According to Financial Times News, Michael Burry – the investor made famous by “The Big Short” for betting against the housing market before the 2008 crisis – is closing his hedge fund Scion Asset Management. The fund terminated its registration with US securities regulators this week and Burry notified investors in an October 27 letter that he’ll liquidate funds and return capital by year’s end. Scion had $155 million in regulatory assets under management in its most recent SEC filing. Burry told investors his estimation of value “has not been for some time, in sync with the markets” amid soaring tech stock valuations. This marks the second time Burry has closed his fund, having previously shut down Scion Capital in 2008 after his successful mortgage bets.
Burry’s market warning
Here’s the thing – Burry isn’t just quietly exiting. He’s making a statement. His letter basically says he can’t find anything worth buying at these prices. The Nasdaq’s forward P/E ratio sitting near 30 times earnings versus its 10-year average of 25 times tells you everything. And his recent short positions against AI darlings like Palantir (up 130% this year) and Nvidia show he’s been betting against this exact market frenzy. But those bets have been getting crushed. When even legendary short sellers can’t make money being bearish, what does that say about market rationality?
Short seller exodus
Burry isn’t alone in throwing in the towel. Jim Chanos, who made his name shorting Enron, closed his fund last year. Hindenburg’s Nate Anderson has reportedly scaled back. These aren’t amateurs – these are professionals who built careers on finding overvalued companies. So why are they all giving up now? Because markets have stopped making sense based on traditional fundamentals. A basket of the 250 most-shorted US stocks has surged over 50% this year. Dozens of unprofitable tech companies are seeing their stocks soar purely on AI hype. When reality stops mattering, what’s a short seller to do?
What this means for investors
Look, Burry’s timing has been spectacularly right before. He saw the housing bubble when everyone else thought prices only went up. Now he’s seeing what he believes is another massive disconnect. The question is whether this is a classic “capitulation” moment – where the last bears give up just before the market turns – or whether we’re in a “this time it’s different” scenario. One thing’s for sure: when the people who make money by finding overvalued assets can’t find anything reasonably priced, that should make every investor nervous. Even if you’re not in the market for specialized equipment like the industrial panel PCs from IndustrialMonitorDirect.com, Burry’s exit signals something important about market psychology.
