'Big Short' Michael Burry Awakens Ghosts of the 2008 Financial Crisis

(TheStreet) - The sad memories of the 2008 financial crisis resurfaced on the markets after a cryptic tweet from 'Big Short' legend Michael Burry.

Are we about to relive the financial crash of 2008? 

The question is beginning to cross people's minds since a cryptic tweet on May 24 from iconic investor Michael Burry, known to be one of the first to bet against the subprime mortgages in the mid-2000s. Burry accurately predicted the collapse of the housing bubble. The hit movie 'Big Short', where his role is played by actor Christian Bale, depicts his incredible bet against the tide of a euphoric market.

'Plane Crash'

"As I said about 2008, it is like watching a plane crash," Burry posted on Twitter on May 24. "It hurts, it is not fun, and I'm not smiling."

He added no further messages, leaving Twitter users and investors to speculate. The confusion added to the nervousness.

The Nasdaq Composite fell 2.4%, while the S&P 500 slid 0.8%. The Dow rose by 0.2% in a late-day reversal, despite falling as much as 1.6% earlier in the session.

Investors are worried about an overheated economy and fear that a recession is on the horizon. They are currently panicking over every sign suggesting an economic slowdown. Such was the case on Tuesday, May 23, when social network Snap Inc  (SNAP) - Get Snap, Inc. Class A Report issued a profit warning on disruptions in supply chains, soaring prices and Russia's war in Ukraine making companies cautious about spending on digital advertising.

"2008 housing market responsible but 2022 what reasons???" a  Twitter user asked Burry.

"The massive amounts of monroe printing has created a bubble on every single asset. 2008 was nothing compared to what is coming. A home that should be valued at 500k is now 2.2M is insane. The us dollar as a currency is been destroyed," another user responded.


On May 16,  Burry, who runs Scion Asset Management, revealed he shorted Apple. Basically, he is betting on the sharp drop in Apple stock. Hedge fund Scion Asset Management revealed in a filing with the Securities and Exchange Commission that it owned 206,000 put options on Apple shares as of the end of Q1. 

Apple stock is down 21% since January. The iPhone maker also lost the honorary title of the world's most valuable company to oil giant Saudi Aramco. 

Burry will always be remembered as the man who predicted the collapse of the housing bubble, and also as the person who said the mortgage market was a huge and unsustainable house of cards.

By Luc Olinga
May 25, 2022


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