Michael Burry: "The Index Fund Bubble Is About to Explode"

"In the last 100 years, we have seen 16 recessions. That means we are averaging more than one recession per decade. In the last 100 years, we have seen 25 market crashes. A market crash is defined as markets falling by 20% or more, which means we're averaging more than two market crashes per decade. There's always a crash coming. There's always a bubble. There's always a recession coming. It's a part of our economic system."

"We get emotional. We always think, "Oh my god, this crash is different. This recession is different." And there might be some slight differences, but we know the cycle because we can look at how history has played out again and again and again."

"The strategy that I teach when it comes to investing your money as a passive investor, it's very simple. Passive investing is a very simple concept. You just follow a simple system that I call a b beep. Always be buying. If you're investing the S&P 500 into the Dow Jones into the NASDAQ, this is the way that you win. Always be buying. You buy every week, every two weeks, every month."

"Poop happens in every downturn. During the 2020 downturn, poop happened. Panic led to overselling. People were freaking out when the markets were closing, when the economy was closing. And that overselling led to opportunity to buy good stocks and investments and funds at a discounted price, which led to the opportunity for profit for the people that were patient."

"During the 2008 great financial crisis, people panicked. People were selling off of every asset that they had. They thought the entire financial system was going to implode which created overselling which led to opportunity for good investors to come in buy real estate at 50 60 sometimes even 90ome% off even stocks were selling at huge discounts which led to the opportunity for profit were the people that held on and were patient"

"During the 2000.com bubble bursting that panic led to overselling because people said that the internet was just a fed and no one's going to ever use the internet again and markets were collapsing which created an opportunity I The tech side of the stock market, the NASDAQ fell by more than 75%. The Amazon stock fell by more than 90%. It created an opportunity for people to come in and buy and profit if you were patient."

"And yeah, we probably have an index fund bubble. We are probably have an AI bubble. We probably have a recession coming. We probably have a market crash coming. All these things are happening, but nobody knows when the bubble's going to burst."

"Are we in an index fund bubble? Maybe. These are the four reasons why people say that we are. It's because the concentration of money is into these seven stocks, especially in the S&P 500. It's because there's this price insensitivity where people are buying shares of companies without really caring about the valuation of them because they're just throwing the money into these funds. It's because there's people that are asset insensitive. They don't know what actual stocks they're buying when they invest in the S&P 500 or really any fund out there. It's because people have a lack of experience that when markets go down, they panic and they sell. And if people panic and sell, they're selling out of these seven stocks plus these 493 other stocks which can trigger a big sell-off in the markets."