The S&P 500 and Nasdaq Composite indexes fell 1.6% and 3% this week. Nvidia shares dropped 7.1% and Palantir shares were down 11.2%. The decline was attributed to the “Michael Burry effect.” Burry filed a bearish bet on both stocks, causing market volatility. He bought put options on Nvidia and Palantir worth $186.6 million and $912.1 million, respectively.

Burry, known for predicting the 2007-2008 financial crisis, filed the SEC 13F Form revealing his bearish bets on Nvidia and Palantir. His actions led to a market sell-off this week. While some investors see Burry as a stock forecaster worth following, others believe his influence may have triggered an overreaction in the market.

In response to Burry’s actions, Nvidia shares fell 7.1% and Palantir shares dropped 11.2% this week. However, both stocks stabilized on Friday, with Nvidia closing unchanged and Palantir gaining 1.6%. This suggests that the market may have already reacted to the Burry news, potentially signaling the end of the “Burry effect.”

Investors are advised to maintain their positions on Nvidia and Palantir stocks before the Burry news. While headlines about hedge fund managers’ actions can influence stock prices, it’s important for investors to make decisions based on their own analysis and long-term outlook. Burry’s bearish bet on Nvidia may not necessarily indicate the stock’s future performance.

Burry’s bearish bets on Nvidia and Palantir were made through put options, not short-selling. It’s important for investors to understand the difference and consider the implications for their investment strategies. Burry’s fund also holds other stocks, including Pfizer, Halliburton, and Lululemon Athletica, worth about $283 million at the end of Q3.

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Read more at Yahoo Finance.: Michael Burry’s Bets Against AI Stocks Nvidia and Palantir: What Investors Should Know