‘Big Short’ legend Michael Burry says markets are acting like in the last months of 1999-2000. Prepare for the crash now
Uncategorized
‘Big Short’ legend Michael Burry says markets are acting like in the last months of 1999-2000. Prepare for the crash now
018 mins
Jim Spellman/ Getty Images
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Michael Burry, the investor who accurately predicted the U.S. housing crash in 2008, is not feeling good about the state of the stock market these days.
The investor, known as the inspiration for the 2015 film The Big Short, which looked at his prediction of the subprime mortgage crisis, has repeatedly stated that the market’s long-running rally is about to end — with a significant decline potentially on the way.
Must Read
JPMorgan still sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Learn more with a free guide from Priority Gold
Burry hasn’t backed away from that warning. Throughout 2026, he has continued making moves that suggest he remains concerned about parts of the market — particularly the surge in AI-related stocks. His latest bearish bets against some high-profile technology names have underscored his belief that investor excitement may have pushed some valuations too far.
But Burry isn’t simply warning about a crash — it’s also leading to blindness. In a recent Substack post (1), he argued that the rush into Artificial Intelligence has caused investors to overlook established companies with strong fundamentals.
He compared the setup to the opportunities he found after the dot-com bubble began to unwind, saying he was “patiently acquiring” companies that the market had moved away from.
In an earlier Substack post, Burry said he felt deja vu when it came to the market (2).
“That I had lived this before suddenly dawned on me,” he wrote (3). “The NASDAQ 100, complete reversal … I am calling something. The market has jumped the shark.”
Part of the reason for his bearishness is the resemblance between today’s market and the final parts of the dot-com bubble. Investors, he added, are ignoring economic data and global events to focus on just one thing instead: AI, in this case.
“Absolutely non-stop AI. Nobody is talking about anything else all day,” Burry wrote after listening to financial radio coverage on a long drive (3).
“Stocks are not up or down because of jobs or consumer sentiment. They are going straight up because they have been going straight up. On a two letter thesis that everyone thinks they understand,” he added, noting that it’s “Feeling like the last months of the 1999-2000 bubble.”
Burry isn’t alone in questioning whether the AI rally has gone too far. Other market veterans have raised concerns that excitement around artificial intelligence has pushed some technology stocks to lofty valuations. The challenge, as always on Wall Street, is knowing whether a correction is around the corner — or still years away.
Still, predicting market bubbles is far easier than predicting exactly when they will burst. And while Burry’s 2008 call made him famous, his more recent warnings have not always played out on the timeline he expected.
The boy who cried wolf
Burry conceded in his post that he has incorrectly forecasted market crashes in the past. He compared bitcoin to the housing market in March of 2021 (4). Three months later, he warned of a massive bubble and looming market crash that he said would be the worst in history (5).
Neither of those crashes happened, and Burry took ownership of that in his post (6), but also pointed to his track record.
“I am now a meme for the number of times I have called a crash,” he wrote. “I have become the boy who cried wolf. History is written not by the victors, but by those that control the pen, and social media has that pen right now, it seems.
“Still, I got it right in 2000, got it right in 2007. Got it right in 2019, helped by COVID, and I called the meme stock crash in mid 2021. I called the bank stock run in 2023.”
That’s an impressive track record, and Burry’s willingness to go against the crowd is exactly why investors continue to watch him closely — even when his predictions don’t always unfold on his timeline.
Burry isn’t the only stock market veteran who is warning of a forthcoming correction.
On May 8, Paul Tudor Jones told CNBC that the current environment on Wall Street felt a lot like 1999, the last strong year before the dot-com crash (2). While Jones said he expects the current rally to last another year or two, he worries about how high valuations might rise in that time.
“Just imagine the stock market went up another 40%,” Jones said. “The stock market GDP is going to probably be good lord 300%, 350%. You just know that there’ll be some … breathtaking kind of corrections.”
This ties into something known as the Buffett Indicator, which tracks the ratio of stock value to GDP. As the name implies, Warren Buffett himself coined the term — and it tracks whether, in his view, the stock market is overvalued.
The Buffett Indicator remains at historically high levels, suggesting the U.S. stock market is expensive compared with the size of the economy.
But it’s not a crystal ball. Stocks can stay expensive for a long time before a downturn arrives.
How to survive a stock market crash
Despite mounting AI-driven layoff fears, sticky inflation and ongoing geopolitical tensions in the Middle East, the stock market has remained surprisingly resilient. That disconnect on Wall Street has left many uneasy and explains why prominent investors like Michael Burry continue to warn of the risks of a sharp correction.
But preparing for a potential market crash doesn’t necessarily mean panic-selling your portfolio or trying to perfectly time the market.
Even investors who share Burry’s concerns generally acknowledge that timing a crash is extremely difficult.
More often, it means returning to the fundamentals — building a financial cushion, protecting your downside and diversifying beyond stocks alone.
Keep a cash buffer
When markets turn volatile, cash suddenly becomes one of the most valuable assets you can have. Financial experts generally recommend keeping at least three to six months’ worth of expenses in easily accessible accounts — although some, like Suze Orman, recommend a staggering three to five years’ worth, especially for retirement.
This buffer can make a massive difference during market downturns because it buys you time. Instead of being forced to sell investments at a loss just to cover monthly bills, a healthy emergency fund gives you breathing room while markets recover. Aside from protecting your wealth, it can also be tapped in the event of a sudden job loss or medical emergency.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s over ten times the national deposit savings rate, according to the FDIC’s June report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
One of the biggest mistakes investors sometimes make during bull markets is assuming that stocks alone will continue to carry their portfolios higher forever. But when volatility spikes, concentrated portfolios can unravel quickly.
That’s why diversification matters.
Diversification isn’t just about owning more investments — it’s about owning assets that don’t all move in the same direction at the same time. Spreading your money across different asset classes can help reduce the impact of any single market downturn and smooth out long-term returns. During periods of economic stress, some alternative assets can hold up better than traditional equities, helping offset losses elsewhere in your portfolio.
Preserve your wealth
Gold has long earned its reputation as a defensive asset during periods of uncertainty. When inflation rises, recession fears grow or markets become unstable, investors often turn to precious metals as a store of value.
Part of gold’s appeal is that it doesn’t move in lockstep with the stock market. Gold’s value isn’t directly tied to company earnings or central bank decisions, which can make it attractive during periods of market stress. It also can’t be printed at will, like the U.S. dollar could be, during a downturn.
One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with Goldco.
Real estate provides something many crave during uncertain markets — tangible assets with income potential. Rental income, distributions, and long-term appreciation can create an additional stream of returns that isn’t directly tied to daily stock market volatility.
Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
— With files from Chris Morris
You May Also Like
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
