• Fund managers with a pessimistic view of the economy
• High level of debt as a massive risk
• Advertising for own funds
Hedge fund company Universa Investments is advised by financial writer Nassim Taleb. The former options trader became nationally known after the publication of his book “The Black Swan: The Power of the Highly Unlikely Events” in 2007. Taleb predicted the 2008 financial crisis. The expert does not consider it completely improbable that the markets will again face major challenges in the coming months and years.
Massive debt could set off time bomb
Mark Spitznagel, the company’s chief investment officer at Universa Investments, recently sent a letter to investors outlining the prospects for the financial markets evaluated with little optimism. “It is objectively the largest time bomb in financial history – larger than the late 1920s and likely to have a similar impact on the market,” quoted Bloomberg from the expert’s investor statement.
Last year he warned of a “catastrophic market failure” if the credit bubble were to burst. In his current letter, he refers to this again and specifically criticizes the high level of debt in the entire global economy, which could wreak havoc: “The correction that was once natural and healthy has become a contagious inferno that can destroy the entire system “, he explains. In his view, the world is “simply leveraged too much today, the debt construct is simply too big.”
Advertisement for his hedge fund
In this context, Spitznagel wants to encourage investors to invest in his hedge fund Universa Investments. The company has a focus on risk mitigation and also offers a fund to hedge against black swan events. According to Spitznagel, his hedge fund’s strategy could yield an average return of 402 percent on invested capital if the S&P 500 loses 10 percent in one month. A return of 10,251 percent would be possible if the index fell by 30 percent. “This payout profile is Universa’s core competency,” says Spitznagel. “We’ve been refining it for decades.” According to Bloomberg, if investors had invested 2% of their portfolio in Universa, the compound annual growth rate over the past five years would have been 10.4%. However, investors would have fared worse than the market. In the five years ended Jan. 30, 2023, the S&P 500 is up more than 55 percent, according to Bloomberg.
Other experts share concerns about global debt
Regardless of this, other market experts have also recently expressed concern about the high level of global debt. Star economist Nouriel Roubini also recently warned of a massive debt crisis. In his book “Megathreats: 10 threats to our future – and how we survive them” he referred to it again and explained that the economy was being hit by a debt crisis, state and company bankruptcies, a demographic “time bomb”, cheap money and inevitable stagflation threatened.
Editorial office finanzen.net
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