Investor Michael Burry warns that the Nasdaq 100 Index may plunge due to excessively high valuations of tech stocks

Burry wrote on Substack that the current market situation is similar to the peak before the burst of the internet bubble, specifically pointing out the recent sharp rise in chip stocks. Since the end of March, the Philadelphia Semiconductor Index has risen nearly 70%. He stated that, according to his calculations, the price-to-earnings ratio of the Nasdaq 100 Index is currently about 43 times, far above the “reasonable level” of about 30 times, because “Wall Street has overestimated the earnings of the fastest-growing and highest-valued companies by 50%.” Burry said, “We are witnessing history. In the stock market, that’s usually not a good thing.” He compared the current situation to “the last few minutes before a bloody car crash.” However, Burry advised against shorting stocks, as the cost of put options is high and it is easy to suffer losses due to poor timing.