Jul 8, 2026
When Warren Buffett reveals he’s buying something, other investors usually follow suit. His reputation alone can push a share price higher, and people call that the “Buffett effect.”
Michael Burry may have the opposite effect, though he doesn’t buy that idea.
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The investor, known for predicting the 2008 housing crash, now writes about his trades on Substack. And last week one pattern stood out. He revealed bets against six stocks, and most of them fell in value within days. Business Insider asked him if he thought his calls were moving those stocks, and he pushed back in an email: “I do not believe there is a Burry effect.”
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Burry ranks second on Substack’s “Bestsellers in Finance” list and has almost 2 million followers on X. When someone with that kind of audience says he’s shorting a stock, some people are going to copy him. But you shouldn’t do it just because he did — at least not without understanding why.
What Burry actually bet against
First, the mechanics. Shorting a stock is a bet that the stock will fall — you borrow shares, sell them now and plan to buy them back cheaper later, keeping the difference. If the stock climbs instead, you lose.
On June 30, Burry disclosed shorts against Nvidia, Applied Materials, Caterpillar, Tesla and the iShares Semiconductor ETF (SOXX), a fund that holds Nvidia, Micron and other microchip stocks. The next day he added Micron Technology, posting that it “defines cyclical like no other.” He argues that Micron has taken 34 drops of more than 30% in 42 years, and its long-run returns on capital are “frankly terrible.”
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Did he cause the drop, or just call it?
Then the chips fell. Micron dropped 15% over two days, the SOXX and Applied Materials fell 12% and 17%, and Tesla slipped 6% even after reporting more than 480,000 second-quarter deliveries. In Seoul on Thursday alone, Samsung fell about 9% and SK Hynix about 15%.
Burry didn’t do that alone though. U.S. investors were already dumping chip stocks that week on doubts about how long the AI spending boom can last, and the selling spread to Seoul.
His shorts landed on a market that was already selling fast. Wealth Club chief investment strategist Susannah Streeter, one of the analysts who told Business Insider a short-lived “Burry effect” is plausible, framed it as “almost the mirror image of the Buffett effect.” Buffett’s approval pulls buyers in, and a Burry warning tends to speed up selling that’s already started.
What this means for your money
It’s tempting to read a Burry short as a sell signal, but exercise caution.
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When you copy a big-name investor like Burry, you only see part of the picture. You don’t know his full portfolio, his timing or when he’ll exit. Take defense contractor Palantir, which Burry began shorting in November. By the time last week’s headlines hit, he’d already halved that bet — buying back half the borrowed shares to lock in part of the gain. Palantir has since dropped roughly 40% from its November peak, so Burry’s prediction looks to have been correct. But he’s also famous for being right years too early — his housing bet took ages to pay off — and many people are uncomfortable sitting in a losing position for that long.
You also need to separate the stock from the headline. Micron makes memory and storage chips — the hardware that helps phones, laptops, data centers, and AI systems handle huge amounts of data.
The week Burry shorted it, the stock fell about 15%. But it had just reported a record quarter, with $41.46 billion in revenue, up about 346% from $9.30 billion a year earlier, and a 15% jump in the share price after the report. Sanjay Mehrotra, Micron’s chairman and CEO, called out “the strategic value of memory in the AI era.” Burry’s bet is about price and timing, not Micron’s survival, and calls like that can take their time to prove right or wrong.
When a loud investor posts a trade, it may move prices around for a few days, but it doesn’t decide where those stocks go over time. If you’re holding volatile assets like tech stocks, consider how long you plan to hold them, and if you could stay calm if they dropped across the board by 20% (the definition of a bear market). That matters a lot more than whatever Burry happens to say this week.
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Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
