My Investing Muse

'Big Short' investor Michael Burry warns stocks will crash and rallies won't last. Here's a roundup of his recent tweets and what they mean.   Michael J. Burry photo - extracted from insider article Burry's book shelf - what he reads Source: https://markets.businessinsider.com/news/stocks/big-short-michael-burry-tweets-stock-market-bubble-crash-rallies-2022-5   Key quotes from the article: When the S&P 500 has crashed in the past, it has traded lower several years later, Burry noted. He pointed to the index bottoming 13% lower in 2009 than it did in 2002, 17% lower in 2002 than it did during the Long-Term Capital Management fiasco in 1998, and 10% lower in 1975 than in 1970.   Burry noted that 12 of the 20 largest one-day rallies in the Nasdaq index took place as the dot-com bubble burst, while nine of the S&P 500's 20 biggest one-day rallies occurred in the aftermath of the Great Crash in 1929.   He noted that after the dot-com bubble burst, th...

  Market dips or corrections are part of the journey of investing. Peter Lynch shared that in 93 years, the market saw about 50 market corrections (or dips that are more than 10%) and out of these 50 corrections, 15 of them will be more than 25% in drop.  Thus, this implies that in an average of every 2 years, we should experience a market correction of more than 10% and every 6 years, a crash of more than 25%. From another source,  a  correction  is generally agreed to be a  10% to 20% drop in value  from a recent peak. This can happen to a single company or market as a whole. A  market crash  is usually a  more than a 20% drop in value in the market . The chart above shows an important element - the market always recovers after such corrections (listed by the various corrections from 2009 to 2018). As per 4th Nov 2021 (GMT+8hrs), S&P500 stands at 4660 is way beyond the 2800+ seen on the chart ending Q4/2018. From the chart abo...