The man behind the 2008 real estate crash, Michael Burry, suggests that the stock market crash is underway

Recently, Michael Burry dumped all but one of his stocks, indicating that the crash is near. In addition, he tweeted on August 31 a chart of the S&P 500 that shows an 18% drop from its December 2021 peak.

pic.twitter.com/nXxRqXQHsi

– Michael Burry Archive (@BurryArchive) August 31, 2022

Mocking his followers, he captioned his tweet as follows: “And yet, people keep asking me, “When is the crash?“.

Burry’s recent alarm bells are a continuation of his previous warning he posted on June 2021, when he warned market participants not to get carried away by fear of missing out or (FOMO), as it is likely to end in disaster due to the overextension of retail traders.

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.

– burrytweetbot (@burrytweetbot) June 17, 2021

“When crypto falls by trillions, or meme stocks fall by tens of billions, #MainStreet losses will approach the size of countries.”

Correlation between stock markets and crypto-currencies

Furthermore, Michael Burry’s warnings seem prophetic in hindsight, as the correlation between the crypto-currency markets and the stock market has increased. He warned that the problem with crypto-currencies is the reckless borrowing to fund certain coins and that a crash in one market could potentially lead to a crash in another, making it the mother of all crashes.

Another doomsayer joined Burry in indicating that a stock market crash is coming. He is Jeremy Grantham, who argues that the recent rally in the stock market is merely a recovery from the bear market. In his research note entitled “Entering the Superbubble’s Final Act“, he argues that the mix of overvalued assets and the Federal Reserve’s (Fed) fight against inflation could lead to a market crash.

It’s hard to know exactly what will happen, but Michael Burry has a history of making accurate predictions, which often seem prescient in hindsight. The broader markets are experiencing increased volatility, so market participants should focus on companies with strong cash flows and competitive advantages if they plan to stay in the markets, despite warnings from doomsayers.