Michael Burry warns stocks are overdue for a crash — markets ‘fragile’

Michael Burry wrote on his Substack that US stocks are long overdue for a painful correction, calling the market historically expensive and “more fragile.” Using the S&P 500’s level at the start of this year, he estimated the index would need to fall about 32% to roughly 4,700 points for its Shiller CAPE to drop from 40 to the post-1990 average of 27, and about 52% to near 3,300 points to reach the long-term average of 19.

He traced the market’s resistance to mean reversion to several structural trends: a boom in passive investing through index funds as baby boomers shifted from bonds to stocks, market-cap-weighted indexes funneling capital to the biggest companies, widespread buybacks, and authorities stepping in to limit sell-offs.

Burry also pointed to factors that have made markets more vulnerable, including the rise of high-frequency trading and pod shops that reduce liquidity and increased correlation across assets.

United States

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