Next market crash will be different! This is the biggest risk in the market for the next few years, according to three Wall Street veterans.

When Wall Street is still debating whether the United States will fall into an economic recession and whether the S&P 500 index will reach new highs or experience a "crash," more seasoned Wall Street veterans are already looking at the "next major risk" in the next five to ten years. Saba Capital Management, a hedge fund that seeks excess returns during periods of high volatility, has its co-founder and chief investment officer, Boaz Weinstein, making a pessimistic prediction. He believes that the Federal Reserve will no longer be able to "easily rescue the market" as it did in the past when the next severe market sell-off occurs, and the next recession will be different from the past. His reasoning is that since the 2008 financial crisis, the Federal Reserve has implemented an extreme zero interest rate policy, leading to improper investment behavior in the market. On one hand, major central banks such as the Federal Reserve have been "printing money" on a large scale, resulting in a surge in the size of outstanding government debt under ultra-low interest rates. Moreover, central banks have also initiated quantitative easing by purchasing corporate junk bonds, directly promoting high-risk activities in the financial market. There are even "smart money" encouraging retail investors to enter the high-risk field of private equity. All of these pose safety hazards in the next market crash. Now that the Federal Reserve has launched the most aggressive monetary tightening policy since the 1980s, not only are mortgage interest rates doubling for ordinary people, but also loan interest rates for businesses are doubling. Coupled with the ongoing economic slowdown, this may lead to a significant increase in the default rate on debts starting next year, making it difficult for the previously high-flying "dream companies" to sustain their livelihoods. It is worth noting that investors are still overly optimistic. From the recent performance of the stock market to the bond market, everything seems to be going smoothly. They are betting that the Federal Reserve will successfully combat inflation while achieving a soft landing for the U.S. economy, and the prospect of a "golden-haired girl" scenario is quite dazzling: "However, just look at the frenzy surrounding retail investors' favorite stocks, and you will know that market behavior is influenced by human emotions and psychology. Now people believe that every sell-off is a buying opportunity. I am actually worried that future sell-offs driven by fundamental reasons may be exacerbated by technical factors, and people will rush to exit, causing a liquidity avalanche, market crashes, and more sell-offs." Ida Liu, the global head of Citigroup's private banking business with decades of professional investment experience, believes that geopolitical tensions, especially those surrounding the conflicts and stalemates among the world's top economies, will be the biggest black swan event in the medium term since the Russia-Ukraine conflict: "Artificial intelligence is one of the biggest mainstream trends we are currently seeing, and it is being driven by the semiconductor industry. (This trend coincides with) very complex geopolitical issues, which is something we must keep in mind for the next few years." However, she advises clients to seek opportunities from an optimistic perspective. The first step is to ensure a truly diversified investment portfolio on a global scale, and the second step is to seize opportunities in the constantly changing international trade patterns to find the greatest growth opportunities. For example, she is optimistic about the emerging markets having more room for growth in the coming years, "especially because we believe that the strength of the US dollar has peaked," and currently the trading prices in emerging markets are discounted by as much as 40% compared to developed markets. At the same time, as international trade gradually gives rise to new models with more diversified supply chains, she also sees opportunities in Southeast Asian countries such as Thailand, Vietnam, and Malaysia, as well as Brazil and Mexico benefiting from their respective performances in the China-US trade relationship: "We believe that in the coming years, many different countries will become beneficiaries and continue to benefit from the changes and patterns we see in global trade. As global investors, we cannot ignore the important position of China as the world's second-largest economy. China is making many new advances and progress in artificial intelligence, virtual reality, robotics, and clean energy, which are suitable for investors seeking growth opportunities." David Rubenstein, co-founder of global private equity investment firm Carlyle Group, is concerned about the further exacerbation of social and wealth inequality, which could affect investment performance in the financial markets: "The United States is destined not to lead the world in our lifetime or even the next 100 years. Since 1870, the United States has been the largest global economy, but China and India are catching up and may surpass the United States at some reasonable time in the future. This will lead to a simultaneous decrease in the living standards of the rich and the poor, and even intensify conflicts among different ethnic groups, social classes, and age groups in the United States. During President Carter's tenure, the total US debt was less than $1 trillion, and now it is about $32 trillion. Sadly, there is no other way out of this predicament except essentially getting out of it through inflation. We will not cut government spending, we will not increase taxes too much, we will not seek assistance from the International Monetary Fund, and we will not default on our debt. The only option is to solve the problem through inflation. This is not a good solution for people with lower income levels because they do not have the same ability as the wealthy to deal with inflation. But politicians are powerless in addressing these issues."