Michael Burry has urged investors to pare back positions in technology stocks, arguing that markets are exhibiting features associated with dangerous speculative manias. In a recent Substack note, the investor - known for calling the 2008 housing collapse - advised market participants to "reject greed" as excitement around artificial intelligence and momentum-driven trading elevate valuations.
In his post, Burry offered a practical prescription for most investors: reduce exposure to stocks broadly and to technology names in particular. "An easier way for most is to simply reduce exposure to stocks, to tech stocks in particular. For any stocks going parabolic reduce positions almost entirely," he wrote.
He also disclosed that he maintains "a significant leveraged short position" on a basket of companies he believes are depressed and cheap - a tactic he has employed in prior market cycles. However, Burry cautioned that taking bearish positions is not suitable for the average investor and carries material risks.
"Shorting is not the answer. It is not something most people should ever do," he wrote. "Right now it is expensive, in general, to buy put options and directly shorting stocks can still cause significant pain."
Burry emphasized that his recommendation for most investors is not to pursue short bets, but rather to raise cash - preserving capital to deploy when market conditions present clearer opportunities. "The idea is to raise cash, and prepare to put it to work when it makes more sense to do so," he said.
The investor has repeatedly likened the market's intense focus on AI to the late stages of the dot-com boom. Most recently, he drew a parallel between current moves in the Philadelphia Semiconductor Index (SOX) and the run-up in technology stocks before their collapse in March 2000, saying the present environment feels like "the last months of the 1999-2000 bubble."
Major equity benchmarks have continued to reach fresh highs as investors pile into semiconductor makers and other large-cap technology companies. Burry's commentary frames these rallies as driven in part by momentum trading and enthusiasm around AI, factors he views as inflating valuations.
Context and guidance
- Burry's core guidance for most investors is capital preservation through reduced exposure to stocks, especially technology names showing parabolic moves.
- He reports holding a significant leveraged short position in a selection of companies he regards as undervalued, though he warns shorting is generally impractical for most people.
- He recommends raising cash now to have dry powder available for later deployment.
Market signals cited
- Persistent record highs in major stock indexes.
- Strong investor demand for semiconductor stocks, referenced via the Philadelphia Semiconductor Index (SOX).
- Broad enthusiasm around AI and momentum-driven trading as valuation drivers.