Mark Spitznagel, Chief Investment Officer and founder of the tail risk-focused hedge fund Universa Investments, stated in an interview with Reuters that market exuberance could drive U.S. stocks up another 20%, pushing the S&P 500 index above 8,000 points, after which a historic collapse comparable to that of 1929 would occur, as the U.S. economy is expected to collapse under the pressure of still high borrowing costs.
Spitznagel admitted that he does indeed expect the stock market to drop 80%, but this would only happen after a massive, exuberant, and historic blowout rally. He believes that U.S. stocks are currently in the middle stage of this rally, rather than at its end.
The hedge fund manages $20 billion in assets and focuses on protecting against "black swan" shocks, using investment tools including credit default swaps, stock options, and other financial derivatives that appreciate in value during extreme market dislocations