Michael Burry has built his entire career off being able to see things that other investors can’t. His famous bet against the U.S. housing market before the 2008 financial crisis has turned into the ultimate Wall Street parable, and that’s not the only impressive market call Burry has made over the last couple of decades.
That’s why investors sit up straight whenever Michael Burry has something to say. And when he tweeted the word “sell” in January 2023, plenty of market watchers listened.
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Things weren’t looking good for the S&P 500 ($SPX). It was definitely flailing, and only trading at around 4,077. But fast-forward three years, and the benchmark has shot up above 7,600. That represents a gain of almost 90%.
Translation: If you took Michael Burry’s advice literally in 2023 and sold your S&P 500 holdings, you ended up missing out on one of the strongest stretches in the history of the U.S. stock market.
So, why did Burry get this one so wrong? The truth is that it’s not hard to see where the guy was coming from. But even then, this iffy piece of advice should serve as a fundamental lesson for both bulls and bears alike.
How Michael Burry Got His Timing All Wrong
First things first: Burry’s warning at the end of January 2023 didn’t come out of the blue.
The previous couple of quarters had been brutal on markets, and the Federal Reserve was in the midst of an aggressive rate hike campaign to fight inflation. The S&P 500 had dropped 19% over 2022, and it didn’t look like things were getting better any time soon.
Burry clearly took the view that higher interest rates weren’t done inflicting damage on the economy, and he reckoned investors were underestimating the huge levels of risk on the horizon. Burry wasn’t necessarily betting the market would never recover, but he did think things were going to get worse before they got better.
You don’t have to be a religious market watcher to know his timing was pretty off, though.
The S&P 500 ended up rallying in 2023 after Burry’s famous tweet. Then, it rallied again in 2024 and 2025 as inflation leveled out and investors started pouring billions into the AI boom. In fact, it was essentially the market’s insatiable appetite for AI growth that drowned out the risks Burry was eyeing in January 2023.
Burry himself admitted he got the timing wrong and shouldn’t have told investors they should sell. He obviously just got caught up in the sensible logic behind bearish investing: If stocks look expensive, you should probably sell them and wait for the inevitable correction, right?
Well, yes and no.
Corrections are just about always inevitable. What’s not inevitable is timing, and that’s what makes a bearish strategy so difficult. Even if you identify excessive valuations or a bubble that you’re sure is going to pop, it can take months (or even years) before your hypothesis gets proven right.
That was the problem with Michael Burry’s bad call. Imagine you had $100,000 in an S&P 500 index fund when Burry told us all to run. Selling up would have meant an opportunity cost of $90,000 just because you pulled out too early.
If you’re into market forecasts and have a naturally bearish posture, that’s the key lesson from this whole episode. When it comes to playing the market, the question you should be asking yourself isn’t necessarily whether your prediction will be correct. The question you should be asking is whether you can afford to wait for that prediction to turn out to be correct.
But that’s not an argument in favor of simply “going with the flow” or pushing money into a rallying market. There’s an important takeaway for bulls in all this, too.
The Cost of Being Wrong Can Go Both Ways
It’s easy to dismiss Burry’s 2023 warning as bad advice. In fact, it might make you feel warm and fuzzy to know that even Wall Street titans make the wrong call every once in a while. But it also illustrates how difficult it can be to turn a market forecast into your whole investment strategy.
You can’t afford to ignore market risks just because historical trends tell you stocks should keep on rallying. But you also shouldn’t be ignoring productive assets when warning bells begin to sound, either. Most of us should strive to occupy the space in between where these two strategies meet.
When a guy like Michael Burry issues a market warning, listen. Don’t liquidate your portfolio, but use it as an informed prompt to really examine your asset mix. Are you too concentrated on a handful of AI stocks? Do you have enough fixed income to avoid selling if the warnings are right? Are you using leverage?
The answers to these questions will be more useful and more actionable than trying to guess the precise moment a huge correction is going to arrive, and that’s the measured approach that Burry is known for taking.
The guy got it wrong one time, sure. But these things go both ways, and Michael Burry’s 2023 warning shows just how expensive it can be to make a second mistake.
If you’re a bear, it’s easy to spend years waiting for a crash that might never happen. Then again, you don’t have to be able to predict whether Nvidia (NVDA) is going to crash to recognize that an AI-heavy portfolio carries a pretty high risk profile. And bulls get caught out all the time with stubborn positions that all the warning signs had told them to shore up.
The next market crash is coming. It always is. It might be in three months, or it might not happen for another three years. So, the trick isn’t predicting exactly when it happens. The trick is to ensure you’re reading the signs and are stubborn enough to keep on trading even if you make the wrong call. That's the balancing act we've all got to pull off, and it should be your biggest takeaway from Michael Burry's ill-fated crash prediction.
On the date of publication, Nash Riggins did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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