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‘The Big Short’ investor Michael Burry warns speculation has reached a century high – and points to Rivian’s $100 billion IPO as a prime example

Business
Michael Burry big short
Michael Burry.

  • Michael Burry warned speculation is at a historic high, and valuations have exceeded dot-com levels.
  • “The Big Short” investor pointed to Rivian, a tiny startup valued at more than $100 billion.
  • Burry noted that real US wages have fallen this year, and that inflation hammers the poor.

Market speculation has reached its highest level in a century, and asset valuations are more excessive today than during the dot-com bubble, Michael Burry warned in a tweet on Thursday.

“More speculation than the 1920s,” he said, referring to the years leading up to the Great Crash in 1929. “More overvaluation than the 1990s.”

The investor of “The Big Short” fame highlighted a Wall Street Journal story about Rivian, an electric-vehicle startup that has only made 156 vehicles and generates virtually no revenue. Regardless, it commands a market capitalization north of $100 billion after going public this week.

In another Thursday tweet, Burry noted that US wage growth has lagged inflation this year, and emphasized that price increases disproportionately affect the poor.

“American real wages – adjusted for inflation – are down 2.2% since Jan 1,” he said. “Seems the ONLY truly meaningful thing that’s down this manic, manic year. Inflation is a massively regressive tax. Never forget it.”

The Scion Asset Management boss has set his sights on electric-vehicle companies and inflation this week. He tweeted that Tesla CEO Elon Musk might be selling stock to cover his personal debts, and raised the prospect of the automaker’s stock plunging 90%.

Moreover, he noted that month-on-month inflation hit a 13-year high in October primarily because of rising energy prices and factors unrelated to the US economy reopening from the pandemic.

Burry is best known for calling the mid-2000s housing bubble and making a fortune by betting on its collapse. He’s been urging casual investors not to gamble on meme stocks, cryptocurrencies, and other risky assets for months.

“All hype/speculation is doing is drawing in retail before the mother of all crashes,” he tweeted in June. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries.”

Read more: The founder of a Michael Burry subreddit explains ‘The Big Short’ investor’s unique appeal – and reveals the stocks hidden in his tweets

Read the original article on Business Insider
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