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Mark Spitznagel, a bearish investor, predicts that stocks could soon lose more than half their value in a sell-off.
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He says a recession could occur by the end of the year, fueled by the government’s $34 trillion in debt.
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His fund, Universa Investments, has made billions from previous stock market crises.
Black swan investor Mark Spitznagel says the stock market is headed for a historic sell-off, reiterating a bearish warning for investors who are getting comfortable with stocks’ steady gains amid the frenzy surrounding of artificial intelligence.
On a recent interview with The Wall Street JournalSpitznagel said the years-long stock market rally represented the “biggest bubble in human history.”
He pointed out similarities to the dot-com bubble, when investors poured money into technology stocks before the frenzy subsided and the Nasdaq crashed in 2000.
“You don’t feel like a fool for making a pessimistic argument,” he told the Journal.
But Spitznagel said the bubble – and the impact of its bursting – would be even more extreme this time, as the government Debt of US$34 trillion it would make it more difficult for the Federal Reserve to turn around the economy in time to avoid a recession.
Spitznagel said the current recovery will likely continue for months as inflation continues to fall and the Fed eases monetary policy, adding that stocks could soon lose more than half their value in a subsequent sell-off.
In short, Spitznagel said the situation in the markets was “mega-tinderbox time bomb.”
“I think we’re on the way to something very, very bad — but of course I would say that,” Spitznagel said.
Spitznagel’s Universa Investments fund bets on “black swan” events that move markets. He made billions during the 2008 stock market crash, the 2015 flash crash and the onset of the COVID-19 pandemic in early 2020.
It has been warning of an accident since January 2023, so although it is It’s not the first time he’s sounded the alarmhe said the timeline of a coming crisis was clearer now and that a recession could be in sight before the end of the year.
Read the original article at Business Insider
