The world's stock markets witnessed a day of turbulence on August 5, sparking fears of an imminent financial crisis.

What Happened: Mark Spitznagel, a seasoned hedge fund manager, cautions that this could be an indication of the largest stock market bubble in history approaching its zenith.

As per a Fortune report, stock markets from Japan to the U.S. were swept up in a storm on August 5, leaving analysts and economists in a scramble to find explanations.

A disappointing jobs report and the unraveling of influential trades due to shifting central bank policies were pinpointed as the main factors.

The Wall Street panic was so severe that it prompted calls for emergency rate cuts from experienced economists. Mark Spitznagel, founder and CIO of the private hedge fund Universa Investments, labelled the market chaos as "amateur hour."

"I have never seen anything like that in my career," Spitznagel told the outlet.

Although global markets have largely rebounded since, with the U.S. S&P 500 climbing approximately 5% from its August 5 low, Spitznagel warns that the recent market volatility is a distinct red flag.

"It's a great comparison to 2007. But I think we're going to see a compressed path. I don't think we've got a year of this, because the connectivity is greater...the fragility is greater," he added.

He suggests we're on the cusp of the largest stock market bubble in history, and the majority of investors are ill-prepared for the repercussions when it bursts.

Spitznagel has consistently contended that the Federal Reserve's near-zero interest rates for over a decade following the global financial crisis have spawned the most significant credit bubble in human history.

"I think if anybody shorts the market or is too under invested relative to their temperament, they're going to get squeezed in at a euphoric height that is probably still coming in the months ahead," he added.

He anticipates this bubble will soon implode under the pressure of the Fed's rate hikes, potentially leading to more severe fallout than previous market crashes due to our globally interconnected economy.

"I think people just kind of need to have this come-to-Jesus moment. Close your eyes, think about a world where the market is down 50 to 75% and then think about opening your portfolio. Are you going to do something crazy? And now, think about it being up 20%, and open your portfolio. Are you going to do something crazy?" he said.

Spitznagel's advice to retail investors is to exercise patience, invest in basic S&P 500 index funds, and maintain a safety margin to avoid being compelled to sell at the most inopportune time.