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If you think the current boom in the US stock market will never end, legendary American investor and fund manager Michael Burry has made a shocking prediction. Friends, in the history of the stock market, there are only a few people who went against the whole world and made a prediction that shook the entire world.
One such person is Michael Berry. The same Michael Berry, who made billions by predicting the Great Recession of 2008, has now issued a red alert for the global market. He has warned that the market may experience a terrible decline like the Black Monday of 1987, meaning that the stock market may collapse after 40 years.
Who exactly is Michael Berry? What did he say in his post and if such a recession occurs, what could be the reasons for it? Let's find out in detail through this video. Hello, I am Rupal and you are watching Special Berry. Now, before knowing what warning Michael Berry has given, it is important to know who he is.
Michael Bury is a neurologist of Pakistani origin. But he was very interested in the stock market. He left the medical field and started the same fund called Sion Capital in 2000. One special thing is that in 2008, when the subprime mortgage crisis hit America and the world's biggest banks collapsed, the whole world was in a state of economic turmoil, but Bury accurately predicted the recession by studying the data in depth.
He bet against the market, which is called a short position, and his fund made a profit of 750 million dollars, or about 1000 crore rupees. His real- life story was later made into a popular Hollywood movie and book called The Big Shot, which brought him worldwide fame . Now, let's talk about what exactly Michael Burry warned about.
Currently, indices like the S&P 500 and Nasdaq in the US are crossing new records every day . But according to Bari, this boom is at a very dangerous stage. He directly warned in his recent Substack post that this decline could be similar to Black Monday of 1987 . On October 19, 1987, the Dow Jones index in the American stock market fell by 22.6% in a single day, destroying billions of rupees in a single day.
The crisis had led to the collapse of the US housing sector and affected stock markets around the world, including India. The reasons behind this are said to be panic among program trading investors and lack of transparency in the market. Ironically, overvaluation of stocks and falling confidence in the dollar are considered to be the two main reasons behind Black Monday, which seem very similar to today's situation .
According to Bari, the market structure is once again in a fragile state today. Now, once again, he has warned of market volatility, saying that this decline could be similar to Black Monday in 1987 . Now Bari has also explained the reason behind this situation . So the first reason is AI and the tech bubble.
The current boom is mainly driven by artificial intelligence (AI) and semiconductor companies such as Nvidia and Micron. They say that the share prices of these companies have increased unreasonably. Will billions of dollars of investment in AI really pay off? Bari has raised doubts on this . They call Nvidia a company that sells shovels.
That means everyone is buying shovels in search of gold. But he says it's not yet clear how many people will actually find gold. The second reason is algorithmic and automated trading. According to him, today's market runs more on computer bots and algorithms than on humans. There are funds in the market worth around $500 that automatically start selling shares at the slightest movement.
If the market drops by two to three percent, these computers will sell out at once. This will lead to panic selling in the market and a major crash . Overall, they say that the calmer the market appears, the more dangerous it becomes. According to them, the third reason is market FOMO and leverage, i.e.
investing with debt. So when the market is at an all-time high, FOMO increases among ordinary investors. People invest money by borrowing or using leverage. This risk increases due to low volatility and when there is a sudden hit, all the money is lost. The fact that Bury has maintained short positions in companies such as IHS Semiconductor ETF, Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials means that this is not just a verbal warning, but he has also put actual money in that direction.
Now, not everyone agrees with Bury. According to some analysts, today's American market is different from Black Monday of 1987. Regulatory safeguards such as circuit breakers and improved market efficiency reduce the likelihood of crashes due to technical reasons. Moreover, Bari himself has acknowledged that as the market is reaching new highs, there is a possibility of new money coming into it, meaning the short-term bull run could continue.
This prediction by Michael Bury is not 100% certain to come true. Some of their predictions have been wrong in the past, but their warnings cannot be completely ignored, so let's briefly understand what investors should be careful of. So, don't get carried away by the market boom and suddenly take out a large loan or invest all your money at once.
Keep some cash in your portfolio so that you can buy good stocks at a discount if the market crashes . Similarly, if you are a long-term investor, do not panic and continue investing regularly through SIP. In short, the market is soaring today, but an experienced and accurate investor like Michael Brin is warning of caution.
Now, no one can say for sure whether what happened in history will happen again. But one thing is for sure: it is very important to keep your eyes open when investing in the market. Let us know in the comments what you think about Michael Bury 's warning that the market will continue to reach new highs, and do n't forget to subscribe to Bury's YouTube channel.
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