‘The Big Short’ Burry says the market feels like the final stage of the dot-com bubble

[Financial News]  
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Michael Burry, the hedge fund investor who inspired The Big Short, warned of a bubble collapse on the 8th (local time).
Burry earned wealth and fame by accurately predicting the U.S. subprime mortgage crisis that triggered the 2008 financial crisis. The story was later turned into The Big Short.
According to CNBC, Burry wrote on his Substack that the current market trend, driven by what he called an "AI that never stops," reminds him of the movement seen in the months just before the dot-com bubble burst in the early 2000s.
He pointed out that stocks no longer respond logically to economic indicators such as employment trends or consumer sentiment.
Although U.S. consumer sentiment fell to a record low that day, the S&P 500 and the NASDAQ on Wall Street both hit all-time highs in a single day after April employment data came in better than expected.
That appears to be because investors placed greater weight on employment data, amid hopes that high oil prices, which have weighed on consumer sentiment, will ease once the war with Iran ends.
Burry, however, said that "stock prices do not rise or fall based on employment or consumer sentiment" and that "stocks have kept rising because they have been going up all along." In other words, he said the rally is continuing through momentum rather than economic fundamentals.
Burry said stock prices are moving based on "the two-letter theme that everyone thinks they understand: AI." He warned that "it feels like the last few months of the 1999-2000 bubble."
Burry also noted that the recent trend in the Philadelphia Semiconductor Index (SOX) resembles the period before the tech crash in March 2000. The index has surged 65% this year, including a gain of more than 10% just this week.
Meanwhile, Paul Tudor Jones, the Wall Street legend who correctly predicted Black Monday in 1987, offered a somewhat different outlook in a recent CNBC interview. He said a bubble is forming, but added that it is not about to burst just yet.
He said the current market resembles 1999, but believes this bull market still has room to run.
Jones said the market now brings to mind the rally of 1999, before the bubble burst, and predicted that the bull market could continue for another one to two years.
He said, "If we assume stocks rise another 40% from here, the ratio of market capitalization to Gross Domestic Product (GDP) would probably reach 300% or 350%." He added, "At that point, you can reasonably expect a breath-taking correction."
The market-cap-to-GDP ratio is often called the Buffett Indicator, named after Warren Buffett, the Oracle of Omaha.
The term comes from Buffett's praise in a 2001 Fortune interview, when he called it "probably the best single measure of where valuations stand."
When the indicator is at 70% to 80%, stocks are considered undervalued and a good buying opportunity.
Around 100%, stocks are seen as fairly valued. But once it rises above 120%, it signals overheated prices and a bubble.
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dympna@fnnews.com Song Kyung-jae Reporter