‘Black Swan’ Investor Warns of Historic 80% Market Crash
Notorious market pessimist Mark Spitznagel believes the recent stock market volatility following President Trump’s tariff announcements isn’t the catastrophic crash he’s been predicting – it’s merely a prelude to a much larger collapse. The founder and chief investment officer of hedge fund Universa Investments expects an eventual 80% market crash, describing current conditions as “the largest bubble in human history.”
“I expect an 80% crash when this is over. I just don’t think this is it. This is a trap,” Spitznagel told MarketWatch on Monday. His comments came as markets experienced wild swings following last week’s steep selloffs that saw the S&P 500 fall a cumulative 10.5% after Trump unveiled sweeping tariff measures.
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The ‘Black Swan’ Strategy
Spitznagel’s Universa Investments employs a “Black Swan” strategy designed to profit from rare, unpredictable, but highly impactful events – a term popularized by scientist and author Nassim Nicholas Taleb. The approach has proven remarkably successful in past market crashes, with Universa making headlines in 2020 after returning an astounding 4,144% during the March COVID market collapse.
Despite his long-term bearish outlook, Spitznagel maintains he’s been bullish since 2022 and sees the possibility of markets reaching new highs before the eventual collapse. “I’ve been calling for a blow-off euphoric high for two and a half years,” he told Fortune in a Friday interview. “I’m still waiting for that. I think it’s still probably going to happen.”
The stock market will go down 80% ‘when this is over,’ says bearish investor Mark Spitznagel https://t.co/odwrWwb4GC
— MarketWatch (@MarketWatch) April 7, 2025
A ‘Head Fake’ Selloff
Spitznagel characterizes the recent market selloff as a “head fake” rather than the beginning of a true crash. “This is another selloff to shake people out. This isn’t Armageddon. That time will come as the bubble bursts,” he wrote to MarketWatch, adding that “This is a most contrarian view right now. Promise.”
The renowned investor emphasizes he isn’t in the business of predicting the exact timing of market crashes. However, his perspective runs counter to increasingly bearish Wall Street sentiment, with some analysts raising recession odds as high as 50% in recent forecasts.
The Debt Bubble and Fed Response
At the core of Spitznagel’s catastrophic prediction is concern over the “explosion of debt” that was stressed by the Federal Reserve’s aggressive rate-hiking cycle in 2022 and 2023. While the central bank has since pivoted to rate cuts, Spitznagel believes lag effects from the tightening are still working through the system.
When the bubble finally bursts, he expects the fallout to be far worse than the 2008 financial crisis. “I think, when this is over, we’re going to see something far worse than ’08, ’09,” he warned. The catalyst will likely be a severe recession that prompts extreme Fed intervention – leading to what he describes as “hard landing, panicking Fed. And that’s a crash.”
Warning Signs and Advice
Spitznagel told Fortune that market failures typically occur when the economy pivots, pointing to current conditions of slowing growth, cooling inflation, and falling bond yields. “This is sort of slowly turning like a tanker, and that’s put us in black swan territory for sure,” he said. “As that accelerates, we really need to be on the lookout.”
Despite his alarming predictions, Spitznagel has previously offered practical advice for retail investors. In a 2023 Fortune interview, he suggested ordinary investors could weather market storms by purchasing low-cost, broad index funds and even adding to positions when markets decline – provided they haven’t overextended to the point of being forced to sell at unfavorable times.
Professional Doom and Gloom
“All the doom and gloomers think it’s over and they have this figured out. Take it from a professional doomer, they don’t,” Spitznagel wrote on Monday. His firm continues to position for a crash while allowing clients to participate in ongoing market gains. “We’ve had our clients riding this bull market for years,” he noted, underscoring his unique approach of preparing for catastrophe while capturing upside potential.
As markets remain volatile and investors try to interpret conflicting economic signals, Spitznagel’s stark warning serves as a reminder that even in apparently stable conditions, the potential for unprecedented disruption remains – though the timing, as always, remains the greatest mystery.
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