Michael Burry and Jeremy Grantham are bracing for a devastating crash across financial markets. They’re far from the only experts to warn that rampant speculation fueled by government stimulus programs can’t shore up asset prices forever.
The billionaire investors Leon Cooperman, Stanley Druckenmiller, and Jeffrey Gundlach have also sounded the alarm. The same is true for the “Shark Tank” star Kevin O’Leary, the market prophet Gary Shilling, and the “Rich Dad Poor Dad” author Robert Kiyosaki.
Here are the most striking warnings from these 8 market experts:
Michael Burry
Burry described the markets as the “greatest speculative bubble of all time in all things” in June 2021, and said retail investors were buying into the hype around meme stocks and cryptocurrencies before the “mother of all crashes.”
In the weeks and months before that tweet, the investor of “The Big Short” fame, who runs Scion Asset Management, pointed to Tesla, GameStop, bitcoin, dogecoin, Robinhood, and the red-hot US housing market as signs of speculative excess.
Grantham said in January 2021 the market was a “fully fledged epic bubble” and described it as the “real McCoy.”
“When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years,” the legendary investor and GMO cofounder said.
“We will have to live, potentially, possibly, with the biggest loss of perceived value from assets that we have ever seen,” Grantham added.
“Everything I look at would suggest caution, intermediate to long term, would be the rule of the day,” the billionaire investor and Omega Advisors boss said. “When this market has a reason to go down, it’s going to go down so fast your head’s going to spin.”
But Cooperman described himself as a “fully invested bear” because factors that typically cause bear markets — rising inflation, recession fears, a hostile Federal Reserve — weren’t present.
Druckenmiller said in May 2021 that the bull market reminded him of the dot-com boom, but he cautioned that asset prices could continue rising for a while.
“I have no doubt that we are in a raging mania in all assets,” the billionaire investor and Duquesne Family Office chief said. “I also have no doubt that I don’t have a clue when that’s going to end.
“I knew we were in a raging mania in ’99, but it kept going on, and if you had shorted the tech stocks in mid-’99, you were out of business by the end of the year,” Druckenmiller added.
The investor indicated he would pull his cash out of equities in a matter of months.
“I will be surprised if we’re not out of the stock market by the end of the year, just because the bubbles can’t last that long,” he said.
The billionaire investor and DoubleLine Capital boss said that claiming the stock market was “anything other than very overvalued versus history” was “just to be ignorant of all the metrics of valuation.” He predicted that stocks would fall by upwards of 15% when the downturn comes.
Gundlach, known as the “bond king,” predicted that the retail investors who had piled into meme stocks and other speculative assets wouldn’t stick around once prices started dropping.
“We’ll have a tremendous unwind of a lot of the money that thinks that the stock market is a one-way thing,” he said.
O’Leary said in April 2021 that stocks would eventually crumble, but he framed the downturn as an educational opportunity for rookie investors.
“Buying the dip is more rock-and-roll, but what invariably happens is you go through a massive correction and you learn a very important lesson,” the “Shark Tank” star and O’Leary Funds chief said.
“The generation that is trading right now has never gone through a sustained correction. It’s coming — I don’t know when, I don’t know what’ll trigger it, but they will learn their lesson,” he continued.
“If you have a lot of leverage on, it’s a hell of a lesson because you end up in a negative net-worth position,” O’Leary added. “But you do learn from it.”
“Biggest bubble in world history getting bigger,” the personal-finance guru and author of “Rich Dad Poor Dad” said. “Biggest crash in world history coming.”
Kiyosaki has accused the Federal Reserve of overstimulating markets and devaluing the dollar. He’s advised investors to prepare for the downturn by stocking up on precious metals and cryptocurrencies.
“ARE YOU READY?” he tweeted in April. “Boom, Bust, Mania, Crash, Depression. Mania in markets today. Prepare for biggest crash, depression in world history. What will Fed do? Print more money? Save more gold, silver, bitcoin.”
Gary Shilling
Shilling predicted in April 2021 that financial markets would nosedive, but he declined to hazard a guess at when the crash would arrive.
“I’m not making any firm prediction as to when this thing is going to collapse,” the veteran forecaster and president of A. Gary Shilling & Co. said.
“Speculations outrun any logic and that’s probably going to be true of this one,” Shilling continued. “But at some point, boy, there’s going to be a lot of blood on the floor.”