Hedge Funder Who Made 4,000% In 2020 Crash Sends Dire Warning - Again?

Mark Spitznagel, owner and Chief Investment Officer of the hedge fund Universa, warned investors that we are financially in a “tinderbox timebomb” waiting to explode in a letter on his fund’s 15th anniversary. 

Sptiznagel has made a killing in his career during turbulent events in the market. In fact, back in 2015, Sptiznagel famously made more than $1 billion in a single day during the 2015 “flash crash.” More recently, he netted more than 4000% in a single quarter in 2020 betting against the market when it crashed amid the COVID-19 pandemic. 

Spitznagel strives to identify “black swan” events - occurrences of extreme volatility such as the COVID-19 crash. Nassim Nicholas Talib wrote a book titled “Black Swan” in 2007 focused on these kinds of unpredictable events and the impact they have on financial markets.

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Spitznagel’s fund, Universa, has put up incredible numbers throughout the last decade or so. In fact, according to a recent report from The Wall Street Journal, 2 cents invested in the fund at inception would be worth about $1.30 today, good for about a 6,400% gain in 15 years. 

In the letter, Spitznagel does not say exactly when he expects the financial timebomb to explode, but indicates the impact would be enormous. But, as the Wall Street Journal points out, Spitznagel’s views on the economy may be influenced by his politics as well.

Spitznagel is close with former Libertarian Party presidential nominee Ron Paul, who is a proponent of restoring the gold standard and abolishing the Federal Reserve. Both ideas are disputed by most reputable economists. But, those like Paul who want to restore the gold standard, often use the idea of a Great Recession-type collapse as a way to spread their message. 

So, while Spitznagel has a long track record of posting higher returns than the market, his ideas about a huge crash may be more hopeful than objective. 

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