Stocks are hitting record highs, but Michael Burry (1) says the path forward may be far less predictable. The investor, best known for calling the 2008 financial crisis and making ‘the big short’ bet against the housing market, resurfaced in 2025 after a long stretch of silence (2) — and he’s now investing his own money and sharing his views on Substack (3).
After a stock market rally fueled in part by easing geopolitical tensions after Iran signaled the Strait of Hormuz was “completely open,” which led to a stabilization of energy markets, Burry suggested the next phase in markets may be defined less by a sudden crash and more by volatility. In his view, markets could continue climbing, but with sharper swings and a less steady climb.
“I think it will be volatile and there will be further new highs and big drops and at some point maybe what has happened will one day look like a top again,” Burry wrote in an April 19 discussion thread (4) with his Substack subscribers.
The S&P 500 recently crossed 7,100 (5) for the first time ever, capping a sharp rebound after a turbulent start to the year. In March, rising tensions tied to the Iran conflict along with a surge in oil prices rattled markets and sent stocks lower. But sentiment has since shifted. The index is now up nearly 4% this year (6) and has climbed about 12% since April 1, marking its strongest monthly gain since the post-pandemic rebound in 2020.
That momentum is hard to ignore, and not everyone sees it as a reason for caution. Tom Lee, co-founder of Fundstrat Global Advisors, has argued the rally could still have room to run. He points to strong market momentum and believes many individual investors have yet to fully re-enter after pulling back earlier this year.
“No one’s ever going to ring the bell at the bottom,” Lee said in a Macro Minute video update (7), adding that the market’s March low didn’t have a clear trigger. Instead, “the market just stopped responding to bad news,” he said.
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That view contrasts with Burry’s, which is less about how high markets can go and more about how uneven the climb might be. Even as stocks move higher, some signs suggest the rally may not be as steady as it looks.
Burry has played down the idea of a sudden crash, writing (4) that “markets have never seen a needle top.” Instead, he points to something less dramatic but difficult to predict. He also quoted, in his latest Substack post, a March post in which he said “shorts are not forever,” suggesting that betting against the market may work for only a limited time.
Other data reflects that same tension. Stocks are trading at relatively high valuations. The S&P 500’s price-to-earnings ratio is currently near 30 (8) — meaning investors are paying a premium for future growth. At the same time, much of the rally has been driven by a small group of large tech stocks (9), which can mean the market will be more fragile if those names fall for a prolonged period.
The CBOE Volatility Index, often called the market’s “fear gauge,” (10) has started to edge higher, though it remains relatively low. In the past, that mix of calm and rising volatility has made markets more sensitive to sudden shifts.
Some strategists, including those at Goldman Sachs, say the rally is supported by stronger earnings expectations, with analysts raising forecasts for several major companies. Still, others warn against (11) getting too aggressive, especially as uncertainty around the war continues.
In past cycles, Burry has focused less on headlines and more on where risk is building beneath the surface, particularly in the behavior of lenders and investors willing to take on more exposure as markets rise.
“What you want to watch are the lenders, not the borrowers,” Burry has said (1), arguing that periods of strong growth can sometimes mask a gradual loosening of standards and an increase in risk-taking.
That doesn’t necessarily signal an immediate downturn. But it does reinforce the idea that even in a rising market, conditions can shift quickly and not always in obvious ways.
For investors, that means the next stretch may be more about navigating uncertainty than predicting a clear direction for markets. Sitting entirely on the sidelines could mean missing further gains if the rally continues. But jumping in aggressively after a rapid run-up can also leave portfolios exposed to short-term swings.
Financial experts often point to a more balanced approach in uncertain markets: staying diversified, avoiding all-in bets based on short-term moves and focusing on long-term goals rather than trying to time every shift. For those unsure of how to adjust their strategy, speaking with a financial advisor or working with a portfolio manager can help ensure decisions are aligned with long-term financial goals.
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Fox Business (1); Business Insider (2),(4); Substack (3); Yahoo Finance (5),(6); MarketWatch (7); Multpl (8); The Wall Street Journal (9); Investopedia (10),(11)
This article originally appeared on Moneywise.com under the title: ‘Big Short’ investor Michael Burry just repeated ‘shorts are not forever’ — here’s why and what he sees coming next
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