Investor Michael Burry warns that the Nasdaq 100 index may fall sharply due to overvaluation of technology stocks

On May 12, well-known investor Michael Burry warned that the Nasdaq 100 index faced a sharp reversal after a "parabolic" surge and the valuation of technology stocks reached unsustainable heights. Burry posted on Substack that the current market situation is similar to the highs before the bursting of the Internet bubble, pointing out in particular the recent sharp rise in chip stocks. Since the end of March, the Philadelphia Semiconductor Index has risen nearly 70%. He said that based on his calculations, the Nasdaq 100 index currently trades at about 43 times earnings, well above the "reasonable level" of about 30 times because "Wall Street overvalues 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 accident." However, Burry recommends not shorting stocks because put options are costly and prone to losses due to inappropriate timing.