Michael Burry's Latest Warning: Stock Market 'Feeling Like the Last Months' of Dotcom Bubble

• The PHLX Semiconductor Index rose nearly 70% between late March and the article date, with stocks like Intel and Micron tripling and doubling respectively in six weeks
• Burry warns against shorting tech stocks due to expensive put options and advises instead to 'reject greed,' trim exposure, and raise cash for future opportunities when valuations improve
• Market analysts note the SOX index is 33% above its 200-day moving average, a level previously hit only in December 1998, March 2000, and November 2002, all significant market turning points

Summary: Michael Burry Warns of Dotcom Bubble Parallels in AI Stock Rally

Key Warning: Michael Burry, renowned for predicting the 2008 housing crash, issued stark warnings about current market conditions resembling the final months of the 1999-2000 Dotcom Bubble. In recent Substack posts, he urged investors to "reject greed" and reduce exposure to AI-driven stocks.

Market Performance: Since late March, tech stocks have surged dramatically:

• PHLX Semiconductor Index (SOX): up nearly 70%
• Intel and Micron: tripled and doubled respectively in six weeks
• Chip stocks traded 33% above 200-day moving average—a level only reached three times previously: December 1998, March 2000, and November 2002

Investment Advice: Burry recommends against shorting tech stocks due to expensive put options and potential pain from direct shorts. Instead, he advocates:

• Reducing positions in parabolic stocks "almost entirely"
• Raising cash for future opportunities
• Derisking and diversifying portfolios

Market Context: The AI rally has drawn multiple Dotcom comparisons from analysts. Bespoke Investment Group and Renaissance Macro CEO Jeff DeGraaf noted similar warning signals last triggered in 1996, 2000, and 2022. DeGraaf cautioned against premature selling, suggesting investors "wait for deterioration and sell on the way down."

Historical Precedent: The original Dotcom crash wiped out many investors, with survivors like Microsoft and Cisco taking over 25 years to recover peak valuations.

Bottom Line: Burry believes current stock movements are momentum-driven rather than fundamentals-based, warning that "the resolution will be to much lower prices" regardless of near-term continuation.