Legendary investor Michael Burry seems to have significant reservations about the remarkable start to the year that the stock market has had.
On Tuesday, January 31, he tweeted just a single word, “Sell,” in a grim warning to investors after the stock market’s strong start to the year.
It’s possible that the fund manager made famous in “The Big Short” was warning investors not to let themselves be deceived by the recent rally in stock prices. In January, the benchmark S&P 500 index increased by 6.2%, while the tech-heavy Nasdaq Composite index jumped 11%, marking the index’s best performance for the month of January since 2001.
Some of the stocks that were struck the hardest in the previous year have led the march upward. Elon Musk’s Tesla (NASDAQ: TSLA) had a gain of 41% in January, making it the second-highest performer in the S&P 500, Roblox (NYSE: RBLX) climbed 37%, while Cathie Wood’s flagship Ark Innovation fund (ARKK) had its best month ever in January.
In 2021, Burry’s Scion Asset Management fund bet against both the EV maker and the technology-focused fund, and Burry took aim at Tesla and Wood through Twitter.
Not quite a bull market
Burry has been trying to dampen the enthusiasm around the recent stock market surge. On January 23, he sent out a tweet with a chart that showed the fall of the S&P 500 during the dot-com disaster.
On the chart, he marked in red the S&P 500’s rise between September 2001 and March 2002, which occurred before the index reached its lowest point six months later. The inference was that the 17% gain made by the S&P 500 from the bottom reached in October of last year might also prove to be transitory.
Since the beginning of the first half of 2022, the leader of Scion has been ringing the alarm about an impending economic calamity and has been sounding the horn on asset values for more than two years.
Burry identified the greatest speculative bubble of all time and forecasted the “mother of all crashes” to take place during the summer of 2021. In the second quarter of last year, he likewise followed his own advice and sold all of his investments in his US stock portfolio, with the exception of one.
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