Michael Burry and Jeremy Grantham are bracing for a devastating crash across financial markets. They’re far from the only experts to warn that rampant speculation fueled by government-stimulus programs can’t shore up asset prices forever.
Billionaire investors Leon Cooperman, Stanley Druckenmiller, and Jeffrey Gundlach have also sounded the alarm. The same is true for “Shark Tank” star Kevin O’Leary, market prophet Gary Shilling, and “Rich Dad Poor Dad” author Robert Kiyosaki.
Michael Burry described the state of markets in June as the “greatest speculative bubble of all time in all things,” and warned that retail investors are buying into the hype around meme stocks and cryptocurrencies before the “mother of all crashes.”
The investor of “The Big Short” fame, who runs Scion Asset Management, pointed to Tesla, GameStop, bitcoin, dogecoin, Robinhood, and the red-hot US housing market as signs of speculative excess earlier this year.
Jeremy Grantham labeled the market a “fully fledged epic bubble” in January, and described it as the “real McCoy.”
“When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years,” the legendary investor and GMO cofounder continued.
“We will have to live, potentially, possibly, with the biggest loss of perceived value from assets that we have ever seen,” Grantham added.
Leon Cooperman expressed deep concerns about financial markets in May.
“Everything I look at would suggest caution, intermediate to long term, would be the rule of the day,” the billionaire investor and Omega Advisors boss said. “When this market has a reason to go down, it’s gonna go down so fast your head’s gonna spin.”
However, Cooperman described himself as a “fully invested bear” because that factors that typically cause bear markets — rising inflation, recession fears, a hostile Federal Reserve — weren’t present.
Stanley Druckenmiller said in May the current bull market reminds him of the dot-com boom, but he cautioned that asset prices could continue rising for a while.
“I have no doubt that we are in a raging mania in all assets,” the billionaire investor and Duquesne Family Office chief said. “I also have no doubt that I don’t have a clue when that’s gonna end.”
“I knew we were in a raging mania in ’99, but it kept going on, and if you had shorted the tech stocks in mid ’99, you were out of business by the end of the year,” Druckenmiller added.
However, the investor indicated he would pull his cash out of equities in a matter of months.
“I will be surprised if we’re not out of the stock market by the end of the year, just because the bubbles can’t last that long,” he…