‘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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‘Big Short’ investor Michael Burry is betting Volkswagen will beat Tesla in electric vehicles

Burry
Christian Bale as Michael Burry in “The Big Short.”

  • Michael Burry owns a stake in Volkswagen’s largest shareholder, Porsche SE.
  • “The Big Short” investor is betting Volkswagen can beat Tesla in electric vehicles.
  • Burry said he was short Elon Musk’s car company in December.
  • Visit the Business section of Insider for more stories.

Michael Burry holds a stake in Volkswagen’s biggest shareholder, he revealed in a now-deleted tweet on Wednesday.

“I don’t own a Porsche, but I own the Porsche that owns VW that owns Porsche,” the investor said. He was referring to Porsche SE, the German holding company that owns 31.3% of Volkswagen, which itself owns Porsche AG, Audi, and other car brands.

Porsche SE and Burry’s Scion Asset Management didn’t immediately respond to requests for comment from Insider.

Burry is best known for his billion-dollar bet against the US housing bubble in the mid-2000s. His lucrative wager was immortalized in Michael Lewis’ book “The Big Short,” and he was played by Christian Bale in the movie adaptation.

The Scion chief’s indirect bet on Volkswagen is notable because the German auto group is taking on Tesla in the electric-vehicle market, and Burry was short Tesla as of December.

He predicted in January that shares in Elon Musk’s electric-vehicle company – which have skyrocketed by more than 600% since the start of 2020 – would suffer a massive collapse. “Enjoy it while it lasts,” he said.

Burry disclosed his Porsche SE position after trumpeting Volkswagen in several tweets.

“Investors, partly due to the #ESGFog, underestimate the size, scale, brands, staying power, and resources of Volkswagen,” he said. The investor linked to a Bloomberg story about a UBS analysis that found Volkswagen’s ID.3 electric car stacked up well against Tesla’s models.

“Ever wonder who owns Bentley, Bugatti, Lamborghini, Porsche, Ducati, etc? VW,” Burry said in another tweet. “Although, Porsche owns VW too. Interested why VW and Porsche do not trade in the US? Because what US investors think is not too important to VW or Porsche.”

Burry’s championing of Volkswagen and his stake in its largest shareholder, coupled with his criticism of Tesla and short position, strongly suggest he’s expecting the German automaker to trounce Musk’s upstart rival.

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‘Big Short’ investor Michael Burry turns to Warren Buffett to underscore the dangers of inflation

Michael Burry Warren Buffett

  • Michael Burry cited Warren Buffett to highlight the dangers of inflation.
  • “The Big Short” investor highlighted Buffett’s warning that inflation erodes real returns.
  • Burry studied Buffett as a young man but decided to forge his own path.
  • Visit the Business section of Insider for more stories.

Michael Burry of “The Big Short” fame turned to Warren Buffett to hammer home the dangers of inflation in a Twitter thread on Tuesday.

“Warren Buffett’s #BerkshireHathaway annual letters guided me tremendously earlier on,” the Scion Asset Management boss said.

“During the last great inflation, #WarrenBuffett wrote about the topic at hand, and for those eyeing the future, this is worth revisiting, the 1980 chairman’s letter.”

Burry shared several screenshots from Buffett’s 1980 letter to Berkshire Hathaway shareholders. In the letter, Buffett explained that high rates of inflation act as a tax on capital, discouraging companies from investing by reducing their real returns.

Inflation can also result in investors earning negative returns, Buffett said, because it serves as an implicit tax on their purchasing power, on top of the explicit taxes they pay on dividends and investment gains.

“The average tax-paying investor is now running up a down escalator whose pace has accelerated to the point where his upward progress is nil,” the Berkshire chief wrote.

Burry dredged up the letter to emphasize that if inflation ramps up, corporate profits today will be far more valuable then profits in the future.

“Taking #Buffett’s lessons from 1980, and porting them to 2021 doesn’t take much translation,” he tweeted

“If high inflation…Each $ of earnings today becomes important,” he continued. “Earnings 10 and 20 years from now, the corollary goes, may be worth substantially less tomorrow than today.”

Banging the inflation drum

Burry shot to fame after his billion-dollar bet against the US housing bubble was immortalized in the book and movie “The Big Short.”

He also paved the way for the GameStop short squeeze in January when he bought a stake in the video-game retailer in 2019 and wrote several letters to its board.

Burry has been sounding the alarm on inflation. He warned investors last week to “prepare for inflation” as the US economy reopens and receives a fresh round of stimulus. He also compared America’s current trajectory to Germany’s path to hyperinflation in the 1920s.

The Scion chief studied Buffett early in his career, but decided not to model himself on the Berkshire boss. Burry realized Buffett’s quirks and distinctive investment style were key to his outsized success, and also recognized he was too socially awkward to ever be as popular as the investing icon.

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‘Big Short’ investor Michael Burry warns the stock market is ‘dancing on a knife’s edge’ – and fears he’s being ignored again

Michael Burry played by Christian Bale
Christian Bale as Michael Burry in “The Big Short.”

  • Michael Burry sounded the alarm on the stock market this weekend.
  • “The Big Short” investor said extreme speculation and debt could cause a crash.
  • Burry’s warnings are being ignored as they were during the housing bubble, he said.
  • Visit Business Insider’s homepage for more stories.

Rampant speculation and widespread betting with borrowed money has driven the stock market to the brink of collapse, Michael Burry warned over the weekend.

“Speculative stock #bubbles ultimately see the gamblers take on too much debt,” the investor tweeted, along with a chart showing the S&P 500 index and levels of margin debt both soaring in recent months. “The market is dancing on a knife’s edge.”

Burry said the flow of cash from actively managed funds to index trackers, and the boom in day traders sharing tips on social media and touting meme stocks, have helped to fuel the market upswing.

“Passive investing’s IQ drain, and #stonksgroup hype, add to the danger,” he said.

The Scion Asset Management chief highlighted a “massive spike” in the volume of bullish call options being traded in another tweet. He added the hashtags “#cautiontothewind” and “#blowofftop” to emphasize his view that those types of wagers are propelling stocks to extreme levels.

Burry is best known for his billion-dollar bet on the US housing market to crash in the mid-2000s, which was immortalized in “The Big Short.” He was portrayed by Christian Bale in the movie adaptation of the book.

The investor also laid the groundwork for the GameStop short squeeze when he backed the video-game retailer in 2019 and wrote several letters to its bosses.

Burry tweeted on Sunday that his latest warning is being ignored, just as Wall Street dismissed his cautions during the housing bubble.

“People say I didn’t warn last time,” he said. “I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned.”

Burry doubled down on his view by adding that tweet to his Twitter bio. He already uses “Cassandra” as his username – a reference to the priestess from Greek mythology who was cursed to share true prophecies but never to be believed.

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‘Big Short’ investor Michael Burry says ‘prepare for inflation’ – and warns bitcoin and gold might be at risk

Michael Burry
Michael Burry.

  • Michael Burry expects the economy’s reopening and more stimulus to fuel inflation.
  • “The Big Short” investor warned governments might ‘squash’ bitcoin and gold to protect their currencies.
  • Burry highlighted Germany’s hyperflation in the 1920s as a cautionary tale for the US.
  • Visit Business Insider’s homepage for more stories.

Michael Burry expects the post-pandemic economic recovery and another round of stimulus to drive up prices, and doesn’t see bitcoin or gold as guaranteed havens for investors.

“Prepare for #inflation,” the investor said in a now-deleted tweet on Thursday night. “Re-opening & stimulus on the way. Pre-COVID it took $3 debt to create $1 GDP, and it is worse now. In an inflationary crisis, governments will move to squash competitors in the currency arena. $BTC #gold.”

Burry shot to fame after his billion-dollar bet against the US housing bubble was chronicled in the book and movie “The Big Short.” He also helped lay the groundwork for GameStop’s stock to skyrocket last month when he invested in the video-game retailer back in 2019.

The Scion Asset Management chief underscored the rising threat of inflation in a flurry of follow-up tweets. He quoted at length from “Dying of Money: Lessons of the Great German and American Inflations,” a book by Jens O. Parsson, to drive his message home.

Burry highlighted passages from the book about the recurrence of inflation throughout history, how it’s usually preceded by an economic boom and a spike in overnight fortunes, and how it leads to soaring crime, surging living costs, and poverty.

The investor compared Germany’s path to hyperinflation in the 1920s to America’s current trajectory.

Read more: JPMorgan says buy these 40 stocks set to soar as bond yields make a surprising jump higher

“Germany [the US] started by not paying adequately for its war [on COVID and the GFC fallout] out of the sacrifices of its people – taxes – but covered its deficits with war loans [Treasuries] and issues of new paper Reichsmarks [dollars]. ‘ #doomedtorepeat,” Burry tweeted.

“#History is not useless,” he said in another tweet. “This text explores the 1970s American #inflation, which is more relevant today than one might think.”

Burry also drew parallels between the market mania in Germany before inflation took off, and the Reddit-fueled buying of meme stocks this year that led Robinhood to temporarily halt purchases of certain stocks.

“Before the German hyperinflation in the 1920s, ‘everyone from the elevator operator up was playing the market’ and volumes became such that ‘the financial industry could not keep up with the paperwork’ and the ‘Bourse was obliged to close.’ Sound familiar? #robinhooddown,” he tweeted.

Burry’s latest comments echo his warnings of a massive market bubble and his description of the GameStop frenzy as “unnatural, insane, and dangerous.”

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‘Big Short’ investor Michael Burry says Tesla stock could plunge 90% without major fallout – and a slump could reduce speculation

Michael Burry
Michael Burry.

  • Michael Burry says Tesla stock could plunge 90% without crashing the financial system.
  • “The Big Short” investor suggested a slump could temper speculation.
  • Burry, who is short Tesla, has criticized reckless investing in recent months.
  • Visit Business Insider’s homepage for more stories.

If Tesla stock plummets 90% this year, it would put a stop to cult-like support of certain companies without endangering the financial system, Michael Burry tweeted on Monday.

“$TSLA below $100/share by later this year will not crash the system,” the investor said. “There is no reflexivity in such a fall,” he continued, dismissing the risk of a positive feedback loop where investors lose confidence and hoard their money, hurting the economy and scaring investors even more.

“But it would trigger the end of an era for a certain type of investing,” Burry added. His latest comments echo his recent criticism of speculative betting on Tesla, bitcoin, and GameStop, and his warning of “dangerous” bubbles in markets last week.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

Burry is best known for his billion-dollar bet against the US housing market in the mid-2000s, which was immortalized in author Michael Lewis’ book “The Big Short.” The Scion Asset Management boss also laid the groundwork for the recent GameStop short-squeeze when he invested in the video-game retailer in 2019.

The investor has been skeptical of Tesla since at least last fall, when he began tweeting about the automaker’s limited profitability, reliance on sales of regulatory credits, and sky-high valuation relative to its industry peers.

Burry revealed he was short Tesla in December and called its stock price “ridiculous.” Elon Musk’s electric-vehicle company has soared in market capitalization by 37% to north of $780 billion since then.

Read more: Tom Finke recounts how he went from running a $345 billion money manager to joining in the SPAC boom as a sponsor – and shares 3 characteristics investors should look for in an ideal blank-check company

The Scion chief compared his bet against Tesla to his wager on a housing-market collapse in a January tweet. “My last Big Short got bigger and bigger and BIGGER too,” he said. “Enjoy it while it lasts.”

It might seem extreme for Burry to suggest a drop in Tesla’s stock price from more than $815 as of Friday’s close to less than $100. However, the company’s shares traded at that level as recently as last April.

Here’s a chart showing Tesla’s remarkable stock performance over the past year:

Tesla_stockchart_150221
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Michael Burry compared GameStop to ‘The Big Short’ – and said he would cash out if he won big on the stock

Michael Burry

  • Michael Burry compared the GameStop squeeze to “The Big Short” as a unique opportunity.
  • The investor highlighted the stock’s huge short interest, small market cap, and how unloved it was.
  • Burry said that if he had made life-changing money on GameStop, he would cash out.
  • Visit Business Insider’s homepage for more stories.

Michael Burry compared the GameStop saga to “The Big Short” and suggested big winners should cash out in tweets on Friday and Saturday that have now been deleted.

“There really can’t be another GME,” the investor said. “Nothing else is/was even close to as shorted (100+% of float), so small (microcap), and so hated/ignored/dismissed prior to the #thebigshortsqueeze.”

“It was a uniquely perfect setup,” the Scion Asset Management boss continued. “There won’t be another like it. Much like #thebigshort.”

Read more: Bank of America warns of 3 looming catalysts that could send the bull market crashing in 2021 – and shares how to position for the ‘big change’ as the WallStreetBets crowd fights against the system

Burry is best known for his billion-dollar bet on a US housing-market crash in the mid-2000s, which was chronicled in Michael Lewis’ book “The Big Short.”

The investor laid the groundwork for GameStop’s astronomical rally this month when he disclosed a 3% stake in the video-game retailer in August 2019, and began pushing for changes at the company.

Chewy cofounder Ryan Cohen followed his lead by taking a 13% stake in the retailer last year, and parlaying it into three board seats earlier this month.

Hordes of amateur investors, buoyed by Burry and Cohen’s votes of confidence, have seized the chance to squeeze short-sellers and make fast money by driving GameStop’s stock price up as much as 2,500% this month.

Read more: A veteran options trader breaks down the intricate strategy that Reddit traders used to outsmart Wall Street’s bet against GameStop – and shares 2 ways the parabolic rally could permanently alter the stock market

Burry highlighted the story of Keith Gill, the casual investor who goes by “Roaring Kitty” on YouTube and u/DeepFuckingValue on Reddit, in another tweet.

Gill plowed $54,000 into GameStop call options in June 2019 after determining the retailer’s stock was undervalued. He boasted $32 million in GameStop calls and shares and $14 million in cash as of Saturday, according to an unverified screenshot he posted on Reddit.

“Hey, $GME is now a $stonk and may go >$1000, but if I made a life-altering amount in this stock, I’d punch out,” Burry tweeted.

Read more: GameStop has surged more than 600% in the past week. 3 experts break down where the stock could go from here as Reddit’s army of traders take profits and search for their next targets.

“Main Street has Wall Street by the cojones. Great story/LOVE it. Tee it: bulls make money, bears make money, #pigsgetslaughtered,” he added.

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‘Big Short’ investor Michael Burry warns day traders about the dangers of blind faith

Michael Burry Getty
  • The investor Michael Burry is cautioning against getting too infatuated with specific stocks.
  • On Thursday he pointed to Iomega, a disk-drive maker that saw a spectacular rise and fall.
  • Burry probably sees parallels between Iomega’s ’90s cult following and the hype around GameStop.

Michael Burry, whose billion-dollar bet against the US housing bubble was immortalized in Michael Lewis’ book “The Big Short,” issued a fresh warning Thursday to people feverishly speculating on stocks.

“How many current $stonck market fans lived #Iomega?” the Scion Asset Management boss asked in a now-deleted tweet. “Some of us older folk have a few ‘been there, done that’ badges that are fairly relevant about now.”

Read more: Value investor Adam Mead shares 7 key insights into Warren Buffett’s Berkshire Hathaway after writing its complete financial history

The investor linked to a cautionary tale on Substack about Iomega, a disk-drive maker that once inspired the kind of mania now affecting stocks such as GameStop, AMC, and BlackBerry.

Burry’s firm disclosed a stake in GameStop and called for changes at the video game retailer in 2019, arguably laying the groundwork for the stock to explode as much as 1,700% this month.

Iomega’s stock skyrocketed 2,135% in a single year, lifting its market capitalization to almost $7 billion, the investor Aaron Edelheit wrote in his Substack newsletter.

The business attracted cult followers who labeled themselves “Iomegans,” trashed any critics of their beloved company, and embraced the stock as their investing identity.

Read more: MORGAN STANLEY: Buy these 17 stocks with strong earnings that are expected to outperform into 2022 even if the broader market sinks

Iomega shares plummeted in 1996, however, and the company was eventually sold for $218 million to EMC in 2008.

“Iomega was an early preview of how ridiculous investors would become in the Internet bubble,” Edelheit wrote.

The episode demonstrates how stock lovers can “lose sight of the fundamentals and simply become a cheerleader,” dismissing naysayers and never challenging their own viewpoint, he continued.

“How rigid you are in your investing identity matters,” Edelheit added. “This holds as much danger for investors now as it did for Iomegans.”

Read more: A chief investment strategist breaks down how the GameStop saga could upend long-standing practices on Wall Street – and shares her 4-part advice for navigating the frenzied trading environment

Burry probably flagged the story because of the parallels between the intense passion and blind faith in certain stocks on online forums such as Wall Street Bets and the irrational exuberance around technology stocks before the dot-com bubble burst.

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