Hedge Funds Bet Against Trump Economy, Risking 401(k)s and Pensions

NEW YORK, N.Y. — Hedge funds are making unprecedented multi-billion-dollar bets against the U.S. stock market, signaling expectations of a devastating crash that could wreak havoc on retirement savings across America. The dramatic shift comes just two months after Wall Street billionaires enthusiastically backed so-called “Trump trades” following President Donald Trump‘s election victory.

Data from Goldman Sachs reveals that throughout January, investors placed ten times more bets on American stocks falling than rising. This pessimistic outlook represents a significant reversal from the optimism that followed Trump’s re-election, when hedge funds predicted a golden era for corporate America fueled by aggressive tax cuts, tariffs, and deregulation policies.

Elliott Management, one of the world’s most influential hedge funds managing over $70 billion in assets, has warned that Trump’s policies are fueling speculative bubbles. “These bubbles could wreak havoc if markets crash,” the Financial Times reported, citing Elliott executives. The massive sell-off has particularly impacted the “Magnificent Seven” tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—which have all suffered substantial losses.

Chipmaker Nvidia has been hit especially hard, with its shares plunging more than 18 percent in the past five days. The company lost a staggering $589 billion in value on Monday alone, highlighting investor concerns over increased competition from Chinese AI firms like DeepSeek.

“The increase in short bets against U.S. stocks likely reflects concerns about macroeconomic uncertainty,” warned Bruno Schneller, managing partner at Erlen Capital Management, in an interview with the Daily Telegraph. UBS analysts echoed these concerns, with Karim Cherif, head of alternative investments, stating, “As the new year unfolds, uncertainties persist regarding Trump’s policies, the global economic trajectory, and central bank actions.”

The potential fallout from hedge funds’ massive short positions could devastate everyday Americans’ retirement savings. Millions of workers relying on 401(k)s and pension funds may find themselves vulnerable if a market collapse materializes. The situation has raised alarm bells on Capitol Hill, with growing concerns about the impact on household savings across America.

Trump’s response to Wall Street’s apparent disloyalty could prove significant. Historically, the 47th President has shown little tolerance for perceived disloyalty, and the latest short-selling frenzy may push him to take action against financial elites who appear to be betting against America’s economic success.