By Intense Life Desires 
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Michael Burry, the investor who accurately predicted the U.S. housing crash in 2008, is not feeling good about the state of the stock market these days.
The investor, known as the inspiration for the 2015 film The Big Short, which looked at his prediction of the subprime mortgage crisis, said he believed the market’s long-running rally is about to end and a significant decline could be on the way.
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In a post on Substack, Burry said he was having a major feeling of deja vu when it came to the market.
“With what is happening in the market the last week, that I had lived this before suddenly dawned on me,” he wrote (1). “The NASDAQ 100, complete reversal … I am calling something. The market has jumped the shark.”
Part of the reason for his bearishness is the resemblance, he says, between today’s market and the final parts of the dot-com bubble. Investors, he said, are ignoring economic data and global events and focusing myopically on just one thing instead: AI, in this case.
“Absolutely non-stop AI. Nobody is talking about anything else all day,” Burry wrote after listening to financial radio coverage on a long drive (2).
“Stocks are not up or down because of jobs or consumer sentiment. They are going straight up because they have been going straight up. On a two letter thesis that everyone thinks they understand. … Feeling like the last months of the 1999-2000 bubble.”
But this isn’t the first time he has made predictions about an imminent crash, even if he has a better batting average than most.
The boy who cried wolf
Burry conceded in his post that he has incorrectly forecasted market crashes in the past. He compared bitcoin to the housing market in March of 2021 (3). Three months later, he warned of a massive bubble and looming market crash that he said would be the worst in history (4).
Neither of those crashes happened, and Burry took ownership of that in his post (5), but also pointed to his track record.
“I am now a meme for the number of times I have called a crash,” he wrote. “I have become the boy who cried wolf. History is written not by the victors, but by those that control the pen, and social media has that pen right now, it seems.
“Still, I got it right in 2000, got it right in 2007. Got it right in 2019, helped by COVID, and I called the meme stock crash in mid 2021. I called the bank stock run in 2023.”
Read More: Non-millionaires can now hoard property like the 1% — how to start with as little as $100
Not alone
Burry isn’t the only stock market veteran who is warning of a forthcoming correction.
On May 8, Paul Tudor Jones told CNBC that the current environment on Wall Street felt a lot like 1999, the last strong year before the dot-com crash (2). While Jones said he expects the current rally to last another year or two, he worries about how high valuations might rise in that time.
“Just imagine the stock market went up another 40%,” Jones said. “The stock market GDP is going to probably be good lord 300%, 350%. You just know that there’ll be some … breathtaking kind of corrections.”
This ties into something known as the Buffett Indicator, which tracks the ratio of stock value to GDP. As the name implies, Warren Buffett himself coined the term — and it tracks whether, in his view, the stock market is overvalued. As of May 20, the indicator sat at ‘strongly overvalued,’ or at 214.14% (6).
This means that the stock market is worth over two times America’s GDP.
How to survive a stock market crash
Despite mounting AI-driven layoff fears, sticky inflation and ongoing geopolitical tensions in the Middle East, the stock market has remained surprisingly resilient. That disconnect on Wall Street has left many uneasy and explains why prominent investors like Michael Burry continue to warn of the risks of a sharp correction.
But preparing for a potential market crash doesn’t necessarily mean panic-selling your portfolio or trying to perfectly time the market. More often, it means returning to the fundamentals — building a financial cushion, protecting your downside and diversifying beyond stocks alone.
Keep a cash buffer
When markets turn volatile, cash suddenly becomes one of the most valuable assets you can have. Financial experts generally recommend keeping at least three to six months’ worth of expenses in easily accessible accounts — although some, like Suze Orman, recommend a staggering three to five years’ worth, especially for retirement.
This buffer can make a massive difference during market downturns because it buys you time. Instead of being forced to sell investments at a loss just to cover monthly bills, a healthy emergency fund gives you breathing room while markets recover. Aside from protecting your wealth, it can also be tapped in the event of a sudden job loss or medical emergency.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s ten times the national deposit savings rate, according to the FDIC’s March report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
Diversify your portfolio
One of the biggest mistakes investors sometimes make during bull markets is assuming that stocks alone will continue to carry their portfolios higher forever. But when volatility spikes, concentrated portfolios can unravel quickly.
That’s why diversification matters.
Diversification isn’t just about owning more investments — it’s about owning assets that don’t all move in the same direction at the same time. Spreading your money across different asset classes can help reduce the impact of any single market downturn and smooth out long-term returns. During periods of economic stress, some alternative assets can hold up better than traditional equities, helping offset losses elsewhere in your portfolio.
A precious metal safe haven
Gold has long earned its reputation as a defensive asset during periods of uncertainty. When inflation rises, recession fears grow or markets become unstable, investors often turn to precious metals as a store of value.
Part of gold’s appeal is that it doesn’t move in lockstep with the stock market. Gold’s value isn’t directly tied to company earnings or central bank decisions, which can make it attractive during periods of market stress. It also can’t be printed at will, like the U.S. dollar could be, during a downturn.
One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with Goldco.
With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re not sure how the precious yellow metal could fit into your portfolio, you can download your free gold and silver information guide today to learn more.
Diversify with real estate
Real estate provides something many crave during uncertain markets — tangible assets with income potential. Rental income, distributions, and long-term appreciation can create an additional stream of returns that isn’t directly tied to daily stock market volatility.
Crowdfunding platforms like Arrived allow you to invest in shares of vacation and rental properties across the country with as little as $100.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation.
Arrived distributes any rental income generated by properties to investors monthly, allowing you to potentially set up a passive income stream without the extra work that comes with being a landlord of your own rental property.
The best part? For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.
Those looking to further diversify their portfolios may also consider private real estate platforms focused on income-producing properties in different verticals. After all, there are more types of real estate out there than simply residential — although the buy in can be higher.
Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.
Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.
With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.
— With files from Chris Morris
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see oureditorial ethics and guidelines.
Business Insider(1),(3); CNBC(2); Fortune(4); Substack(5); thebuffettindicator.com (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.