“We’re definitely late cycle, and so at some point we’re going to enter a bear market, and it’s going to happen in the next year and a half, maybe two,” Cohen said during a talk with MSD Capital’s Glenn Fuhrman at the 92nd Street Y in Manhattan on Tuesday night.

“I don’t think the returns over the next two years are going to be very good,” he said. “If the market hangs in there, there’s just going to be marginal returns.”

The $3.2 trillion hedge fund industry lost 3% last month and is down about 1.7% this year as stock pickers to macro traders sputtered, according to Hedge Fund Research Inc. Cohen, who returned to the business earlier this year after a government ban on him managing capital for clients ended, described how it was easier to make money during the early decades of his business because of the bull market in stocks and less competition in the industry.

Cohen, 62, started his former firm, SAC Capital Advisors, in 1992 and it averaged returns of about 30% annually. The hedge fund pleaded guilty to securities fraud in 2013 and paid a record fine as part of a U.S. crackdown on insider trading on Wall Street.

Always Adapting

Cohen said he raised $5 billion from outside clients when his Point72 Asset Management became a hedge fund this year, and that it was easy to gather money. He said he took only 10 to 15 meetings, including one overseas trip.

Cohen rarely speaks publicly about markets. In the wide-ranging talk with Fuhrman, Cohen touched on subjects including fatherhood, emerging artists and Chinese technology companies. He said the trend toward index investing isn’t going to go away.

“We see it on a daily basis where the liquidity in the markets are not what they used to be and that forces us to change what we do.”

Cohen said he’s kept changing his business, even when it was doing well, to position it for the future, and that he’s doing that today at Point72. The trader, who already invests his own money in startups through Point72 Ventures, said his goal is to build a “complete” venture capital operation and that he’s been doing a lot of private investing in artificial intelligence, machine learning, fintech companies and cyber security.

He discussed how he’s devoted a lot of resources toward alternative data and said quantum computing is a technology “coming down the pike” in the next few years.

‘Blown Away’

Cohen said he had visited China last year and met with tech companies including Tencent Holdings Ltd. and JD.com Inc. He described Alibaba Group Holding Ltd. as a “winner.”

“You get blown away by what’s going on there,” he said of the world’s second-largest economy, adding that the only risk for Chinese companies is a big one: The government can seize their assets at any time.

The fund manager described cryptocurrencies as “dicey,” though he said his son believes in the digital coins.

“At some point the blockchain is really going to matter,” Cohen said. “The question is, can you make money money from the blockchain? And I don’t know the answer to that. ”