Michael Burry Warns of An Upcoming Market Crash

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If you’ve been following Michael Burry on twitter you will know he has sent out several warnings about a stock market crash. Let’s see exactly what he’s saying and what we need to watch out for…

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Michael Burry I don’t know if you guys have watched the big-short or not, but he was the one who made a tonne of money by betting that the housing market would collapse in 2008.

Fast forward 13 or so years and he is sending another warning our way for us investors. He thinks that index investing, stock hype groups and free money is causing the stock market to soar in terms of prices, and he warns that this may not be sustainable. Here’s what he said…

“Speculative stock #bubbles ultimately see the gamblers take on too much debt” “The market is dancing on a knife’s edge,”.
“People say I didn’t warn last time, I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned.”.

So these are big words from someone who has a proven history of predicting correctly a market crash. Obviously that’s what he did back in 08.

He even went of further to make his twitter display Cassandra. This is a reference to the priestess who in Greek mythology was cursed to share true prophecies, but no one ever believed her.

Burry in some way is saying he is the financial version of this priestess, he’s freely giving out warnings on his twitter account, but not too many people are paying attention. They’re just enjoying the short-term returns that they’ve had, but let’s see who wins in the long-term. So I want to dig a bit further into some of the things that he’s saying and what we need to watch out for as investors…

First of all we’ve got to talk about all of these hype groups that we’ve seen on reddit, on YouTube and across the internet.These hype groups they promote certain stocks, generally high growth, risky ones, and a bunch of short-term money gets plowed into them.

For example the recent saga that we’ve seen on wall street bets, with Gamestop, with Amc, and all the other ones. We saw these stocks get out of control in terms of price, and people weren’t afraid to throw their stimulus checks into them.

Were they researching the fundamentals of these stocks? Most of course no. Did they understand the risk with these stocks? most of course didn’t, they were trying to make short-term quick money.

Michael Burry who actually invested in Gamestop, when it was cheap, was not happy with all of this so-called uneducated money going into Gamestop. He said “If I put $GME on your radar, and you did well, I’m genuinely happy for you,”. “However, what is going on now – there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous.”…

And one of the reasons for this, is just because there’s so much free money floating around. We’ve seen the new $1.9 billion in stimulus checks come through. We’ve seen the fed keeping interest rates to pretty much all-time lows. This free money a lot of it is entering the stock market, & a lot of it is entering these so called meme stocks. Michael Burry clearly doesn’t think this is natural or sustainable and I tend to agree with him on this point…

The next thing that Burry talks about that is inflating stock prices, is all of this passive investing. As he said “Passive investing’s IQ drain, and #stonksgroup hype, add to the danger,”.

He said a while ago, that “index fund inflows are now distorting prices for stocks and bonds in much the same way that CDO purchases did for subprime mortgages more than a decade ago. The flows will reverse at some point, and “it will be ugly” when they do.

Burry mentioned that “Central banks and Basel III have more or less removed price discovery from the credit markets, meaning risk does not have an accurate pricing mechanism in interest rates anymore. And now passive investing has removed price discovery from the equity markets. The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies — these do not require the security-level analysis that is required for true price discovery.

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DISCLAIMER: It’s important to note that I am not a financial adviser and you should do your own research when picking stocks to invest in. This video was made for educational and entertainment purposes only. Consult your financial adviser. * Some of the links on this webpage are affiliate links. This means at no additional cost to you, we earn a commission if you click through and make a purchase and/or subscribe. This has no impact on my opinions, facts or style of video.

Comments

Makayla Jude says:

Trading crypto has become a lucrative way of making money

Downey Jones says:

If you're here in 2021 and you haven't into bitcoin already then you're late.
But it's better late than never..

Taylor hutton-potts says:

The dtcc and occ are actively changing the rules right now so when the meme stocks go boom only the funds and investors who have shorted them will be footing the bills and it will have much less effect on the markets

Gus says:

He just deleted his account today, like 2 hours ago. Was going to start following him too, sighs our Cassandra is gone

Darcy Cardinal says:

I believe him, I mean really, take a look at the penny stock craze as a prime example

Jack Philips says:

Every week someone comes with a crash theorie….

Kerry Foster says:

MMM same as bitcoin. Once the money supply stops who will invest in a product which only exists in cyberspace?

Motorcar Classics says:

Michael Burry also said there would be an index crash and shorted Tesla.

Conor Mccgregor's left Testicle says:

bro you are tellen us for ages the market will crash

Rob Men says:

He wrote an open letter warning of what could happen because of GME. If GME squeezes a lot of really intelligent people are predicting that it's going to be bigger than the VW squeeze and that hit over $1k. I'm not an expert, but I think that if GME squeezes, it will be a catalyst for the crash. Archegos got margin called. I doubt that they are the only HF that is underwater with no life support. GME squeezes it will trigger a margin call on someone, prob Citadel. If this happens, I think it's going to cause a chain reaction that will trigger other margin calls. A lot of people will be rich, the ones invested in GME and any other memestocks that get margin called, but even more people will lose a lot of money if it does indeed trigger everything I said. I leave you with this one last thing. Micheal Bury deleted his Twitter today.

aa7r aa7r says:

No one around the globe wants to buy US debt . If you can only hear them talk About the US debt you would sell everything tomorrow including your house

Sean OToole says:

Sad that this became a "MARKET CRASH" channel

kamran102 says:

Of course we have watched "The Big Short". What do you take us for? Morons? 😛

edner klax says:

Some believe that the crypto market will crash soon but I belief its here to grow

George Wright says:

A stopped clock is right twice a day, all market internals are signalling bullish & better gains going forward

Danny Rouk says:

here we go again and again and again. Apophis will hit earth ….once

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Calcium Ang says:

It’s 1.9trillion instead of billion

VinceLocRS says:

1.9 Billions…. YOU MEAN 1.9 TRILLONS!

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