'Big Short' investor Michael Burry rang the alarm on a market crash and recession, revamped his stock portfolio, and ripped into Tesla this year. Here are his 4 highlights of 2022.

• Michael Burry issued a raft of grim warnings and bleak predictions in 2022.

• The "Big Short" investor forecasted a stock-market crash and a prolonged recession.

• Burry also made sweeping changes to his portfolio, and took aim at Elon Musk's Tesla.

Michael Burry, the prescient investor of "The Big Short" fame, issued a slew of dire predictions in 2022.

The Scion Asset Management chief warned of a dramatic decline in stocks, and forecasted a slump in consumer spending and company earnings would spark a painful recession.

Burry bet against Apple, virtually liquidated his portfolio for a period, and hinted he may be short the market. He also took several jabs at Tesla, but welcomed Elon Musk's Twitter purchase.

Here are Burry's 4 highlights of 2022:

Bubble and crashes

Burry diagnosed a spectacular bubble in asset prices and predicted an epic crash in 2021. He doubled down on his doomsaying in the first half of 2022, warning the S&P 500 was heavily overvalued and could halve in value to around 1,900 points.

The Scion chief also laid out why stocks were bound to fall based on historical trends, called out "silliness" and unwarranted optimism in markets, and complained about people's refusal to listen to him.

Moreover, he cautioned that stubborn inflation might prevent the Federal Reserve from bailing out markets, and said observing the downturn felt like watching a plane crash.

"All theaters are overcrowded and the only way anyone can get out is by trampling each other," he said in October. "And still the door is only so big."

Inflation, recession, and the Fed

Burry flagged the risk of post-reopening inflation as early as April 2020, and has repeatedly criticized the Fed for overstimulating markets and acting too slowly to curb price increases.

The Scion chief warned in May that consumers — squeezed by rising interest rates and soaring prices food, fuel, and housing costs — are saving less, borrowing more, and burning through the funds they stashed away during the pandemic.

He cautioned they might run short of money by the end of 2022, causing consumer spending to slump, corporate earnings to suffer, and economic growth to weaken.

Burry also predicted inventory gluts for retailers, layoffs for white-collar workers, higher long-term inflation, and a years-long recession. Moreover, he suggested the coming downturn could rival the financial crisis in magnitude and devastation.

The stock portfolio

Burry made several striking changes to Scion's stock portfolio this year.

The investor placed an unexpected bet against 800,000 Apple shares in the first quarter. Next, he dumped all but one of his holdings in the second quarter, slashing his portfolio's value from $165 million to about $3 million and stoking fears that a market crash was around the corner.

While he partially restocked Scion's portfolio in the third quarter, Burry rushed to disabuse his followers of any notion he's optimistic about the market outlook. "You have no idea how short I am," he tweeted.

Sparring with Elon Musk

Burry, who bet against Tesla and clashed with Elon Musk in 2021, continued his assault on the electric-vehicle company this year. He warned in April that the automaker will face tough competition, and said in September that he should be short its stock.

The investor may be feeling vindicated, as Tesla stock has plunged nearly 70% from its peak last November.

On the other hand, Burry welcomed Musk's involvement in Twitter as a victory for free speech and a win for conservatives. The Tesla CEO, who labeled Burry a "broken clock" last year, also appeared to warm to the investor.

"You will get it back, even though you shorted Tesla, you bastard," Musk tweeted in April about Burry's blue checkmark on Twitter, adding a crying-with-laughter emoji.

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