When stocks held by American families are more expensive than houses, is a cold winter approaching?

A single chart is enough to tighten the market’s nerves. Just now, Michael Burry, the original figure of “The Big Short” and someone who once took a large short position before the subprime crisis, posted a chart pointing to an extreme signal that has only appeared three times in the past 70 years. It’s not an emotional judgment, but a warning from the asset structure itself.

An Extremely Unusual Asset Structure Signal

The logic of this chart is simple but striking.

The blue line represents the proportion of real estate in American household net assets — the traditional “ballast.” The red line represents the proportion of stocks in American household net assets — the most volatile and riskiest part.

In a “normal world,” the blue line remains above the red line for a long time. Most households’ core wealth is in their homes, not in stock accounts.

But now, the situation has fundamentally changed: The share of stock assets has long and clearly surpassed real estate.

To put it plainly —
On paper, the total value of stocks owned by American households is now worth more than their homes.

History Won’t Repeat, But It Rarely “Goes Quiet”

This kind of structure has only appeared twice in the past 70 years.

The first was in the late 1960s during the “Beautiful 50” bubble.
The result was the subsequent stagflation decade of the 1970s, where assets were continuously eroded by inflation and low growth, not instant vaporization, but a prolonged decline in wealth.

The second was in the late 1990s during the Internet bubble.
The Nasdaq plummeted 70%, and it took a full 15 years to recover to previous highs.

Neither of these historical instances ended with a “soft landing.”

Burry’s Judgment: Not a Sudden Crash, but a Long Cold Winter

Burry is not predicting a “collapse tomorrow.” What he truly warns against is a more torturous risk:

This time, it may not be a quick V-shaped reversal like in 2020,
but a multi-year bear market.

Not a swift death, but a dull knife cutting through meat.
Not panic-driven stampedes, but a gradual erosion of patience and confidence over time.

From a long-term perspective, Burry’s judgment is often correct;
but the market also knows he is often “early.”

This does not mean the risk isn’t real —
When he starts being considered “too early,” it often indicates that structural problems have already formed.

What to Truly Watch Out For Is Not the Index, But Your Own Asset Structure

In such an environment, risk doesn’t necessarily come from a sudden crash tomorrow, but from long-term misallocation.

If high-valuation tech stocks already occupy too large a share of your assets,
far exceeding real estate, cash, and defensive assets,
then don’t use “long-term investing” as an excuse to bet on high concentration.

This is not about being bearish on the world, but respecting the cycle.

Asset Rebalancing Is More Important Than Predicting Ups and Downs

In the late stage of a bubble, the most dangerous behavior is greedily chasing the last 20% of gains.

Instead of continuing to chase valuation expansion at high levels,
a more rational choice now is to proactively perform a calm asset rebalancing.

High-yield bonds and assets with stable cash flow may not be glamorous,
but their role has never been to make you get rich quickly,
but to help you survive the cold winter.

When Australian government bonds can offer near 4% certain returns,
their significance is no longer “conservative,” but defensive.

Don’t Be the Last to Take the Baton

History repeatedly proves that before a bubble bursts,
the market will always come up with reasons why “this time is different.”

The real risk isn’t whether you missed the last rally,
but whether, at the most crowded valuation, position, and sentiment,
you become the last person to take the baton.

Final Words

When stocks replace real estate as the core wealth holder for American households,
that itself is not a “healthy” long-term state.

Whether winter arrives immediately, no one can say for sure.
But when asset structures are already so extreme,
risk management itself becomes a form of return.

The market doesn’t need you to win every round,
it only asks that you — don’t bet everything when it’s most unwise.