Mark Spitznagel, the Founder and Chief Investment Officer of tail-risk hedge fund Universa Investments has cautioned that US equities could climb another 20% before a collapse rivalling the 1929 stock market crash, according to a report by Reuters.
Spitznagel said the S&P 500 could top 8,000 points after a “massive, euphoric, historic blow-off rally,” but warned this would likely be followed by an 80% decline as the economy struggles under elevated borrowing costs.
Miami-based Universa, which manages $20bn, specialises in protecting investors against “black swan” events through derivatives that gain value during extreme market stress. The firm delivered outsized returns during the 2020 pandemic crash and has averaged over 100% return on capital since its 2007 launch.
Spitznagel described Universa as “the most bearish expression of the market there is,” but noted that investors use its strategies as portfolio insurance, enabling them to stay long equities. While he remains short-term bullish, he argued that years of ultra-loose policy have distorted markets and that the delayed effects of higher rates could still trigger a deep recession.
