'Big Short' legend Michael Burry issues a grave warning to investors with a one-word tweet: 'Sell.'

• Michael Burry issued a grim warning to investors by simply tweeting: "Sell."
• The "Big Short" legend was likely responding to the stock market's astounding comeback in January.
• Burry recently compared the S&P 500's rebound to its short-lived rally during the dot-com crash.

Michael Burry appears to have serious doubts about the stock market's stunning start to the year. He tweeted a single word on Tuesday: "Sell."

The fund manager of "The Big Short" fame was likely urging investors not to be fooled by the recent rebound in stocks. The benchmark S&P 500 index gained 6.2% in January, while the tech-heavy Nasdaq Composite surged 11%, marking its best January performance since 2001.

Some of the hardest-hit stocks last year have led the charge upward. Elon Musk's Tesla notched a 41% gain in January, making it the second-best performer in the S&P 500, while Cathie Wood's flagship Ark Innovation fund recorded its best month ever. Burry's Scion Asset Management fund placed bets against both the automaker and the tech-focused fund in 2021, and the investor took aim at both Musk and Wood in tweets.

Investors dumped tech stocks years after a historic spike in inflation spurred the Federal Reserve to hike interest rates from nearly zero to north of 4%, in a bid to curb the pace of price increases. They have piled back into them this year, as they believe inflation is waning and the Fed will soon pivot to cutting rates, which could revitalize demand and allow the US economy to escape a recession.

Burry has been pouring cold water on the stock rally this year. On January 23, he tweeted a chart showing the S&P 500's plunge during the dot-com crash, and circled in red its rally between September 2001 and March 2002 before it bottomed six months later. The implication was that the S&P 500's 17% rally since last October's low could also prove short-lived.

The Scion chief has been sounding the alarm on asset prices for more than two years, and warning about an economic disaster since the first half of 2022.

He diagnosed the "greatest speculative bubble of all time in all things" and predicted the "mother of all crashes in the summer of 2021. He also took his own advice in the second quarter of last year, selling all but one of the positions in his US stock portfolio.

Burry is one of several top commentators bracing for a catastrophe. GMO's Jeremy Grantham recently declared the S&P 500 could plummet 50% in a worst-case scenario, while Universa Investments's Mark Spitznagel diagnosed the "greatest tinderbox-timebomb in financial history."

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