Investor whose winning stock bet amid coronavirus has returned over 4,100% says ‘we are in a boom and bust cycle, an epic and monumental boom-bust cycle’

Shares have fallen more than 30% amid the pandemic that has put millions of Americans out of work and forced many companies into bankruptcy.

Universa, a hedge fund designed to benefit from tail risks – those unpredictable events that can happen more often than we imagine and are therefore often underestimated by the broader investment community – has seen a surge in remarkable power in the era of COVID-19.

And while Spitznagel doesn’t seem ready to foresee more carnage for investors, he has suggested that the current environment is rife with landmines for complacent investors, with the larger market seen as overvalued due to its incredible rally against a economy which is still on unequal bases.

Lily: The stock market bull, which canceled the rally after March lows, now says the S&P 500 overvalued by 5% to 10%

The S&P 500 rebounded more than 51% from its March 23 lows, the Dow Jones Industrial Average DJIA,
-0.30%
gained nearly 50% from that point on, while the Nasdaq Composite Index COMP,
+ 1.00%
soared more than 62%, according to FactSet data.

See: If history repeats itself, the stock market will hit a new high by the end of August

“Stock market crashes are the direct result of overvaluation. I don’t think there are a lot of people right now who would dispute the fact that the markets are quite overvalued, ”Spitznagel told CNBC on Monday.

“Maybe they will be more overvalued. I think that’s the argument for being long today is that … the over-valuation continues and [they can] become even more. But they’re overvalued and that’s the setup for left tail events in the stock markets, ”he explained.

Lily: Author of “Black Swan” Says If Investors Don’t Use “Back Hedge”, He Recommends “Not To Be In The Market”: “We Are Faced With Huge Uncertainty”

Nassim Nicholas Taleb, author of “Black Swan: The Impact of the Highly Unlikely”, is a Universa advisor.