'Black Swan' investor agrees with Burry on AI risk, but his $20 billion hedge fund is still bullish

Universa Investments is a tail-risk hedge fund known for its "black swan" strategy of guarding against extreme market crashes. Founder Mark Spitznagel says the artificial intelligence boom will ultimately end in a historic market meltdown. However, Spitznagel's firm is not advising investors to cash out; instead, it employs a strategy that encourages them to confidently capture the final leg of the market's surge.

AI bubble and euphoric rally

Spitznagel warns that "Big Short" investor Michael Burry is right about overinvestment by AI hyperscalers in data centers, microchips, and revolving financing arrangements. However, Spitznagel said in a recent interview with Business Insider that Burry "will get the timing wrong."

Spitznagel expects the market will not crash immediately but will instead see "one last, truly massive, risk-on, crazy, manic melt-up" in risk assets. He cautioned that the economy is quietly "weakening" due to the lagged effects of recent interest rate hikes.

"But when that ends, and it could end soon, I think we're going to have the granddaddy of all market crashes that any of us have ever seen," Spitznagel told Business Insider. "I'm going to be the biggest bear you've ever heard of in the coming months. Just not yet."

The 'black swan' playbook

Universa manages approximately $20 billion in assets and focuses on "black swan" events—protecting portfolios against rare, extreme market disasters through deep out-of-the-money options.

This insurance-like approach means absorbing small losses during normal trading days in exchange for astronomical returns when crises hit. During the COVID-induced market crash in the first quarter of 2020, the fund delivered a staggering 4144% return.

Why the bear stays bullish

Despite running what he calls "the most bearish investment tool you can possibly own," Spitznagel says the strategy is designed to let clients remain "extremely bullish."

By allocating just a small portion of a portfolio to Universa's tail-hedge instruments, investors can build a safety net. This structure allows them to confidently capture the final gains from the AI-driven melt-up.

Once the inevitable crash triggers their insurance payouts, they can follow the Warren Buffett crisis playbook—using those windfall profits to buy stocks at deeply discounted prices.

How is the stock market performing in 2026?

The S&P 500 is up 12.75% year-to-date. Similarly, the Nasdaq Composite has gained 14.05%, and the Dow Jones Industrial Average is up 11.13% year-to-date.

On Friday, the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust ETF—which track the S&P 500 and Nasdaq 100, respectively—closed mixed. SPY fell 0.39% to $770.19, while QQQ rose 0.18% to $718.96. Meanwhile, the State Street SPDR Dow Jones Industrial Average ETF Trust also declined 0.53% to $534.08.

In Tuesday's pre-market trading, SPY was down 0.22%, QQQ was up 0.075%, and DIA was down 0.81%.