Founder of Renowned "Black Swan Fund" Warns: S&P 500 Could Soar to 8000 Points Before Plummeting

Odaily According to Mark Spitznagel, Founder and Chief Investment Officer of the "black swan fund" Universa Investments, the multi-year upward trend in U.S. stocks is far from over—at least for now.

In a recent letter to investors, Spitznagel wrote that over the next year, the market will remain in a "Goldilocks zone—with inflation and interest rates declining, the economy slowing but not excessively, and market sentiment turning euphoric—stocks will continue to climb and end with a surge." However, he added that the "largest bubble in human history" has now entered its final stage.

Spitznagel's hedge fund, with nearly two decades of history, focuses on tail risk hedging, which protects investor portfolios from the next major crash. He stated that as long as the economy remains resilient, the stock market will continue to rise—a view he has held since late 2022. In an interview, he claimed that market euphoria could drive the S&P 500 index to 8,000 points or even higher—followed by a sharp reversal.

The concern is: if the Federal Reserve maintains current interest rates for an extended period, companies will begin to struggle with fundraising. Spitznagel noted that although the economy appears resilient, monetary policy has lag effects, and the Fed's excessive focus on lagging indicators like inflation has left it behind the curve.

"The Fed is currently on hold, and as the economy gradually deteriorates, the market will expect more easing measures," he said. In this context, stocks will climb on expectations of more rate cuts, only to fall rapidly when the economy slows. "At some point, the Fed will be powerless to intervene, exactly as happened in 2007 and 2008."