Full Breakdown
Michael Burry Warns of a Potential Market Top as the S&P 500 Hits New Records
8/5/2026, 4:28:17 PM
Core Event
American investor Michael Burry, famed for “The Big Short,” reiterated his bearish view of the U.S. equity market despite the S&P 500 climbing to a fresh record high. In a Substack post released this week, Burry said he believes the market may be nearing a “major top” and that a crash comparable to the 1987 “Black Monday” remains possible. He cautioned that continued rally-driven inflows could further inflate valuations.
Market Context and AI-Related Skepticism
The rally was driven by stronger-than-expected corporate earnings, expectations that the Strait of Hormuz would reopen to shipping traffic, and declining oil prices. The Nasdaq Composite posted gains of roughly 2.6%-2.7%, extending a near-5% rise over the first two trading days of the week. Burry has repeatedly warned that the surge in artificial-intelligence-related investments is being propped up by financing structures he deems unsustainable, rather than solid demand fundamentals.
Short Positions and Profitability
Burry disclosed that he continues to hold short positions in the iShares Semiconductor ETF (SOXX), Micron Technology, Nvidia, Caterpillar, Palantir, Tesla, and Applied Materials. He noted that most of these shorts remain profitable, with the Nvidia position the sole loss-making trade. He added that he would exit any position that moves decisively against him.
Official Statements & Responses
In his Substack commentary, Burry explained that falling volatility prompts volatility-targeting funds to increase leverage, which in turn attracts additional momentum-driven capital, creating a self-reinforcing upward cycle. He emphasized that while fresh capital may flow into the market as it reaches new highs, the underlying dynamics could set the stage for a sharp correction. Burry also reminded ordinary investors that short selling “is not for everyone.”
Verbatim Quotes
- “I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market,” — Michael Burry, american investor
- “Again, shorting is not for everyone,” — Michael Burry, american investor
- “Remember, when the market keeps rising as volatility drops, it forces volatility-target funds to add leverage, while also attracting more momentum-driven capital into the market.” — Michael Burry, american investor
