‘Big Short’ investor Michael Burry warns against an impending crash that awaits Meme stocks

Investor Michael Burry has made a name for himself in the industry by predicting stocks that are likely to skyrocket and crash. 

The Investor reminded other investors about the dot-com boom and housing bubble that occurred in the previous decade. He told Barron’s in an email that the two investments attracted many investors and caused them to go all-out on them. Some people went the extra mile to take out loans to purchase technology stocks and buy multiple homes. This mid-2000s frenzy was short-lived as the boom and bubble met an unexpected end leaving many people in confusion. Burry warns that Meme-stock investors are falling into the same ditch and it would likely not end well.

“We probably do not have to wait too long, as I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails,” Burry wrote in the email. “We’re running out of new money available to jump on the bandwagon.” 

On Thursday morning, the investor issued a series of tweets warning investors and traders of the impending crash that would follow the decline of crypto and meme-stock.

“All hype/speculation is doing is drawing in retail before the mother of all crashes,” Burry wrote. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain’t changed.”

Burry has managed to create a controversial reputation on Twitter. He has now developed a habit of deleting a tweet after he posts it. Earlier this year, the investor told his followers that he was visited by the U.S. Securities and Exchange Commission over controversial tweets.

It’s not all message of doom for Burry who has consistently been at the forefront of warning against potential market crashes. He also brags about the success of some of his investments, with the most recent being videogame retailer GameStop Corp. Although he exited his position before the stock shot up in January, Burry said he is happy he still turned a good profit. In 2019, the Scion Asset Manager Boss took a bullish stance on GameStop, which contributed to laying the foundation of the frenzy that occurred in January. His stance has since changed, as he now warns the market of the coming dangers.

“If I put $GME on your radar, and you did well, I’m genuinely happy for you,” he wrote in a January tweet. “However, what is going on now – there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous.”

Finally, Burry insinuated that the Meme-stock isn’t all doom as ailing companies like GameStop or AMC Entertainment can take advantage of Meme-stock by issuing shares at an inflated rate to raise enough money to pay off their debts and invest in their business.