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- The market might bottom out when people renounce tech stocks, crypto, and NFTs, Michael Burry said.
- "The Big Short" investor predicts weaker consumer demand and bloated inventories this Christmas.
- Burry dismissed the rebound in stocks, noting there were lots of brief rallies in past bear markets.
Michael Burry warned the market downturn might only end when people swear off owning tech stocks, cryptocurrencies, and non-fungible tokens (NFTs).
The investor of "The Big Short" fame also predicted consumer spending would slump, and retailers would be lumped with excess inventory, during the Christmas period. Moreover, he dismissed the recent rebound in stocks as a temporary respite. He made the comments in a string of recent tweets that he's since deleted.
Burry is best known for predicting and profiting from the collapse of the housing bubble, inadvertently paving the way for the meme-stock boom by investing in GameStop, and betting against Elon Musk's Tesla and Cathie Wood's flagship Ark fund last year.
Sentiment needs to sour
"I don't think this is going to be over until everybody swears they will never own an NFT, they will never own crypto, and they will never own a technology stock," Tom Siebel, a software billionaire and the CEO of C3.AI, said during a recent Barrons conference.
Burry relayed that quote in a tweet over the weekend, and noted that widespread investor apathy marked the bottom of previous market downturns. "Such was the sign in 2002, 1932, and '74," he said.
The Scion Asset Management boss attached Siebel Systems' stock chart, which showed the software company skyrocketed in value during the dot-com bubble, only to give up all of its gains by the second half of 2002.
Burry also highlighted a New York Times article from 1974 that underscored the lack of sympathy felt by everyday Americans for Wall Street stockbrokers.
The hedge-fund manager previously cautioned asset prices might not reach a nadir until next year, given the length of the recent bull market.
"The theater took more than a decade to overstuff," he tweeted. "Not likely everyone gets out in less than a year."
Unhappy Christmas
Burry rang the recession alarm, and issued a bleak holiday prediction, in another recent tweet.
"Q. In 2022, what brings a Christmas in July?" he wrote. "A. A disinflationary overstock consumer recession at Christmas."
The Scion chief appears to expect a drop in consumer spending to drag down economic growth later this year, and a mixture of weaker demand and retailers' bloated inventories to temper inflation.
Burry has previously warned that US households — faced with soaring food, fuel, and housing costs — are on track to exhaust virtually all of their savings by the fourth quarter of this year.
He has also flagged shrinking personal savings, a declining savings rate, and ballooning credit-card debt as harbingers of a consumer recession and pressure on companies' earnings.
Relief will be brief
Burry cautioned investors not to get too excited about stock rallies, noting there were dozens of sharp rebounds during previous market downturns.
"Who knew this year was so much fun because of all the doomed rallies?" Burry tweeted. "Recall, 1929-1932 top to bottom, 10 rallies >10%, averaging 23%. 2000-2002, 16 rallies >10%, averaging 23%."
The Scion chief has previously suggested the S&P 500 could plummet 52% from its current level to 1,862, based on the benchmark index's performance in past bear markets.