Burry Warns Record S&P 500 Highs May Mask Weakness in Individual Stocks
Burry said 140 of 436 stocks were more than 10% below their highs when the index set a record on October 6; he cited valuations, AI-related financing and inflation as risks to long-term returns.
Michael Burry says record highs in the S&P 500 may conceal weakness among individual stocks. He points to stretched valuations, AI-related debt and rising inflation as risks that could contribute to a prolonged bear market. When the S&P 500 hit a record on October 6, Burry’s analysis of 436 stocks showed 140 (32.1%) more than 10% below their highs. Of those, 87 (20%) were down over 20% and 58 (13.3%) were down over 30%.
Only 64 stocks were at record highs. Excluding dividends, inflation-adjusted S&P 500 prices declined approximately 58% from 1929—1949, 53% from 1966—1982 and 40% from the 2000 peak to the 2011 trough. With dividends reinvested, the 1966—1982 decline was roughly 10% and the 2000—2011 loss was 25%; investors who held from 1929 were ahead in real terms by 1949. Burry’s accompanying analysis identifies interconnected AI financing risks involving data center leases, bank loans, private credit, chip guarantees and insurance-backed financing.
He argues that speculation, questionable earnings quality and inflation could lead to another 15—20 years of weak inflation-adjusted stock returns.