Black Swan Fund founder raises alarm: US stock market "golden-haired girl" faces sudden end danger
Black Swan Fund founder Mark Spitznagel warns that despite the historic highs in the US stock market, the market seems to be in a "blond zone", but investors should be wary of potential risks. He predicts that the global market will collapse by the end of the year, possibly triggered by an economic slowdown. He mentioned that Fed rate cuts could exacerbate market volatility, causing gold and cryptocurrencies to fall, while bonds could become a safe haven
According to the Zhitong Finance and Economics APP, Mark Spitznagel, the founder and chief investment officer of the Black Swan Fund Universa Investments, stated that as the stock market hits historic highs, traders are increasingly confident in the prospect of a soft landing for the economy. The stock market seems to be in a "golden zone," but in an interview on Thursday, he warned investors to be wary of second-order effects. For example, even if the Federal Reserve cuts interest rates, an economic slowdown could still lead to a sudden market collapse. Spitznagel predicts that a "collapse" will occur in global markets by the end of this year, possibly driven by an economic slowdown.
Spitznagel said, "When the yield curve inverts, and then inverts again, the clock starts ticking, that's when you enter the realm of the Black Swan." His company is advised by Nassim Nicholas Taleb, the author of "The Black Swan." "Black Swans are always lurking, but now we are entering their territory."
Boosted by expectations of corporate profit resilience, the Federal Reserve interest rate cuts, and the belief that the U.S. economy will avoid a recession, the S&P 500 index hit 42 historic highs in 2024. However, Spitznagel believes that the Federal Reserve's lowering of borrowing costs will worry investors and lead them to consider next year's stock price trends more closely.
He said, "Gold will fall, and cryptocurrencies will fall alongside risk assets." He believes that bonds could serve as a safe haven. He also expects market volatility to increase significantly in the coming months