The U.S. stock market has taken a beating as Trump’s tariff-fueled sell-offs continue to rattle investors. But according to one prominent bear, the worst is yet to come.
Mark Spitznagel, founder and chief investment officer of Universa Investments, warned in commentary to MarketWatch that a historic collapse may be looming.
“I expect an 80% crash when this is over. I just don’t think this is it. This is a trap,” he said on April 7, days before Trump announced a 90-day pause on his plan to hike tariffs on most countries.
The stock market recovered some losses on that announcement, but it’s still a chilling forecast from Spitznagel. The S&P 500 is down roughly 7% year to date — enough to shake investor confidence — yet Spitznagel suggests that could be just the beginning of a much steeper fall.
And his warnings don’t stop there.
“This is another selloff to shake people out. This isn’t Armageddon. That time will come as the bubble bursts,” he added.
Spitznagel is no stranger to market mayhem. He gained notoriety during the 2020 COVID crash, when Universa’s flagship “Black Swan Protection Protocol” fund posted an eye-popping 4,144% return in the first quarter of that year.
Today, his call stands out even among Wall Street’s growing caution. Several major firms have slashed their forecasts for the S&P 500, though none approach Spitznagel’s apocalyptic tone.
Markets are inherently volatile. Whether or not you buy into Spitznagel’s outlook, it might be a good time to consider how to diversify beyond traditional stocks. Here are three simple ways to start.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, recently underscored the importance of diversification — and the enduring value of one classic asset.
“People don’t have, typically, an adequate amount of gold in their portfolio,” he said in a February interview with CNBC. “When bad times come, gold is a very effective diversifier.” He suggests having 10-15% of a portfolio invested in gold.
Gold is considered a go-to safe haven. It can’t be printed out of thin air like fiat money, and because it’s not tied to any single currency or economy, investors often flock to it during periods of economic turmoil or geopolitical uncertainty, driving up its value.
Over the past 12 months, gold prices have surged more than 35%.
Today, there are plenty of ways to gain exposure to gold.
Investors can put money in gold ETFs or own shares of gold mining companies. They may also buy gold bullion — many online platforms offer a wide selection of gold and silver bars and coins at fair prices — and even tap into potential tax advantages through a gold IRA.
Read more: The US stock market’s ‘fear gauge’ has exploded — but this 1 ‘shockproof’ asset is up 14% and helping American retirees stay calm. Here’s how to own it ASAP
Like stocks, real estate has its cycles, but it doesn’t rely on a booming market to generate returns.
Even during a recession, high quality, essential real estate can continue to produce passive income through rent. In other words, you don’t have to wait for prices to rise to see a payoff — the asset itself can work for you.
It’s also a time-tested hedge against inflation. As the cost of materials, labor, and land rises, property values often increase as well. At the same time, rental income tends to climb, giving landlords a revenue stream that adjusts with inflation.
Owning rental property allows investors to collect monthly rent payments, but being a landlord is rarely as passive as it sounds. Managing a property involves finding and screening tenants, collecting rent, and handling maintenance and repair requests (out of your own pocket) — and that’s assuming you can save enough for a downpayment and get a mortgage to buy the property in the first place.
The good news? These days, you don’t need to buy a property outright to reap the benefits of real estate investing. Real estate investment trusts (REITs) provide a great avenue for those looking to gain exposure to this asset class without the large down payments or management headaches traditionally associated with real estate ownership.
Alternatively, crowdfunding platforms allow everyday investors to own shares in rental properties, but this option has risks average investors should be aware of, like low liquidity and no guarantee of returns.
It’s easy to see why great works of art tend to appreciate over time. Supply is limited and many famous pieces have already been snatched up by museums and collectors. This also makes art an attractive option for investors looking to diversify.
In 2022, a collection of art owned by the late Microsoft co-founder Paul Allen sold for $1.5 billion at Christie’s New York, making it the most valuable collection in auction history.
Art also has a low correlation with stocks and bonds, which helps with diversification. But it’s not without drawbacks: fine art is an illiquid, high-risk asset whose value can be influenced by shifting tastes, trends and the art world’s inner circle. It also requires proper storage, insurance and care — adding to the cost and complexity.
It’s true that investing in fine art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich. But with a new investing platform, you can invest in iconic artworks too, just like Jeff Bezos and Peggy Guggenheim.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
