Expert Who Shorted 2008 Crash Warns of 25% Drop

On Sep 11, 2021

Glen Goodman made £100,000 shorting markets in 2008.
On Tuesday, he told Insider he’d just bought put options on the S&P 500.
He said there is a “fair chance” the index drops 25% “at some point soon.”

In 2008, Glen Goodman traded stocks as a hobby, a way to earn extra money on the side of his full-time job.

Early that year he had a feeling stocks were going to drop in a big way as the financial crisis began to unfold and the housing market collapse in the US continued to hurt its economy.

So he put £3,000, then later another £2,000, into spread bets against the FTSE 100, the UK’s blue-chip stock index. With the economic outlook bleak, he also later bet against the price of oil, according to a contributed story he wrote for the London-based Times newspaper.

When global markets finally crashed, proving his bet correct, he made £100,000, or about $138,300, according to the piece.

More than 13 years later, Goodman, who now trades full-time, is getting the same feeling. And he’s putting his money where his mouth is.

In an interview with Insider, Goodman said he’d just bought S&P 500 put options, contracts which allow traders to profit if stocks fall. Goodman’s put options expire on October 15, he said, but he may extend them to mid-November if necessary. He said he bought them as an “insurance policy” because a crash is not inevitable and he’s not a “perma-bear.” He still owns a lot of stocks, he said.

But Goodman still painted a bleak picture for stocks in the near future as they hover around all-time highs following a massive run up from March 2020 lows. He said there’s a “fair chance” the S&P 500 drops 25% drop “at some point soon,” adding that there doesn’t necessarily have to be a trigger. This would put the index at pre-pandemic highs.

“What happened to bitcoin today could quite easily happen to the S&P 500 any day,” Goodman said on Tuesday, when the crypto plunged 17%. “That’s the thing, you never know when it’s going to happen. The 1987 stock market crash was really severe, it was one of the worst of all time…and they still don’t know why it happened. Nobody knows. It just happened.”

Looking at a chart of the S&P 500, he continued, “it’s just too neat and tidy, this little spike it’s making. It’s begging to be destroyed.”

One line of thinking on Wall Street right now is that…