Mark Spitznagel, a well-known investor, has said that yesterday’s stock market decline may be a precursor to a larger event in the future.
Referring to the plunge as a “trap,” he said that he anticipates an “80% crash when this is over,” according to a MarketWatch report. “I just don’t think this is it,” he added.
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Who is Mark Spitznagel?
Spitznagel is the founder and chief investment officer of Universa Investments, a hedge fund. Its investing strategy is to take positions that will benefit from rare, unpredictable, but highly impactful events.
Funds like Universa Investments are known as “Black Swan” funds, referring to a term used to describe unexpected events. It was originally popularized by scientist, author and former options trader Nassim Nicholas Taleb, who was also influential in this same strategy.
An example of the strategy’s success would be it making investment returns of as much as 4,144% when markets crashed in from fears of the COVID pandemic, according to the report.
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“This is another selloff to shake people out. This isn’t Armageddon,” Spitznagel said. “That time will come as the bubble bursts. This is a most contrarian view right now. Promise.”
This comes after Spitznagel having been calling for a bigger crash, which he feels would be the worst since 1929.
He had previously warned investors in 2024 to not get caught off guard when the stock market turns for the worse and end up being the “sucker” who sells when the market is down and buys when it’s up.
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How much did the US markets fall?
The Dow Jones Industrial Average was down by 0.84% and the S&P 500 and other major indices saw their steepest two-day selloff since March 2020.
