The ‘Big Short’ fame Michael Burry has argued in a report that crypto and stocks haven’t come closer to hitting rock bottom and that driving prices may even get lower. Last year too, he called the stock and crypto markets the greatest speculative bubbles of all time last year.
He tweeted, “Adjusted for inflation, 2022 first half day S&P 500 25-26%, and Nasdaq down 34-35%, Bitcoin down 64-65%”. That was multiple compression. Next up, earnings compression. So maybe halfway there.”
Last year in June, he described the stock market as “the greatest speculative bubble of all time in all things” and warned crypto investors that “the mother of all crashes” was approaching.
Since then, the S&P 500 has dropped more than 12%, even the blue-chip index is down 21% over the past six months. However, on Thursday, Burry warned that there could be even more pain ahead.
Burry’s predictions turned out to be true. If S&P 500 has another 25% fall ahead of it, even after logging its worst first-half performance since 1970, the index could plunge as low as 2,800 this year.
Even though this sounds worse, it’s still not as bad as what Burry predicted back in May, when he said that the S&P 500 could dip as low as 1,862, based on an analysis of past bear markets.
Note that Burry isn’t the only one predicting the worst for stocks. The chairman of Sanders Morris Harris, George Ball, also said that he estimates the S&P 500 falling to 3,100 this year.
He made the prediction on the basis that the Federal Reserve was continuing to raise interest rates to combat inflation.
Ball said, “We do not believe the stock market has bottomed yet, and we see further downside ahead.” Ball further added that the Federal Reserve’s strict yet necessary inflation-fighting measures can possibly suppress corporate earnings and push stocks lower.
Like Burry, Ball said that the growing cost of borrowing from Fed Reserve interest rate hikes and slowing consumer spending, will hurt corporate profits and reduce the stock prices further.
Also read: JP Morgan Predicts Further Upside in Crypto is Limited
