Tuesday, May 21, 2024

Investors would have made more money buying the S&P 500 instead of following ‘Big Short’ investor Michael Burry’s tweet warnings, an expert says


Michael Burry attends the “The Big Short” New York premiere at Ziegfeld Theater on November 23, 2015 in New York City.Jim Spellman/Getty Images

  • Investors would have made more money buying the S&P 500 than following Michael Burry’s stock-market warnings, said Charlie Bilello, chief market strategist at Creative Planning.

  • The index had an “average 6-month annualized gain of 34%” in the periods following a selection of 2019-2023 Burry tweets, he said.

  • “Don’t make changes in your portfolio based on a tweet,” he said in a post on X.

Investors would have been better off buying the S&P 500 instead of adjusting their portfolios in response to “Big Short” investor Michael Burry’s stock-market warning tweets in recent years, according to one markets expert.

“Simply buying the S&P 500 instead of following Michael Burry’s stock market warnings would have made an investor money each time with an average 6-month annualized gain of 34%. Don’t make changes in your portfolio based on a tweet,” Charlie Bilello, chief market strategist at Creative Planning, said in a post on X.

He was referring to gains delivered by the benchmark index in the periods that immediately followed a selection of Burry’s tweets between 2019 and 2023.

Burry has tweeted a string of dire warnings in recent years about looming equity-market crashes.

The Scion Asset Management chief has attracted a cult following since he anticipated the housing-market crash that precipitated the 2008-2009 global financial crisis. His billion-dollar bet against the bubble was chronicled in the book and the movie “The Big Short.”

In the summer of 2021, he famously cautioned of the “greatest speculative bubble of all time in things,” and predicted the “mother of all crashes”. More recently, in February this year, the fund manager issued a grave warning with a single word: Sell.”

He was likely urging investors not to be fooled by this year’s rebound in equities, largely fueled by falling inflation, a  tech boom, and market expectations that the Federal Reserve could soon pivot from interest-rate hikes to cuts.

However, US stocks have continued to maintain a mostly upbeat tone so far this year, defying bearish predictions from Burry and other experts including Morgan Stanley’s Mike Wilson and economist David Rosenberg.

The S&P 500 share index has climbed more than 16% so far in 2023, thanks in no small part to investor excitement over the rise of artificial-intelligence technologies. The successful release of OpenAI’s ChatGPT sent traders piling into AI-focused stocks, including Nvidia, Apple, and Microsoft.

But Burry hasn’t been convinced by the rally. He’s warned of an economic downturn since the first half of 2022, leading him to place a bet with a notional value of $1.6 billion against the S&P 500 and Nasdaq-100 last quarter.

Read the original article on Business Insider





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