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Black Monday

Michael Burry
2026-08-09 05:59:01

Burry revives 1987 crash warning as Bloomberg columnist says permabears usually miss the mark

Michael Burry has again pointed to a possible replay of the 1987 stock market crash, arguing that falling volatility can push volatility-targeting funds and other momentum-driven strategies to add leverage as the S&P 500 keeps setting records. In his Aug. 4 newsletter, Burry said weaker volatility forces those funds to increase leverage, raising the risk of a sharper unwind if volatility spikes. Bloomberg columnist Jonathan Levin pushed back on that comparison. He acknowledged that Burry’s focus on volatility mechanics does echo part of the dynamic behind the Oct. 19, 1987 “Black Monday” sell-off, when the Dow Jones Industrial Average fell 22.6% in a single day. Levin also agreed that regulators should pay attention to systemic risks tied to automated selling and crowded positioning. Still, he argued that those warnings are not especially useful as market-timing signals. Levin wrote that flash crashes driven by market structure often reverse quickly when fundamentals remain intact. He also noted that Burry highlights the scale of the 1987 decline but leaves out how stocks recovered much of the damage in 1988 and moved to fresh highs in 1989. In Levin’s view, long-term bears are often better at calling danger than at identifying when to get back in, which is why he sees long-term holding as a stronger strategy than trying to time exits and re-entry points.

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Burry revives 1987 crash warning as Bloomberg columnist says permabears usually miss the mark