Wall Street’s most revered investor, Michael Burry, appears to agree with the bleak prognosis that the U.S. economy will enter a recession in 2023.
The inflation rate has reached its high, Burry tweeted on January 1. “Of course, this is hardly the cycle’s final zenith. Recession by any measure is projected to hit the United States in the second half of 2023, with CPI falling to negative territory.”
The protagonist’s cryptic tweets anticipate the stock surge and more. Find out.
Michael burry’s bearish prediction in Jan
- For the uninitiated, Burry tweeted “Sell” on Feb. 1 as a premonition. In January, the S&P 500 Index rose 6.18% after a rough 2022.
- Burry suggested a meltdown against the backdrop. The S&P 500 Index graphic projected a 30% drop in seven months starting in March 2022. He noted the bullish crossover before this timeframe.
- Burry tweeted this historical S&P 500 chart just before a bullish crossover.
This time, the investor assured the press things will be different. Burry’s words may suggest a change of heart, but the data suggests he is still intent on selling off the company. Even if his tone was pessimistic, he believes there is little prospect of a stock market rally in the near future due to macro considerations.
In the graph he has made available, Burry draws parallels between the Effective Federal Funds Rate and the S&P 500 Index for the years 2001 and 2002. Similar to the effective interest rate index, the stock market index has been falling. So, Burry makes it plain that when the U.S. Federal Reserve begins to shift its monetary policy, investors shouldn’t put their money (or cryptocurrency) in the stock market or expect it to appreciate in the longer run.
A brief on his outlook on his Twitter post
- The hedge fund manager implied the market was sending a false signal and would sell precipitously.
- Burry, who frequently deletes his tweets and Twitter account, erased it again a day after the tweet and disappeared for a week.
- Burry Returns: Burry reactivated his Twitter account on Tuesday, tweeting a message that implied a change in position.
- “This time is different,” he continued, showing the 2001-02 S&P 500 chart.
- Musk responded immediately. Musk replied to Burry’s quote-tweet with “Cracks me up every time” and the “rolling-on-the-floor-laughing” emoji.
Conclusion
The discussion of whether to purchase or sell stocks continues online, with many investors keeping an eye on Burry’s every word for clues on how to proceed with their portfolios. The investor’s prediction, which seemed to imply that the stock market will crash, has baffled some investors and inexperienced traders.
When Michael Burry shoots, he “generally doesn’t miss,” as one Twitter user put it. In 2005, he started shorting the subprime mortgage market, and in 2007, the housing market bubble burst, which triggered a worldwide economic meltdown.
Thus, while the markets are currently defying Burry’s projections, as they did in the late 2000s, this is merely a short-term picture. Time will again show who is right.
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