Mark Spitznagel, a widely-renowned hedge-fund manager with Universa, claimed that the financial system is headed towards an eventual “crisis.”
Spitznagel argued in a recent letter that the financial system is “objectively the greatest tinderbox-timebomb in financial history—greater than in the late 1920s, and likely with similar market consequences,” The Wall Street Journal reported Tuesday.
Spitznagel’s stunning success at Universa has made many heed his words and advice on the future of the financial sector. Universa specializes in capitalizing on extreme market fluctuations. The fund takes small and consistent losses when the markets are strong and then rakes in huge returns when they falter. During the height of the COVID pandemic in 2020, Universa saw over 4,000% return on investment.
The firm accomplishes their eye-popping results through their specialty: “convex tail hedging.” When market fluctuations happen, the firm is able to diminish losses through using this specific tail-hedging method to cover for the portfolio.
Mark Spitznagel of Universa on CNBC 02/15/22 pic.twitter.com/FmOqn8qIzj
— Miguel Sanchez 🇺🇸 (@MiguelBarometer) February 16, 2022
Spitznagel claims that U.S. economic policies likely increase the chances of a massive economic collapse down the line. He notably criticized the Federal Stimulus packages of 2020 as being more about aesthetics rather than sound economics.
In an interview reported on by Business Insider, Spitznagel criticized the government’s Federal Stimulus packages of 2020, claiming that they are more about aesthetics rather than sound economic policy.
“[T]he long-run effects of this stuff is very, very destructive.” he said