyperinflation in the 1920s, as cautionary tales about the risks of soaring prices. He also flagged Warren Buffett’s description of inflation as a “tax on capital,” as it discourages companies from investing by reducing their real returns, and acts as an implicit tax on investors by eating into their purchasing power.

Read more: The founders of a crypto-asset hedge fund break down how ether could overtake bitcoin in market cap – and why the second-largest cryptocurrency will go over at least $25,000 in the short- to medium-term

The Scion chief’s takeaway was that profitable companies shine during inflationary periods.

“Each $ of earnings today becomes important,” he tweeted on February 23. “Earnings 10 and 20 years from now, the corollary goes, may be worth substantially less tomorrow’s today.”

Burry didn’t only raise the alarm on inflation. He also warned the stock market was “dancing on a knife’s edge” in February, and called out Tesla, GameStop, bitcoin, and Robinhood as examples of dangerous speculation in markets.

The investor pledged to stop tweeting in mid-March, citing a visit from federal regulators. He deleted his Twitter profile in April.

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‘Big Short’ investor Michael Burry slams NFTs with a quote warning ‘crypto grifters’ are selling them as ‘magic beans’

Michael Burry big short
Michael Burry.

  • Michael Burry subtly criticized non-fungible tokens (NFTs) this week.
  • “The Big Short” investor shared a quote comparing NFTs to “magic beans.”
  • Burry has blasted Tesla, bitcoin, Dogecoin, GameStop, and other popular bets this year.
  • See more stories on Insider’s business page.

Michael Burry isn’t a fan of non-fungible tokens (NFTs), if his Twitter profile is any indication.

The investor has changed his header image to a screenshot of this quote: “NFTs exist so that the crypto grifters can have a new kind of magic bean to sell for actual money, and pretend they’re not selling magic beans.”

The quote is from “NFTs: crypto grifters try to scam artists, again,” an article posted by David Gerard on his “Attack of the 50 Foot Blockchain” blog last week. Gerard is the author of a book with the same name as his blog, which tackles bitcoin, smart contracts, and other cryptocurrency topics.

NFTs serve as virtual certificates of ownership and authenticity for digital items, and are stored securely on a blockchain. They’re getting lots of attention after a digital art NFT was sold for $69 million at a Christie’s auction last week.

Tesla CEO Elon Musk, Twitter CEO Jack Dorsey, “Shark Tank” star Mark Cuban, and other high-profile figures have also discussed and dabbled with the technology in recent days. However, critics question the value of NFTs given it’s virtually impossible to stop others copying, downloading, and sharing digital images and videos.

Moreover, Gerard argues on his blog that NFT proponents are using artists as “aspiring suckers” to pump cryptocurrencies, and handing them “crumbs” for their efforts.

Burry is best known for his billion-dollar bet against the US housing bubble in the mid-2000s, which was chronicled in the book and the movie, “The Big Short.” He’s slammed popular investments including Tesla, GameStop, bitcoin, and Dogecoin this year, and warned investors against buying into speculative bubbles.

The Scion Asset Management boss recently signaled he was taking a break from tweeting. However, the latest change to his Twitter profile suggests he still wants to have his say.

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‘Big Short’ investor Michael Burry called Apple a ‘Buffett stock’ in 1999. Warren Buffett finally bought it in 2016.

Michael Burry Warren Buffett

  • Warren Buffett counts Apple as one of his best investments ever.
  • “The Big Short” investor Michael Burry identified Apple as a “Buffett stock” in 1999.
  • Buffett’s Berkshire Hathaway only bought a stake in the iPhone maker in 2016.
  • See more stories on Insider’s business page.

Warren Buffett praised Apple, one of his most lucrative bets ever and easily the biggest holding in Berkshire Hathaway‘s stock portfolio, as a “jewel” in his latest annual letter. Yet the investor only realized the iPhone maker’s worth and bought a stake in 2016 – nearly two decades after Michael Burry described it as a “Buffett stock.”

Buffett famously seeks to invest in undervalued companies with strong consumer brands, robust finances, and high-quality management. Burry, whose billion-dollar bet against the US housing bubble was chronicled in the book and movie “The Big Short,” recognized that Apple boasted all of those attributes in the late 1990s.

Apple ticked the boxes

Burry, who now runs Scion Asset Management, studied Buffett closely as a young investor and incorporated the Berkshire chief’s teachings into his own research. He shared his stock picks and debated their merits on the Silicon Investor forum, where he posted more than 3,000 times during the dot-com era.

One of Burry’s favorite stocks was Apple, as it showed many of the characteristics that Buffett looks for in a business.

“Apple, boy, everyone is living in the past on this one,” he posted in April 1999, when Apple’s market capitalization was under $6 billion, compared to over $2 trillion today. “Management is now great. The product is now very good, but even more importantly the marketing is now great.”

“No one is crediting Apple, but to me, it has the markings of a value stock and potential Buffett-like stock,” he said in another post that month.

“A real cash machine of late, trading at a mid-single digit multiple of cash flow, with a great recovery in terms of operating efficiency,” he continued. “A great brand name with proprietary advantages and mindshare. Subtract out the cash and it was recently trading at about 10 times earnings.”

The investor doubled down on his position in a May 1999 post. “Apple’s now a Buffett stock thanks as much to its management as its brand,” he said. Apple co-founder Steve Jobs had returned as CEO in 1997, hired future CEO Tim Cook in 1998, and launched the beloved iMac that year as well.

Burry trumpeted the company as “incredibly undervalued” given its cash generation, market opportunity, solid balance sheet, and limited downside in another post in May 1999.

Moreover, he pointed to Apple’s pricing power and consumer brand as evidence it was a Buffett-worthy stock in a July 1999 post.

“Buffett’s point has always been that in the long run it is the consumer franchises that last,” Burry said.

Burry spotted Apple before Buffett

Buffett loves consumer brands, as they allow their owners to hike prices and serve as “moats” that keep competitors at bay. Some of the Berkshire Hathaway chief’s biggest investments are household names such as American Express, Coca-Cola, and Kraft Heinz.

The investor has described Apple as a consumer-product company that uses technology, instead of a technology company, to explain why he invested despite his historical aversion to tech stocks. He lauded it as “probably the best business” he knows in the same interview.

While Burry beat Buffett to Apple by more than 15 years, he didn’t fully capitalize on his early insight. The budding investor sold his shares after they jumped between 50% and 75% in a matter of months, he disclosed in a July 1999 post.

Burry reinvested at some point over the next 15 years. His Scion fund’s biggest position in the first quarter of 2016 was Apple – it owned 75,000 shares worth $8 million, SEC filings show.

Yet Burry sold the following quarter. If he had held on, Scion’s stake would have more than quadrupled in value to $36 million today.

Regardless, Burry deserves kudos for unearthing a gem. If Buffett bought Apple back when Burry realized it was his kind of company, the Berkshire chief would have made far more than his current $80 billion gain on the investment.

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‘Big Short’ investor Michael Burry says he’ll stop tweeting after warning of market bubbles for months

Dr. Michael Burry
Michael Burry.

Michael Burry is taking a break from Twitter, leaving his 400,000 followers with only a couple of restaurant recommendations and a list of his favorite death-metal bands.

The investor – who has criticized Tesla, bitcoin, Robinhood, and the meme-stock frenzy this year – signed off this week with a now-deleted tweet in Vietnamese that translates to: “You know my position now, no need to hear more from me.”

The Scion Asset Management boss, whose wife is of Vietnamese origin, updated his Twitter bio with another sentence in her mother tongue that translates to: “No more, you know where I stand.” 

Burry cleared his Twitter feed, leaving only a trio of tweets promoting two Vietnamese restaurants and a Mexican eatery in his home state of California. He added links to the Twitter profiles of eight bands including “Devil Driver” and “Entombed” to his bio.

Burry, whose billion-dollar bet against the US housing bubble was chronicled in the book and the movie “The Big Short,” has been calling out what he sees as speculation and recklessness in markets for a while. 

For example, after revealing he was short Tesla in December, he predicted its stock price would implode like the housing bubble. He also slammed the astronomical rise in GameStop’s stock price as “insane” and “dangerous” in January, after helping to lay the groundwork for the short squeeze by investing in the video-game retailer in 2019.

Moreover, Burry has panned bitcoin as a “speculative bubble,” described Robinhood as a “dangerous casino,” cautioned that the stock market is “dancing on a knife’s edge,” and warned that markets have “bubbled over in a dangerous way.”

The latest comments suggest Burry feels he’s had his say, and has decided to let investors fend for themselves for a while.

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