Predicting a colossal stock market collapse and walking out of the financial crisis with hundreds of millions of dollars certainly made the world listen whenever Michael Burry forecasted large-scale market crashes.
While the central figure of the critically acclaimed Hollywood drama “Big Short” certainly hit the nail on the head about the 2008 housing market crash, there have been many times when his predictions weren’t as successful.
This article explores Burry’s major stock market predictions, focusing on the wrong ones, so read on to find out more.
12 Times Michael Burry Has Been Wrong?
He predicted a global financial meltdown resulting in the outbreak of World War 3 in 2017.
In his exact words: “I just did the math. Every bit of my logic is telling me the global financial system will collapse”.
He even insisted that the crash was only a matter of time and criticized international regulators for not taking measures and ignoring his warnings.
Despite the current global state of affairs marked by heightened geopolitical tensions, Michael Burry’s predictions about the great meltdown that would incite WW3 still haven’t become reality.
(The People’s Voice)
In September 2019, he stated that index funds are the next market bubble, just like subprime CDOs.
Burry had some bad news for anyone who’s contemplated buying an index fund in 2019, as he warned that surging investments into index funds were distorting stock and bond prices, the same way CDOs affected subprime mortgages before the 2008 market crash.
However, the imminent market crash Michael Burry predicted never happened, as the S&P500 has generated 50% returns by 2021 only, and the COVID-19 flash crash was the only notable disruption the market successfully overcame.
(Bloomberg)
He shorted Tesla in December 2020 and stated the current stock prices were ridiculous.
Pessimistic about the future of the electric vehicle behemoth, he famously tweeted that he’s short Tesla’s stocks and advised Musk to issue 25-50% of his shares to finance his impending debt or even sell the company altogether.
Michael Burry’s shorting of Tesla proved to be another one of his premature moves, as the company’s stocks maintained a steady increase trend of 526% in 2019 to over 700% in 2021.
As for the current outlook, Tesla is still a contender among the ten best stocks to buy, although their recent price cuts cause skepticism among market analysts.
(Business Insider, Nasdaq)
His second attempt at predicting Tesla’s stock price decline in January 2021 was also unsuccessful.
Michael Burry’s stock predictions about Tesla Inc. continued in 2021 when he told the company to enjoy the bubble while it lasted.
Unfortunately for Burry, Tesla’s stock continued to soar and climb 16% in 2021, which caused the company to surpass Facebook’s market cap and Elon Musk to become the wealthiest man in the world.
(Business Insider)
In late January of 2021, he claimed there would not be another rally like GameStop.
In 2019, GameStop’s stocks became an item in Michael Burry’s stock portfolio as he estimated they were undervalued.
He put GameStop on the map by causing a massive rally among day traders in 2021, who organized a short squeeze and boosted GameStop shares by 2,500% within weeks.
Burry claimed GameStop was “a perfect setup” and a one-off case, but he was proven wrong within the same month when the AMC Entertainment Holdings, Inc. rally caught him by surprise.
(Insider Monkey, Business Insider)
He warned the market is at threat of a crash again in February 2021.
After being wrong about Tesla twice within two months, Michael Burry’s stock market predictions that followed were nothing short of gloomy, as he took to Twitter to announce that the market was dancing on a knife’s edge.
According to him, the culprits for the upcoming crash were passive investments, a surge in bullish stock trade, and extreme speculation and debt. The crash, however, never happened as the market continued its post-pandemic boom.
(Business Insider)
In the same month, he predicted inflation would put Bitcoin at risk.
While new investment opportunities flourished amid the vaccine rollout, Michael Burry saw inflation as the latest threat to the stock market, stating Bitcoin was among the most threatened stocks.
While the Beijing crypto crackdown proved Burry wasn’t entirely wrong on this one, El Salvador adopted Bitcoin as a legal form of payment in September 2021.
(Business Insider, Reuters, NPR)
He maintained Robinhood would lead to the gamification of stocks.
Among many of Michael Burry’s predictions during February 2021, he claimed that Robinhood, one of the best trading platforms in recent years, became a “dangerous casino” that favors day trading over long-term investments.
His claims haven’t stopped Robinhood’s surge, which was speculated to have reached $40 billion at the time.
(Business Insider, Insider Monkey)
In March 2021, he predicted Bitcoin is a speculative bubble, claiming its current price was unsustainable.
The first quarter of 2021 continued in a similar fashion with a new prediction from Michael Burry on crypto. He maintained Bitcoin is highly volatile and even wondered whether it would be a good idea to bet against it on his Twitter account.
The fact that the cryptocurrency broke its $60,000 record within weeks after his statement made him change his mind about shorting, although he still maintains they are in a bubble.
(CNBC, Insider Monkey)
In June 2021, he forecasted the “mother of all crashes” and sold all his shares.
After a two-month hiatus, Michael Burry was at it again, claiming that “the greatest speculative bubble of all time in all things” is underway, suggesting that the S&P 500 could decline over 50% in the coming years.
He claimed that the hype and speculation driving retail investments will soon drive the market into a crash.
On top of that, he sold all his shares and bought a stake only in Geo Group, a private prison operator based in Florida. Geo Group remains the largest position on Michael Burry’s stock portfolio at 25.02%.
Despite Burry’s drastic actions and pessimistic warnings, we’re yet to see the “mother of all crashes”.
(Daily Investor, Investor’s Observer)
In September 2022, he foretold more stock market failures, which hadn’t materialized.
In view of the 2022 19% S&P 500 drop, followed by a 27% plummet of Nasdaq, and the decline in the price of Bitcoin by over 66%, causing it to drop to $19,000, Michael Burry’s 2022 predictions seemed to be justified.
This year’s data shows the S&P 500 had an upswing of 15%, the Nasdaq is up 32%, and Bitcoin is currently at $36,815 as of November, proving the Scion founder wrong yet again.
(Business Insider, Reuters, Forbes)
His latest short bet against Wall Street amounts to $1.6 billion.
As of August 14, 2023, Burry made bearish bets against the S&P 500 and Nasdaq 100, betting over 90% of his portfolio on a market crash.
As confident as this may seem, mirrored in his mysterious tweet from January, which consisted of a single word — “Sell”, Michael Burry’s latest predictions might not have been as in March he tweeted: “I was wrong to say sell”.
It would seem that both stocks he betted against are performing well this year, with the S&P 500 increasing by 16% and the Nasdaq 100 by 38%.
(CNN Business)
Conclusion
While he continues to be a financial sage with many correct predictions about stock market fluctuations, even Michael Burry can sometimes be wrong — as the above examples have shown.
Despite the occasional misses, his unique insights and contrarian perspectives continue to make him a figure worth watching in the investment world.
.jpg)
