The founder of a well-known "Black Swan Fund" warns: The S&P 500 may plummet after reaching 8,000 points.

Mark Spitznagel, founder and chief investment officer of the “Black Swan Fund” Universa Investments, says the multi-year rally in U.S. stocks is far from over—at least for now. In a recent letter to investors, Spitznagel wrote that the market will continue in the “Goldilocks zone—declining inflation and interest rates, a slowing but not excessive economic slowdown, and a shift to market frenzy—with the stock market continuing to climb and ending in a surge.” However, he added that “the biggest bubble in human history” is now in its final stages. Spitznagel’s hedge fund, which has been operating for nearly two decades, focuses on tail risk hedging, protecting investors’ portfolios from the next major crash. He says that as long as the economy remains resilient, the stock market will continue to rise—a view he has maintained since late 2022. In an interview, he stated that market frenzy could push the S&P 500 to 8,000 points or even higher—followed by a sharp reversal. A worrying aspect is that if the Federal Reserve maintains current interest rates for an extended period, businesses will begin to struggle to raise capital. Spitznagel stated that while the economy appears resilient, monetary policy exhibits a lag effect, and the Federal Reserve's excessive focus on lagging indicators like inflation has become outdated. "The Fed is currently holding back, and as the economy gradually deteriorates, the market will anticipate more easing measures," he said. In this context, the stock market will climb on expectations of further rate cuts, followed by a rapid decline when the economy slows. "At some point, the Fed will be powerless to reverse the situation, exactly as happened in 2007 and 2008."