...no.

A piece at a time, from Burry:

Central banks and Basel III have more or less removed price discovery from the credit markets, meaning risk does not have an accurate pricing mechanism in interest rates anymore.

Nobody is losing money where they should be because there's been so much free government cash flooding the markets.

And now passive investing has removed price discovery from the equity markets.

And ETFs have made it so that the price of an equity has nothing to do with the value of an equity.

The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies -- these do not require the security-level analysis that is required for true price discovery.

The things people are buying hide the underlying aspects of the stuff that makes up the things people are buying.

“This is very much like the bubble in synthetic asset-backed CDOs before the Great Financial Crisis in that price-setting in that market was not done by fundamental security-level analysis, but by massive capital flows based on Nobel-approved models of risk that proved to be untrue.”

CDOs were make-believe products driven by make-believe models with very real money pumping into them and as soon as the model and the reality diverged, I was destined for a Michael Lewis book.

“The dirty secret of passive index funds -- whether open-end, closed-end, or ETF -- is the distribution of daily dollar value traded among the securities within the indexes they mimic.

That which ACTUALLY makes up an ETF has fuckall to do with what the funds PROFESS to make up an ETF.

“In the Russell 2000 Index, for instance, the vast majority of stocks are lower volume, lower value-traded stocks. Today I counted 1,049 stocks that traded less than $5 million in value during the day. That is over half, and almost half of those -- 456 stocks -- traded less than $1 million during the day. Yet through indexation and passive investing, hundreds of billions are linked to stocks like this. The S&P 500 is no different -- the index contains the world’s largest stocks, but still, 266 stocks -- over half -- traded under $150 million today.

The amount of money indexing is not at all related to the amount of money represented in the stocks that make up the index which means a tiny move in the real stock market becomes a huge move in the index funds.

“This structured asset play is the same story again and again -- so easy to sell, such a self-fulfilling prophecy as the technical machinery kicks in. All those money managers market lower fees for indexed, passive products, but they are not fools -- they make up for it in scale.”

The guys who are selling these things are collecting nickels in front of steamrollers because THEY aren't the ones doing the running. YOU are the one who is going to get run over.

“Potentially making it worse will be the impossibility of unwinding the derivatives and naked buy/sell strategies used to help so many of these funds pseudo-match flows and prices each and every day. This fundamental concept is the same one that resulted in the market meltdowns in 2008.

The problem in 2008 wasn't mortgages defaulting, it was the annihilation of the derivatives whose value was determined by those mortgages. The problem with ETFs won't be any hypothetical drop in the underlying value of the equities that make up the ETFs - the problem will be the mechanism by which those losses are translated into the ETFs because there's leverage and transformation between the values of the two.

Now, here's Ben Carlson:

Herp derp I don't understand Burry well enough to object to what he's saying here's a bunch of random platitudes

I mean, Carlson is basically writing a rebuttal of the argument that index funds are bad because nobody is managing your money. Nowhere was that argument made by Burry. Burry's argument was that the mechanisms by which ETFs are constructed are perverse and weird and subject to different forces than the supply and demand of the underlying equities and Carlson legit didn't understand that.