Last year was among the stock market’s worst since the 2008 financial crisis and the end of a three-year bull run. The tech-driven Nasdaq shed 33.1% during the year, while the S&P 500  plunged 20%.

Some experts now argue the worst is over and that the inflation that has soured the economy is nearly fixed.

But not everyone expects smooth-sailing in 2023 and beyond. Nassim Nicholas Taleb, advisor to hedge fund Universa Investments and author of The Black Swan, says the stock market’s glory days are no more. 

“Disneyland is over, the children go back to school,” Taleb told Bloomberg at an event hosted by Universa on Monday. “It’s not going to be as smooth as it was the last 15 years.”

He said the groundwork was laid when strong stock performance started to no longer be based on companies reporting positive cash flows. The Federal Reserve’s move to lower interest rates to 0% at the time also helped to put markets at a point of no return, causing “tumors” to crop up, according to Taleb. 

He went on to explain that those “tumors,” or asset bubbles, created an illusion of wealth for Americans.

“All these years, assets were inflating like crazy,” he said, referring to real estate and Bitcoin. “It’s like a tumor, I think [that] is the best explanation.” 

Taleb named Twitter as an example of a company that has used stock markets and private investors as a “cash machine,” and that those investors will learn the hard way why cash flow is important to pay bills. Elon Musk acquired Twitter in October 2022 for $44 billion, of which nearly $12.5 billion came from debt.

On the bright side, Taleb expects inflation to decline in some industries, notably in real estate and commodities, even though interest rates are higher than in the recent past. That would help the overall inflation rate slow.

Other market watchers have sounded a similar alarm as Taleb about the stock market’s future this year. Jeremy Grantham, a veteran investor, wrote earlier this week that economic and financial pains may persist, causing the stock markets to plunge. Moreover, he added that only the “first and easiest leg” of the burst in the stock market bubble so far and harder times lie ahead.

Grantham noted that if market correction is worse than investors anticipate, stock valuations could halve compared to their earlier peak in January 2022.