The stock market is on the brink of a historic sell-off, according to renowned black-swan investor Mark Spitznagel. He has issued a stark warning about the potential collapse of the “greatest bubble in human history.”
What Happened: Spitznagel, known for his successful bets on market-moving “black swan” events, in an interview with the Wall Street Journal on Friday, reiterated his bearish outlook on the stock market. He compared the ongoing market rally to the dot-com bubble of the late 90s, which ended in a significant crash in 2000.
“You don’t feel like a fool for making a bearish argument.”
The current bubble’s burst could have more severe consequences due to the U.S. government’s $34 trillion debt, he said, comparing the current market situation to a “mega-tinderbox-time bomb.” This debt, he believes, would hinder the Federal Reserve’s ability to prevent a recession in time.
“I think we’re on the way to something really, really bad — but of course I’d say that.”
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Why It Matters: Spitznagel, whose Universa Investments fund profited heavily from the 2008 market crash, the 2015 flash crash, and the onset of the COVID-19 pandemic, has been cautioning about a potential crash since January 2023. He now believes that the timeline for the impending crisis is clearer, and a recession could be looming by year-end.
Spitznagel’s warning adds to a growing chorus of voices predicting a market crash. In June, economist Harry Dent predicted an “everything” bubble that could surpass the severity of the Great Recession. Similarly, in July, economist John Higgins suggested that a Trump presidency could trigger an early burst of the AI stock rally.
Despite these warnings, some experts see the potential market crash as a buying opportunity. Chief Investment Officer Richard Bernstein suggested that the most expensive stocks in the market are likely overvalued and could be heading for a correction, presenting a significant buying opportunity for other areas of the market.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
Photo courtesy: Wikimedia
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