Legendary Investor Michael Berry, who famously bet against the real estate market in the run-up to the 2008 financial crisis, is known to be skeptical about passive investing. On Sunday, “The Big Short” investor states that passive investing has steadily increased over the past decade and the only way out of the “crowded theater” is to “kick each other underfoot.”

“The difference between today and 2000 is the passive investment bubble, which has steadily inflated over the past decade. All theaters are overcrowded and everyone can only get out by trampling each other. And yet the door is only so big,” Burry said of his tweet.

Screenshots of Michael Burry’s handle on Twitter

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In 2019 Burry said Bloomberg reported that the bubble in passive investing through exchange-traded funds and index funds, and the trend toward very large money managers, have left smaller-value securities orphaned around the world.

Famous investors like Peter Lynch also have criticized passive investing and called the move “a mistake,” according to a Bloomberg report.

Price promotion: When 2022 experienced a stock market crisis after aggressive US interest rate hikes federal reserve, ETFs have underperformed this year. That Vanguard Total Stock Market ETF VTI has lost over 26% since the beginning of the year while the SPDR S&P 500 ETF Trust SPY has lost over 25% over the same period.

Burry previously tweeted how current market conditions remind him of mid/late 2000’s.

“Another feeling I’m getting is mid/late 2000. Free cash flow is entirely negotiable and being ignored while past momentum stocks are falling, but not far enough, and the beloved ‘better companies’ still had a chance , to fall. Value was poised to take off for years, despite more crashes,” Burry said in his tweet.

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