"Approaching a Peak"
Famous investor Mark Spitznagel, who posted returns exceeding 4000% in the first quarter of 2020 during the spread of COVID-19, warned that the U.S. stock market is approaching a peak, calling it the "largest bubble in history."
According to the U.S. daily Wall Street Journal (WSJ) on the 20th (local time), Mark Spitznagel, Chief Investment Officer (CIO) of Universa Investments, recently said that the U.S. stock market could crash more severely than during the 2000 dot-com bubble burst.
He mentioned the possibility of the U.S. economy falling into a recession by the end of the year, evaluating that the large public debt and overvalued asset prices make it difficult for U.S. authorities to respond effectively.
He explained that because the government has acted too aggressively to prevent major economic problems so far, conditions have been created where issues could arise due to debt problems or other hidden risks.
He predicted that the stock market rally could continue for the next few months and the number of rising stocks may increase. Currently, the economy is in the so-called "Goldilocks" phase, neither too hot nor too cold, and expectations for further stock market gains are emerging due to easing inflation and interest rate cuts.
However, he also pointed out that interest rate cuts have often been the "starting gun" signaling a shift in the overall market direction. There is a possibility that stock prices could fall to less than half due to a large-scale sell-off in the future.
CIO Spitznagel is an expert in "tail risk" investment strategies (risks with low probability but very large losses if they occur) and recorded a 4,144% return in the first quarter of 2020 during the spread of COVID-19. The fund he manages usually performs poorly but has made significant profits during periods of high volatility, such as the 2008 financial crisis.
WSJ described an atmosphere where investors are paying close attention to CIO Spitznagel's remarks. Until recently, the U.S. stock market had been strong, significantly reducing the influence of bearish investors on Wall Street, and Marco Kolanovic, a representative bear, resigned from JP Morgan. The Nasdaq 100 index also plunged 4% last week.
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