Elliott warns of market turmoil and describes a shift from FOMO to FOGO

A host relayed an investor letter from Elliott Investment Management comparing today’s market—marked by rising debt, risk-taking and hype around new technologies—to the 1920s before the Great Depression. The host said the firm warned that nearly every alarm bell was ringing for a substantial bear market and coined FOGO, “fear of getting obliterated,” as the opposite of FOMO, “fear of missing out.”

Elliott, an $80 billion firm, had flat returns in the quarter ended September 30 and gains of less than 2% over nine months. The host compared that with nearly 13% total return for the S&P 500 over the same period and about 3% for short-term Treasury bills; the firm also lagged a composite hedge-fund index. As relayed by the host, Elliott’s letter pointed to US budget deficits, persistent inflation, private credit and AI hype, as well as market distortions from zero-day options trading and meme stocks.

The firm said it was focused on preserving capital and preparing to act if turmoil created opportunities. The host said Elliott’s unprofitable third-quarter areas included distressed debt and portfolio hedges related to gold, currencies, stocks and interest rates; profitable areas included commodities arbitrage and credit hedges. The firm identified potential opportunities in activist healthcare investing, energy and, eventually, buying from forced sellers in dislocated credit markets. Its recent activist positions included PepsiCo and Synopsys.