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The Big Short Video

Opinion: The Big Short

Michael Burry, one of the first investors to call and profit from the subprime mortgage crisis, is seeing a similar bubble in passive investing, according to Bloomberg News. Passive investments such as index funds and exchange-traded funds are inflating stock and bond prices in a similar way that collateralized debt obligations did for subprime mortgages more than 10 years ago, Burry told Bloomberg News in an email.

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When the massive inflows into passive vehicles reverse, "it will be ugly," he said. He shot to fame by betting against mortgage securities before the crisis. Low-cost passive vehicles have gained Bgi on Main Street. Passive investments have now taken over nearly half of the stock market as more investors shun The Big Short pickers and flock to index funds, according to Bank of America Merrill Lynch. These funds mirror just about anything that can be tracked. All this gets worse as you get into even less liquid equity and bond markets globally.

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Many notable investors have sounded alarms on the proliferation of passive Shorrt. He called it a "herding behavior" and said it has reached "mania status. Sign up for free newsletters and get more CNBC delivered to your inbox. Get this delivered to your inbox, and more info about our products and services.

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Markets Pre-Markets U. Key Points. All this gets worse as you get into even less liquid equity and bond markets globally," he said. VIDEO Markets and Politics Digital Original Video. Invest in You: Ready. Related Tags. News Tips Got a confidential news tip?

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