Michael Burry. Jim Spellman/Getty Images
Michael Burry stated that the recent stock surge reminded him of dot-com's bubble.
The Big Short investor compared options-trading boom with debt-fueled speculation of the 1920s.
Burry warned many times about a historic crash of the market.
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Michael Burry stated that the current market boom is reminiscent of the dotcom bubble. He compared the options-trading frenzy with the rampant speculation that led to the Great Depression in a series of tweets.
Scion Asset Management chief took a screenshot from Financialweb.com's stock charts and tweeted it. The defunct company behind Stock Detective and other financial-information websites saw its share price nosedive from a high of $28 to a fraction of a cent following the dot-com crash.
Burry stated that this chart was very common back in the day. It looks vaguely familiar.
The hedge fund manager also compared the bull markets of the 15 years up to 2000 with the stock market's rise over the past 15 year. He noted a 94% correlation in the performance of the Nasdaq 100 over each period, and a 95% correlation with the S&P 500 index.
Scion's chief also made a comparison between the rise in trading options on meme stocks like AMC Entertainment and the mass speculation that followed the 1929 Wall Street Crash. He juxtaposed an article on options mania with a quote from Leroy Peavey, a statistician in November 1929. Peavey attributed the 1929 market crash to a wave in leveraged speculation, which attracted "elevator boys," "typewriter girls," and even schoolchildren.
Burry is most well-known for his prediction of the collapse in the US housing bubble in mid-2000s and his betting on a rise in subprime mortgage defaults. The book "The Big Short" and the movie "The Big Short" chronicle his huge wager.
He also purchased a stake in GameStop, and sent several letters to its board in 2019. This laid the foundation for the 2019 short squeeze on the stock and the wider meme-stock trend. Recently, he tweeted a photo of a subpoena from the Securities and Exchange Commission directing him to cooperate in the regulator's investigation into GameStop.
Burry has been warning about Twitter for months. He warned that dangerous levels of speculation on meme stocks, cryptocurrency, and other assets could lead to the "mother crash." Scion had been betting against Elon Musk and Cathie wood's Ark Invest by June 30.
Continue reading: Erik Gordon, a veteran professor, explains why he doesn’t anticipate a stock market crash. He calls Cathie Wood an dot-com throwback for her grand claims and warns against investing in meme stocks