Michael Burry Warns of a 1987-Style Crash. Here Are 2 Index ETFs to Buy Anyway.
A 1987 crash looks unlikely, but a dollar-cost averaging strategy still is most investors' best bet.
Overview
Investor Michael Burry, who made a name for himself by successfully profiting from the housing market collapse, has been one of the biggest bears when it comes to investing in artificial intelligence (AI) stocks. He holds short positions in several large tech stocks, including chip giant Nvidia, memory maker Micron, AI operating platform Palantir, and Elon Musk's Tesla. In a bet against the entire AI infrastructure trade, he is also short the iShares Semiconductor ETF.
However, Burry took his negative views to a new level recently, calling for a potential stock market crash reminiscent of the one from 1987. Known as Black Monday, the Dow Jones Industrial Average, which was widely considered the benchmark index at the time, dropped a record 22.6% on Oct. 19, 1987. A combination of a long bull market, rising interest rates, international tension in the Persian Gulf (sounds familiar), the start of computerized trading, and hedging strategies that led to more selling are often cited for the crash.
Details
In a post on Substack, Burry wrote: "I continue to believe it is possible we are near a major top, and [possibly] a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market. ... Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play."
Source
Originally published at www.fool.com.