‘For any stocks going parabolic reduce positions almost entirely’

Michael Burry has urged investors to reduce exposure to rising technology stocks, saying the current market environment has reached historically dangerous extremes reminiscent of previous speculative bubbles.

The famous investor known for predicting the housing crash of 2008 said investors should “reject greed” as interest in artificial intelligence and momentum-based trading sends valuations soaring.

“An easier path for most is to reduce exposure to stocks, especially tech stocks. For stocks that have gone parabolic, they reduce positions almost entirely,” Burry wrote in a Substack post on Sunday.

Burry has been warning for months that the stock market’s obsession with artificial intelligence was increasingly akin to the final stages of the dot-com bubble. Last week, he compared the recent trajectory of the Philadelphia Semiconductor Index (SOX) to the rise before the collapse of tech stocks in March 2000 and said the current environment feels like “the final months of the 1999-2000 bubble.”

Burry said he followed a similar strategy in 2000, holding a “significantly leveraged short position” against a portfolio of companies he viewed as depressed and cheap.

But Burry warned that betting directly against the rise through short selling is risky and impractical for most investors, especially as bearish trades become increasingly expensive.

“Abbreviation is not the solution. It’s not something most people should be doing,” he said. “Buying put options in general is expensive right now, and outright shorting stocks can still cause significant pain.”

The comments add to a growing debate on Wall Street about whether the AI-driven rally in U.S. stocks is breaking with fundamentals. Major stock indexes have repeatedly hit record highs despite the ongoing war in the Middle East as investors flock to semiconductor manufacturers and mega-cap companies.

“The goal is to raise cash and implement it when it makes more sense to do so,” Burry wrote. “History tells us that even if the party continues for another week, month, three months or year, the solution will be much lower prices.”