Paul Singer thinks the recent dramatic move in the Swiss franc—and resulting losses—shows just how exposed most investors are to market risk.
"Given the pricing and the still opaque and over-levered financial system, the sensitivity ... to risks is extremely high ... and the cushion to withstand risks is very low," the founder of Elliott Management said at the World Economic Forum in Davos, Switzerland, on Wednesday.
Many traders were caught off guard last week when the Swiss government unexpectedly removed the cap on the Swiss franc to the euro, causing it to spike in value versus other currencies such as the U.S. dollar—and causing major losses for some investors.
Read MoreEverest Capital falls victim to Swiss franc, shutters largestfund
Singer repeated his claim that central bank economic stimulus programs, which have provided access to cash at record low prices, have created a "major distortion in asset prices."
He said the high value of stocks and low yield of bonds is leaving little cushion for a negative geopolitical event.
"I believe strongly," Singer said, "that markets are mispricing risk throughout the world."
Read MoreSwitzerland 'will suffer' after SNB move: Zurich CEO
