The investor who became famous for predicting the 2008 Global Financial Crisis — and who inspired the film The Big Short — has just made another bold move. Michael Burry has placed a massive $1.5 billion bet against two of the world’s biggest AI companies.
His move shook Wall Street and sparked new fears that the current artificial intelligence stock boom might be another bubble.
A warning sign from history
In recent months, US tech giants — often called the “Magnificent Seven” — have seen their share prices soar as billions pour into AI projects. But some analysts say the hype may have gone too far. Burry’s latest move suggests he agrees.
He hasn’t explained his reasoning publicly, but last week he posted a cryptic message on X: “Sometimes, we see bubbles. Sometimes, the only winning move is not to play.”
Markets react
His bet immediately rattled investors. Shares in Palantir, one of the AI firms, dropped almost 9 per cent overnight — even though the company had just reported strong profits. Palantir’s CEO fired back, calling the short sellers “bat**** crazy” live on CNBC.
Why it matters for everyday Australians
We’ve seen this movie before. When one sector surges on hype — like tech or property — it can’t last forever. Eventually, prices fall back to reality.
This is a reminder to Australian investors and SMSF trustees to stay balanced:
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Don’t chase trends that everyone’s talking about.
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Make sure your portfolio includes real, tangible assets.
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Remember that what goes up fast can also fall fast.
The takeaway
Burry’s warning shouldn’t cause panic, but it’s worth paying attention. A major move by a respected global investor is often an early warning sign that markets may be overheated.
Earlier in 2024, Burry made a significant increase in his exposure to gold, investing millions through the Sprott Physical Gold Trust — a signal that he was looking for safety outside the share market. Whether or not he’s still holding that position today, the message remains clear: when the man who predicted the 2008 crash shifts heavily into gold and bets against the AI boom, he’s preparing for turbulence.
For SMSF trustees and everyday investors, this isn’t a time to panic — it’s a time to pause, review and prepare. The best defence against market bubbles is still the same: diversification, patience and good advice — not gambling on the next big thing.