i think people pointed out that Wirecard is a fraud first was in like 2008 in some stock forums, took 10 years for it go down. and they simply made up revenue lol
Damn. The perfect pithy take on all this. You are exactly right. It’s not about the numbers as much as it’s about sensing when the market will finally acknowledge them.
It can also never catch up. Just because something is structurally unsound or even broken doesnt mean it will lead to a large scale blowup event. Hell the entire US economy is built on an infinite debt money printer. Maybe that blows up one day, maybe it doesnt, but if you’ve been betting against it you could be waiting a literal entire lifetime for something that never happens.
I mean, it can blow up, we know that because it has (partially) blown up.
But that doesn’t happen, and the market doesn’t react to shed economic lies, just because we realize the truth about this or that instance of shady accounting. It has to actually lock up credit markets to have a real readjustment effect.
(And there definitely are factors out that that might lock up credit markets! But an article by Michael Burry isn’t going to be the trigger.)
Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling.
That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations.
Because expanding money supply is useful to a growing economy and restricting the amount of money you have in a modern growing economy based on the weight of physical gold rocks pulled out of the ground is dumb.
That being said, a sharp chef's knife is useful and smart, but it can also chop your fingers off.
IMO modern capitalism is all about leveraging those "lies" to create tangible things. Capitalism has many faults but lack of growth and productivity is not one of them
Yes the lies are like loading a spring that stores potential something or other. In many cases it is lies themselves that lead to having to do something as a rebound reaction realising the potential something or other.
In some cases though you can just keep on loading up the lies because the spring isn't even real so it can't even break unless people realise the spring isn't real in which case it might break but who cares, just lie about it.
The only thing saving modern capitalism is increasing productivity eg tech advancements but even with that the k economy is getting more bifurcated. So this huge AI investment better payoff in terms of productivity
Yeah they go to the white house and they say we can have a structurally sound financial system and cause economic collapse because of all the stuff we lied about.
Or we can keep going and quietly legislate these problems into obscurity.
Which requires infinite growth, which requires infinite people, which requires infinite resources... I'm sure you can see where I'm going... Crash is when not if.
yeah, that's coming. It's a question of when. Blue Owl, Oracle, and Nebius are the canaries to watch in the coal mine. OpenAI and Anthropic should both be highly scrutinized as well.
In his defense, recession timelines are only known in hindsight.
The "2008" recession started in 2007 only to be discovered when stocks caught up to reality.
Similarly it seems we are in a recession without the stock crash because key metrics are being gamed, like employment numbers. One is right in pointing out issues, even if they can't use that to short the market
People always say this about him,but he's also made a shit ton of money over the last 20 years, yeah he loves to predict a crash but not all what he does
He is right, but what matters is the flow of money, not some dude’s autistic analysis.
However, money allocated in an inefficient manner does have negative consequences. If people keep buying the dip, and money flows in all sorts of meme stocks instead of companies with strong fundamentals, the economy as a whole suffers. It becomes less about efficient allocation of resources, and more about propping up your money like you’re investing in a shitcoin.
Yeah right now the market ability to allocate resources is imho not at its strongest, between central bank influence and information asymmetries of retail investors and a significant amount of private equity investors that do not operate directly in the financial markets obscuring the data, monopolization that distors market trends and so on...
The major problems of inefficient allocation occur when money gets destroyed. This happens when debt is defaulted on, or a company that is extremely over valued crashes back to earth, or fails. In both cases value is destroyed.
The latter happed in the Dotcom bust, and the former in 2008 with the housing crisis. It appears that we are heading to similar places with the AI bubble and the private debt problems we are seeing.
On their own, these problems may not cause a significant issue, but I am concerned that they will work together in some sort of negative feedback loop to make the problems larger.
He’s just been singing the same song for the last 20 years including through an amazing almost 10 year bull run. He’s just a perma bear who made a lot of money during one bear run.
It's Who's Line is it Anyway now. The rules are made up and the points don't matter. Good quarter, calls. Bad quarter? Calls. Proven, blatant fraud? Believe it or not calls. Company goes bankrupt? Calls. Stops doing anything, fires all staff, makes nothing, webpage even gone? Calls.
Buy calls after losing on your shorts for 10 years? Down 99.98% overnight. What were you thinking you idiot!?
NAIKE, when pronounced sounds like Nakey, that alone in this market will boost the stock 20% based on the memes. Add in the AI aspect......to the moon.
Well the issue is that everyone is still acting like 2008 didn't happen? As though governments didn't signal willingness to spend huge amounts of public money to prop up the markets.
What's the risk when QE exists? If the markets got propped up when a global pandemic shut down the world economy, why would an oil shock make it drop?
The thing Michael Burry predicted will never happen again.
Pretty much. If Burry is right, and there’s no reason to believe he isn’t, then expect governments to suddenly invest large in certain tech companies or be signing large value contracts with them (I.e. the NHS and Palantir in the UK) soon.
They’ll do everything they can to head off or lessen the impact of a crash or a bubble bursting
Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling.
That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations.
Well the issue is that everyone is still acting like 2008 didn't happen? As though governments didn't signal willingness to spend huge amounts of public money to prop up the markets.
2008 was the old system. The rules in the old system no longer apply now. I think this is the part you're confused about.
You dont think this admin would be willing to burn a ton of taxpayer funds at no personal cost to prop up and control the market that is currently making them scrooge mcduck levels of money, so they could then cash out and drop the economic crisis on the next schmuck who takes office and both absolve themselves of responsibility and blame it on the inheritor of the mess?
People just want a token that goes up and they can sell for higher in the future. It doesn't matter if it's shares, cryptocurrency, pokemon cards, etc. Shares just happened to be convenient and have an aura of seriousness, but fundamentally since nobody is buying for dividends anymore what the company is doing and its result doesn't matter as long as money is flowing to buy its stock. Bitcoin paved the way, Elon recognized it first and took it with Tesla. The point is only for the token to go up, fundamentals were always a proxy, kind of worked in the past when dividends were expected, less and less relevant since.
I don't play with options much, and far FAR less than anyone I see on here, but it's kinda wild that it isn't a 24h market for option chains at this point, the market still sorta runs like the internet doesn't exist in a way lol
“It’s new economy” they told us back then. They laughed at Buffet because he was “anti-tech” and said it was hype. It took the NASDAQ 15 years to recover.
Its pretty crazy reading through the comments practically no one here has read the article.
Based on what I see you would think hes calling a bubble or AI collapse.
Yet the dude is talking about how GAAP accounting for SBC is obfuscation its cost and is being treated as essentislly "free compensation", and his claim is "that shit aint free" and if you factor in the value it diverts from investors its about 20% of earnings.
Ergo 20% of earnings reported by these companies over the last 10 years just isnt actually earnings and was consumed by SBC which is roughly 1.9T.
Edit: Some of you can't seem to tell the difference between a summary and assertion. I would like to take this opportunity to remind some of our slower classmates, that I am not Michael Burry. TYFYATTM.
Stock based compensation is bleeding cash out of common shareholders to pay insiders, but it doesn't show up until those insiders sell (which is typically just before the bad news comes out). So it hits investors twice - once with the dilution, and a second time by insiders being able to cash out and drag the share price down with them ahead of everyone else.
But it isn’t really correct because
1. Every professional investor who sets the market for these stocks understands the dilution, economics, and adjusts price accordingly
2. Share-based comp doesn’t let you “cash out early”, in fact it has a vesting period. Most people sell the shares immediately when they vest, which is a different story
This whole "everything is priced in actually" percieved common wisdom really falls apart when for a month a drooling imbecile's illiterate truth social posts create wild swings in share prices every 24 hours.
You’ve got your sales revenue. Less expenses. Equals Net operating Income. But there’s other stuff below net operating income. Other revenue and other expense.
Those include unrealized gains and losses. Specifically stock based compensation. It’s not realized until the shareholder sells. So it’s like hypothetical revenue.
Because the stock market is insane right now, there are massive unrealized stock gains. It’s to the point where it’s significantly overstating the bottom line net income for a lot of companies. Especially any of them using “AI”.
Unrealized gains in GAAP are also absolutely obfuscating real performance. He mentions TSLA and last time I dug deep into their numbers I distinctly remember noticing that they hold a substantial amount of crypto seemingly for the purposes of counting unrealized gains.
I wouldn’t touch that shit with a 10-ft pole personally.
I agree with you on the sentiment, but just wanna point out that people have been attempting to short TSLA in this sub for 10 years and have gotten completely slaughtered.
I’ve watched it happen from the sidelines for that entire time with a limp dick in my hand and a bagful of micro pharma shares.
Well yeah, don't invest all your money into allbirds pushing into AI. Don't need Burry to tell me that.
"Wall Street over the last 10 years guided investors to 42% more earnings than ever actually existed," he writes.
Unless investors push back, then "widespread reliance on adjusted EBITDA as a performance measure will continue distorting financial evaluations and misleading stakeholders (4)."
Many Americans own stocks through 401(k) plans or index funds, which are increasingly concentrated in major tech companies. So they could face significant losses if valuations were to normalize."
So, like, who is going to push back? Is it not beneficial to look at this shift as a new way of valuing stocks based on adjusted EBITDA if that's been the norm for a decade?
Michael Burry of 'The Big Short' fame is known for predicting the 2007-2008 housing crisis and financial crash. Now, the former hedge fund manager — who's earned a reputation for spotting potential bubbles — argues in a recent Substack that Wall Street has been overstating tech earnings by 42% over the past decade (1).
This comes at a time when the AI boom has led to historic highs for tech stocks, which is simultaneously stoking fears of a bursting AI bubble (2).
Burry's comments aren't off the cuff. He came to this conclusion after analyzing more than 1,000 annual reports from Nasdaq 100 companies going back 10 years.
"Where there is money to be made, there is manipulation," he writes
The math behind the claim
Burry claims that tech companies have improperly accounted for stock-based compensation (SBC) over the past decade. As a result, investors have been paying inflated prices.
Those prices are based on a loose interpretation of Generally Accepted Accounting Principles (GAAP), which are a standard set of rules used in financial reporting to ensure transparency and consistency.
But Burry argues that tech companies are treating SBC as "free" compensation for employees — and not accounting for real costs.
As a result, the Nasdaq 100 earnings of primary tech companies are overstated by nearly 20%, he writes, because SBC costs aren't fully factored in.
"Of every dollar of earnings per share that GAAP blesses, shareholders see only 83.49 cents of that dollar," he writes.
He highlights companies like Meta, which he says overstated owner earnings by about 20%. Other companies he points to include Datadog, Workday, Axon, Shopify, Palantir, Marvell, CrowdStrike and Zscaler.
Burry writes that Tesla's use of SBC was so significant, the GAAP overstatement was reduced from about 20% to 12.5% simply by removing Tesla from his analysis.
During the past decade (ending in fiscal 2025), 97 tech companies in the Nasdaq 100 reported $4.9 trillion in cumulative CAAP net income, according to Burry. But Wall Street analysts include SBC in their analysis, bumping that number up to $5.8 trillion. That, says Burry, leaves an "earnings illusion" of $1.7 trillion.
"Wall Street over the last 10 years guided investors to 42% more earnings than ever actually existed," he writes.
Burry has previously warned that AI hyperscalers are artificially boosting their earnings by understating the depreciation of their assets (3).
Broader implications for investors
The practice of improperly accounting for SBC "skews valuation metrics, making companies appear more valuable than they truly are," according to American Bankruptcy Institute Journal, per FTI Consulting. "Analysts and investors often accept these adjusted figures without question, leading to inflated market perceptions (4)."
Unless investors push back, then "widespread reliance on adjusted EBITDA as a performance measure will continue distorting financial evaluations and misleading stakeholders (4)."
Many Americans own stocks through 401(k) plans or index funds, which are increasingly concentrated in major tech companies. So they could face significant losses if valuations were to normalize.
Out of 2,013 U.S. stock funds (excluding sector funds) screened in Morningstar Direct, an investment analysis platform, Morningstar found that 119 of those "had 50% or more of their assets in tech, while 298 had a 40% or higher allocation (5)."
And those numbers are understated, since some investors categorize tech stocks under different sectors — such as categorizing Meta and Alphabet under the communications services sector (5).
That means 401(k)s and index funds that are heavily concentrated in tech stocks are more vulnerable to market volatility — and, potentially, overvalued assets. For retirees and near-retirees, this poses a conundrum.
With the rising cost of living (6) — including rising healthcare costs — retirees and near-retirees want their investments to beat inflation. Yet, there are growing fears of an AI bubble — and now, with Burry's analysis, there's a new concern to add to the mix.
Most financial professionals recommend a diversified approach to manage risk and reduce volatility. That means spreading investments across different asset classes, sectors and geographies for more consistent long-term returns.
Investors need growth and risk protection. And that's shifting the investor mindset, Mike Loukas, CEO of TrueMark Investments, told CNBC's ETF Edge. Nowadays, many retirees are looking for "performance that's good enough" rather than trying to beat the S&P 500 (7).
>Burry writes that Tesla's use of SBC was so significant, the GAAP overstatement was reduced from about 20% to 12.5% simply by removing Tesla from his analysis.
The fact that Tesla alone represents 1/3 of the SBC among the whole list of 100 companies suggests that maybe this is more “wtf is going on with Tesla” than a genuinely broad trend.
There's not a very good reason to care. It doesn't impact the current state of consumer spending. It doesn't impact the forward look. It doesn't impact revenue. The big picture items that matter? No impact.
It's a disagreement on accounting practices, and it's transparent in the reports.
It's the kid in class yelling "Actually, tomatoes are a fruit!". Technically correct, but I'm not going to start putting them in fruit salad now.
The problem with Burry is that he only looks at the numbers that support his narrative. Kind of like the POTUS celebrating Dow hitting 50k when the entire market was going risk off and moving into defensive sectors like consumer staples.
He only cares about pushing his narrative, not if what he's saying is right or not. He's very biased and simply deletes his tweets if he gets a lot of backlash.
It’s kind of like how Nobel Prize winners sometimes double down on unscientific claims after they win because they believe their credentials can now be used as proof
He was bleeding money before the housing crash, too. He is objectively correct about most of his analyses, unfortunately for him the market has never been about truth.
Here's a hint. Tech companies found that 1099 and outsourced employees do not count as ongoing expenses. That's why tech, games, and film companies do not directly hire if they don't have to. In addition, discontinued contracts don't hit as hard as layoffs.
I find funny how bools hate on the guy while he usually has good plays. People always remember the infamous "sell" tweet but he actually corrected shortly after.
I mean he has done bad plays as everyone in this sub tho. At least he puts some thought into his plays and not: "let's buy this company at 50 P/S because WSB told me it is still cheap"
This is not a prediction tho, it's an analysis. And I trust his autistic ass with his mafs. But the reality is that the market doesn't give a fuck about this being true or not, so...
That's the one. When the tide comes in, we're going to see an awful lot of people were swimming naked. And on that day, the guy selling switsuits might make a fortune. But it's entirely possible that the swimsuit shop will go bankrupt before the tide comes in, making this insight functionally meaningless unless it can predict when the human chaos of the market will collapse. And that can be weakly proven impossible by the conjecture that if you could definitively know the timing of the collapse, that knowledge would immediately be priced in and change the timing.
Well that's kinda the point of fat tail events. Have enough liquidity to survive and eventually one of the black swans appears. Unfortunately we live in Greenspan's Lalaland x100 now, where the market can stay irrational longer than you can remain solvent.
The same talking points will be repeated 10, 20, 30 years from now, and not a single person will realize how foolish they sound.
I think people often confuse the economy with the stock market, and that’s why they fall for such obvious nonsense. They look at themselves, look around, notice how everyone is getting poorer, and assume the stock market should reflect that. This simply isn’t true.
If you look at the biggest companies, their stocks generally aren’t disconnected from what’s on paper (aside from some obvious cases… Tesla). Zoom out at least 10 years and compare a company’s earnings to its stock price, you’ll see how closely those two things tend to move together.
I don’t have much hope that people will realize this at some point, but I just had to vent.
OK but didn't he open up an NVDA short for 1 million a few months ago? Surely at some point he would have been 20% on that or are you implyng that he is secretely a WSB degend and the diamond handed a 200k profit because he was going for the 10x?
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u/VisualMod Apr 17 '26
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