Einhorn acknowledged that Greenlight had “prematurely identified” the bubble in a 2016 warning, one he put down in part to the notion that the height of the 1999-2000 bubble was a once-in-a-career experience and that investors wouldn’t repeat “that level of insanity.”
“Clearly, we were mistaken,” he said.
Bubbles, meanwhile, tend to topple under their own weight as all investors finally hop in, short sellers cover, and the “last buyer has bought (or bought massive amounts of weekly calls),” he wrote.
“The decline starts and the psychology shifts from greed to complacency to worry to panic,” Einhorn said.
Einhorn pointed to 10 signs that backed up his bubble call. If the call is correct, investor sentiment is shifting from greed to complacency.
