Historic replay? Big Short's Burry warns: US stocks will enter a "2000-style bear market" AI bubble will burst within two years.

Recently, "The Big Short" Michael Burry, who is known for accurately predicting the 2008 subprime mortgage crisis, appeared on a podcast interview. In the conversation, Michael Burry expressed an extremely pessimistic outlook on the current US stock market, believing that the next few years may see a prolonged bear market similar to the one in 2000. He predicted that due to passive investing (index funds) dominating the market (accounting for over 50%), when the market falls in the future, it will be a "collective decline," making it difficult for investors in the US to protect themselves with long positions. Burry likened the current AI investment craze to the 2000 "data transmission bubble," pointing out that both have capital expenditures and stock market peaks. He bet that Palantir would see a significant decline within two years, citing the unreasonable valuation and unhealthy financial structure, especially as the company has created several billionaires through large, high-cost stock incentives without making significant profits. Burry believes that AI poses a deadly threat to Alphabet Inc. Class C's core cash flow source, the search business. He argues that Alphabet Inc. Class C search's success lies in its extremely low costs, while AI search is very expensive. He predicts that most users can access the required services for free, and the percentage of users willing to pay for large models will be very small, with real profits potentially only existing in the developer ecosystem. Burry holds the sharpest criticism for the Federal Reserve, stating that after a hundred years of existence, it "hasn't done anything truly beneficial" and advocates for abolishing the Fed and transferring its functions to the Treasury Department. Some highlights from the interview include: 1. I think the current stock market situation is not good, and the next few years may be bad, possibly experiencing a long-term bear market similar to 2000. 2. Currently, I believe the entire market will collectively decline, making it difficult for individuals in the US to protect themselves with long positions. 3. For example, if Palantir is currently priced at $200 a share, and I think it's only worth $30 or even lower, I would buy significantly out-of-the-money put options with an exercise price of $50 for a two-year period. 4. If you look at Palantir in this way, the company has almost never made any real significant profits. My basic conclusion is: the company has a high market value, but in reality, it hasn't made much profit - or only made a little profit - and it has already produced several billionaires. 5. Palantir and NVIDIA Corporation are the luckiest companies on the planet, as they initially didn't produce products specifically designed for AI. 6. This bubble is very similar to the "Internet bubble" back then, but it was not entirely an "Internet bubble," it was more like a "data transmission bubble." 7. In each of these cycles, when the related sectors' stock markets peaked, capital expenditures often didn't even reach half. 8. Our current level of capital expenditure is similar to previous peaks: similar to the level compared to GDP during the shale oil revolution, and close to the Nasdaq peak during the Internet era. 9. Current AI investment hype is similar to the great communication revolution. If you have experienced the 1980s, then to the 2000s, the transformation was dramatic, greatly changing everyone's lives. 10. But from the perspective of large language models, most people can already get what they want through the free layer, and penetration is very high. 11. AI will bring additional things to developers, where there is indeed a lot of money. But the problem is that the proportion of people willing to pay for large models is very small, and they may never need to pay because these services will be highly commodified and priced very low. 12. I think the Fed hasn't done much that is truly beneficial, and it may be the easiest job in the world. ... I don't think we need the Fed. These are some key points summarizing the interview.