Big Short' Burry Warns of 1987-Style Crash as S&P 500 Hits Record High

Michael Burry, the investor portrayed in the film "The Big Short," has renewed his warning that the current stock market rally could end in a sharp selloff similar to the 1987 crash. Burry made the comments in a Substack post on August 4, even as the S&P 500 index closed at a record high. The S&P 500 jumped 1.9% on Tuesday to close at 7,736.52, its first record close since June. The Dow Jones Industrial Average rose 907.47 points, or 1.71%, to 54,085.88. The Nasdaq Composite surged 671.1 points, or 2.59%, to 26,584.99. The rally was driven by stronger-than-expected corporate earnings from AI-related companies and a drop in oil prices amid hopes that the Strait of Hormuz could reopen. Burry wrote: "I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market." He warned that rising stock prices and falling volatility could fuel systematic automated buying, ultimately amplifying a sharp decline later. "Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play," he said. Burry said he continues to hold short positions in the iShares Semiconductor ETF, as well as Micron Technology, Nvidia, Caterpillar, Palantir Technologies, Tesla, and Applied Materials. He stated that all positions except the Nvidia short remain profitable. He added: "Again, shorting is not for everyone. I must short. Most should not." Burry has been one of Wall Street's most outspoken skeptics of the artificial intelligence boom, arguing that demand for AI infrastructure is being fueled by financing arrangements that may prove unsustainable. His latest warning comes as the S&P 500 and Dow have risen for four consecutive trading sessions. The market advance was also supported by comments from U.S. Treasury Secretary Scott Bessent, who said the U.S. could reach an agreement with Iran to reopen the Strait of Hormuz within days. Oil prices fell more than 5%, with West Texas Intermediate crude settling at $75.77 a barrel.