Today Michael Burry explained to Bloomberg that ETFs are comparible to subprime CDOs, in that investors are buying securities that aren't backed by any real value:
Passive investing has removed price discovery from the equity markets...
... 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.
The S&P 500 contains the world’s largest stocks, but still, 266 stocks -- over half -- traded under $150 million today. That sounds like a lot, but trillions of dollars in assets globally are indexed to these stocks.
My question is: does this apply to physical ETFs (e.g. iShares CSPX) or is Burry only refering to synthetic ETFs and other derivatives?