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Mark Spitznagel, chief investment officer of Universa Investments, told Business Insider in 2024 that he thinks the “worst market crash since 1929” is coming (1).
More than a year later, Spitznagel hasn’t backed away from that prediction. Instead, he says the market is still building toward one final rally before what he expects will be a historic crash.
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“I’ve been waiting for over three years for a final euphoric blow-off in equities — followed by the worst crash since 1929,” Spitznagel told Business Insider earlier this year. “That blow-off is still unfolding (2).”
His new warning comes as U.S. stocks continue to climb on AI optimism and expectations for lower interest rates. But with government debt at record levels, stock valuations stretched and geopolitical tensions lingering amid the Iran conflict, Spitznagel says investors shouldn’t mistake the rally for a sign the danger has passed.
Instead, he argues it’s the final stage of a massive market bubble before a historic crash.
During an earlier interview with Intelligencer (3), he noted the high levels of national debt and the Federal Reserve’s aggressive rate hikes as contributing factors to the “greatest credit bubble in human history.”
“Credit bubbles end. They pop. There’s no way to stop them from popping,” he said, adding that the Fed has brought the economy to a place “where there’s no turning back.”
So, what’s Spitznagel’s advice to everyday investors? In another interview with Fortune, Wall Street’s gloomiest bear noted that one of the most common investing maxims is actually hurting you.
Preparing for a crash
Spitznagel’s advice to investors is unorthodox.
“Diversification is not the holy grail as it’s been touted by many people. That is a big lie actually,” he told Fortune (4).
Traditionally, diversification is used to protect yourself against a market nosedive. But, according to Spitznagel, many investors take it too far, believing that it will save them from a worst-case scenario. By the same token, an overly diversified portfolio can lead to missing out on maximizing your gains from market highs.
