Michael Burry

After the first-half 2022 sell-off (valuation multiples shrinking), the next leg of the bear market will be falling S&P 500 corporate earnings (inferred window: through 2023).

“That was multiple compression. Next up, earnings compression.”

Said on

30 June 2022 · Post on Twitter after noting that, adjusted for inflation, the S&P 500 fell 25-26% in the first half of 2022. No window given; "next up" read as about the following 18 months.

Source

Michael Burry: Stocks and crypto haven't come close to hitting the bottom yet, hedge funder famous from 'The Big Short' says · Fortune

Should come true

2023

How sure they sounded

stated as fact; followed by "So, maybe halfway there."

Categories

MarketsEconomy

Importance

2 of 5 · A call on the direction of US corporate earnings and stocks over the following year; matters to investors.

Outcome

Partly right

S&P 500 earnings did fall year over year for three straight quarters (Q4 2022 to Q2 2023), a mild "earnings recession" of a few percent per quarter. But the compression was small and short; earnings growth resumed in late 2023, and stocks bottomed in October 2022 rather than falling much further, so this is scored partial rather than accurate.

Evidence:

• https://www.schwab.com/learn/story/earnings-recession-could-end-soon-now-what
• https://ibkrcampus.com/?p=193287