Mark Spitznagel of Universa, who has lined his pockets with billions of dollars from past crashes, predicts there will be one final hurrah for stocks before they take a plunge. Spitznagel’s expertise is highly respected amongst investors, so when he says stuff like this, the big boys pay attention.
So why do these folks listen to Spitznagel? Well, for starters, he pulled in a billion dollars in one day, along with a number of other huge scores since getting into tail risk hedge fund Universa Investments in 2008. The second reason people’s ears perk up when he speaks is that his success has not been predicated on a short-term view.
According to Yahoo Finance:
In a recent interview with The Wall Street Journal, Spitznagel said the yearslong rally in the stock market amounted to the “greatest bubble in human history.” He pointed to similarities with the dot-com bubble, when investors poured money into tech stocks before the frenzy fizzled and the Nasdaq crashed in 2000.
“You don’t feel like a fool for making a bearish argument,” he said during his interview the Journal.
But Spitznagel said the bubble — and the impact of its bursting — would be even more extreme this time around, as the government’s $34 trillion debt would make it more difficult for the Federal Reserve to turn the economy around in time to avoid a recession.
Spitznagel said the current rally would likely continue for months as inflation continues to fall and the Fed eases monetary policy, adding that stocks could soon lose over half their value in a subsequent sell-off.
In short, Spitznagel said the situation in markets was a “mega-tinderbox-time bomb.”
“I think we’re on the way to something really, really bad — but of course I’d say that,” Spitznagel added.
His company, Universa Investments, provide funding for bets on what are known as “black swan” events moving markets. During the 2008 stock-market crash, the 2015 flash crash, and the coronavirus pandemic, Spitznagel made billions of dollars.
Ever since January 202, Spitznagel has warned that a crash was on its way.
While it’s not the first time he’s issued such a dire warning, he pointed out the timeline for the upcoming crisis has been made clearer and a recession is on the horizon, perhaps unfolding before the year comes to a close.
With all of the unrest in our country and many others around the world, this is a pretty bad time for a recession to explode onto the scene. But it’s not exactly a surprise. Look at the current inflation rate. It’s insanely high, which has resulted in an increase in the cost of living that has people shell shocked after a trip to the grocery store.
It’s more critical now than ever before to ensure you have a stockpile of food and other necessities just in case things turn south sooner than expected. You might have to be slow about building up your emergency stash, since things are so expensive at the moment, but starting now and having something put back is better than having nothing when the crap hits the fan.
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