Michael Burry compares market to 1929, deletes Twitter account

Burry compares market to 1929 and deletes his Twitter account

Michael Burry, the investor who made his name predicting the subprime crisis, posted a comparison of the current market with the 1929 crash and then deleted his Twitter account. It is not the first time. The repeated gesture has reignited the same old question: a serious warning, or a character who needs to return to the stage? What does remain is the content of the message, which has been circulating in screenshots these days because someone archived it before it disappeared.

The comparison he draws is the kind that lingers. According to the analysis he shared, in Microsoft's case, from peak to trough of a fall, 5.2 times all of its shares outstanding were traded. Today, over the stretch covered so far, only about 0.5 times that volume would have changed hands. In trench language: if the pattern repeats, the market still has a long way to go on the selling front. A calculation that, broken down stock by stock, produces vertigo that does not fit in a tweet.

The timing problem: getting the what right is not getting the when right

Burry has been warning of a crash for years. And there lies the classic trap of the trade: repeat the prophecy until one comes true. The investor's own track record illustrates it. He went heavily short Tesla betting on a big drop, and since then the stock has practically doubled in price. It was never clear whether he ultimately won or lost on that position, and he himself later admitted the size of the bet had been greatly exaggerated.

The lesson is the usual one, and no less true for being worn: the market can stay irrational longer than you can stay solvent. An asset can be overvalued to the point of absurdity and keep rising for months or years. Those who get out too early look foolish, even if they turn out to be right later. It happens to everyone.

Where to put your money while inflation devours cash

The underlying debate is not whether there is a bubble. It is what to do with your money while there is one. Going to cash sounds prudent until inflation —with 9% on the table— runs you over. Taking refuge in gold or real estate does not solve it either: the metal is illiquid, owning it can be persecuted, and its price has been inflated for years by those who hedged earlier. Real estate, with the market as it is, is another leap into the void.

Hence the famous TINA (there is no alternative). With rates where they are, idle money loses value every day and conservative options do not pay off. Those who sell to protect themselves accept a certain loss to avoid a possible one. And that is, perhaps, the most effective trap this decade has built.

Buffett's warning nobody wants to hear

In parallel, another veteran voice issued its own warning. Warren Buffett pointed out how anomalous the number of people trading stocks is: he bought 14% of a company in two weeks. That level of turnover points to a market full of nervous hands checking their phones every minute, convinced that money is made by staying active. That is not investing. It is something else.

Buffett himself, meanwhile, is hoarding liquidity: after his latest purchases he holds close to 85% in cash, with token positions in beaten-down stocks. His historical logic is to buy while falling and sell while rising. Applying common sense, he says, is all it takes. The problem is that common sense is scarce when the index is hitting highs.

Economists and their seven crises out of the last three

Irony runs through the whole discussion: economists have predicted seven of the last three crises. And yet, every time someone with a track record warns, the market rises another notch. Statistics, that science of bending numbers to the client's taste, allows you to defend almost any thesis. The S&P could crash tomorrow or in five years. Nobody knows.

The only certainty is that what goes up comes down, and that when the big index tumbles, everything else will feel it many times over. Meanwhile, the machinery keeps turning, the warnings pile up, and money looks for somewhere to hide from an inflation that shows no mercy. Burry has already deleted his account. He will be back, as he always has. The question is whether this time the chart will prove him right before it takes that right away.