Renowned Black Swan Fund founder: "The biggest bubble in human history" is about to burst

The mysterious quantitative analyst is a disciple of "Black Swan" author Nassim Nicholas Taleb, whose complex strategies almost make him lose money every day, only effective in very unstable periods.

During a few stock market crashes (including the 2008 financial crisis, the "flash crash" in 2015, and the collapse triggered by the 2020 pandemic), holding a small amount of the funds he manages was enough to defeat classic 60/40 stock-bond portfolios.

Now he believes that a large-scale sell-off is imminent, and the stock market may be halved.

However, predicting the approximate timing of a market crash is much more difficult than hedging portfolio risks, and many people even think it is impossible. Just like those fund managers and strategists who always sound optimistic, scary statements sound like clever marketing tactics of people guarding against tail risks.

Spitznagel joked in an interview this week, "I think we are heading towards a very, very bad place. Of course, that's something I would say."

With market volatility at historically low levels and the stock market nearing all-time highs, Universa has recently found it difficult to attract clients.

Spitznagel believes that the rise of the U.S. stock market will continue for several months, even becoming more frenzied. This is because the market is in a "blond girl period," with declining inflation rates, and the Federal Reserve getting closer to dovishness is further fueling bets on further stock market gains. But he said, rate cuts often signal a major market reversal. Another signal is that some stubborn figures in the investment community remain cautious.

Spitznagel said, "Presenting a bearish argument won't make you feel like a fool." But this statement has been shaken recently.

In May of this year, Morgan Stanley strategist Mike Wilson turned bullish shortly after losing his position on the company's Global Investment Committee. Just recently, Marko Kolanovic of JP Morgan lost his job, maintaining a pessimistic attitude throughout the rise in U.S. stocks driven by the artificial intelligence boom.

Fund managers who did not join the artificial intelligence boom and buy NVIDIA stocks are licking their wounds. These events inevitably bring to mind the dot-com bubble: at the end of 1999, a few months before the peak of the S&P 500 Index (SPX), Merrill Lynch's bearish strategist Charles Clough left the company.

Spitznagel predicts that this turmoil will be more severe than the bursting of the dot-com bubble, calling it "the biggest bubble in human history". And high public debt and valuations make Washington-led relief efforts more difficult to succeed.

He believes that the moderate slowdown in inflation has been over-adjusted, and the U.S. economy may enter a recession by the end of this year Ray Dalio described the macroeconomic situation as a "giant powder keg and a time bomb." His metaphor is more subtle than it sounds: the government has been actively extinguishing any sparks in the economy, to the point where debt and other hidden risks have become the cause of a serious fire.

So, how should ordinary people without tail risk hedging tools respond to his prediction? Dalio said, perhaps nothing needs to be done. "Prophets are terrible investors," he said.

Dalio stated that passive investing in stocks is the best long-term strategy. The primary purpose of Universa's protective measures is to allow professional fund managers to bear risks with peace of mind, and then provide them with additional cash when opportunities for buying low arise