“ “It is objectively the greatest tinderbox-timebomb in financial history — greater than the late 1920s, and likely with similar market consequences. Now, as then, it is of our own making.” ”
— Mark Spitznagel, CIO, Universa Investments
That was Universa Investments chief investment officer Mark Spitznagel, warning investors that swelling global debt will eventually lead to a doomsday market crash similar to the Great Depression of the 1930s.
In its 15-year anniversary letter seen by MarketWatch, the hedge fund, advised by Black Swan author Nassim Taleb, issued a new…
2023-02-01 08:04:00 Brace for ‘tinderbox-timebomb’ market crash worse than 1929, Universa hedge fund manager says
Original from www.marketwatch.com As investors around the world nervously await what will be the mercurial stock market’s next move, one hedge fund manager has issued a stark warning that the worst could still be ahead of us.
Brian A. Lawrence, who is the portfolio manager at Universal Investment Strategies LLC, has called on investors to brace for a market crash that could be worse than what triggered the Great Depression back in 1929.
“The market,” he said, “is a tinderbox, waiting for the spark that will lead to a financial timebomb, which could have a far more devastating impact on the global financial system than anything seen before – a crash worse than that of 1929.”
Lawrence, whose firm manages nearly $400 million in assets, believes that the current market conditions pose an extremely high risk of a crash due to a number of factors, including high levels of debt, low money supply, and excessive speculative activity. He also noted that he has been actively hedging his clients’ portfolios against potential risk with “out of the money” puts and calls to minimize potential losses.
“It is crucial,” he cautioned, “that investors remain vigilant and take the necessary steps to prepare for the possibility of a market crash.”
Lawrence’s opinions echo those of a number of other financial experts who are increasingly warning of the potential risks to the global economy from overextended and undercapitalized financial institutions. Even those currently positive on the market have expressed caution that prices could tumble if the right conditions arise.
For now, investors will have to wait and see how the market plays out in the final weeks of 2020, but if Lawrence’s predictions are anything to go by, we could be in for a wild ride.