Stock Assets Surpass Real Estate: Warning Signs from Historical Market Cycles

Michael Burry has recently pointed out a notable phenomenon in the US economy — the stock value of households has surpassed real estate values for the first time in decades. Looking back at market history, this pattern is not a positive sign. Before major recessions in the 1960s and 1990s, the ratio between stock assets and real estate also exhibited similar characteristics.

But what has driven this change? Burry believes that a series of macroeconomic factors have created the current landscape. Prolonged zero interest rate policies, large-scale economic stimulus packages, inflationary pressures, and the booming development of AI have fostered an environment conducive to speculative behavior. At that time, game-like trading behaviors — where investors view the market more as a playground than a capital allocation mechanism — became more prevalent than ever.

An additional issue is the structural change in the market. Passive investing now accounts for more than half of market transactions, meaning many accounts are inactive and rely on indices rather than fundamental analysis. This can create an amplification effect — when the market begins to correct, the sell-off by index funds could turn into an uncontrollable flood.

In this context, the fear and greed index has become an even more important tool for assessment. This index measures the extremity of investor sentiment — from meme fears spreading on social media to unlimited greed. When this index hits extreme levels, it often signals potential turning points, where the market may reverse. Smart investors see it as a sensor of collective market sentiment.

For those following altcoins, this warning is particularly relevant. These currencies are often the riskiest assets, and they are the first to be sold off when market sentiment shifts from greed to fear. Therefore, understanding market psychological cycles — and knowing how to interpret tools like the fear and greed index — can make the difference between profit and loss.

In conclusion, Michael Burry is not necessarily predicting an immediate market crash. Instead, he is pointing out that current conditions exhibit characteristics of a market top — a mechanical mechanism supported by extreme investor behavior. When combined with the dominance of passive investing, these signs suggest that a correction may be imminent, and those best prepared will be those who understand this market cycle most thoroughly.