Mark spitznagel strategy

Nassim taleb He is the founder, owner, and chief investment officer of Universa Investments , a hedge fund management firm based in Miami, Florida. He is known as a pioneer in so-called " tail - hedging " [ 3 ] or "black swan" investing , an investment strategy intended to provide " insurance -like protection" against stock market crashes. Spitznagel has a graduate degree in mathematics from the Courant Institute of Mathematical Sciences at New York University and an undergraduate degree from Kalamazoo College. When he was 16 years old, Spitznagel was apprenticed by year veteran corn and soybean trader Everett Klipp. In , Spitznagel founded the hedge fund Universa Investments, where he is the Chief Investment Officer; Universa offers a type of insurance against extreme market risk.

Mark Spitznagel

American investor and hedge fund manager (born )

Mark Spitznagel (; born March 5, ) is an American investor and hedge fund manager. He is the founder, owner, and chief investment officer of Universa Investments, a hedge fund management firm based in Miami, Florida.[2]

He is known as a pioneer in so-called "tail-hedging"[3] or "black swan" investing, an investment strategy intended to provide "insurance-like protection" against stock market crashes.

Early life and education

Spitznagel has a graduate degree in mathematics from the Courant Institute of Mathematical Sciences at New York University and an undergraduate degree from Kalamazoo College.[1]

When he was 16 years old, Spitznagel was apprenticed by year veteran corn and soybean trader Everett Klipp.[4][5] Spitznagel became an independent pit-trader at the Chicago Board of Trade and later a proprietary trader at Morgan Stanley in New York.[6]

In , Spitznagel and author and financial mathematicianNassim Nicholas Taleb (who was Spitznagel's professor at NYU) established the Empirica Capital "tail-hedging" fund.[7][8]

Investment career

In , Spitznagel founded the hedge fund Universa Investments, where he is the Chief Investment Officer; Universa offers a type of insurance against extreme market risk.[9] Taleb has been associated with Universa as an advisor for nearly two decades.[10][11]

In , The Wall Street Journal reported that "a strategy consisting of just a % position in Universa with the rest invested passively in the S&P had a compound annual return of % in the 10 years through February (), far better than the S&P itself" (and portfolios with "more traditional hedges").[12]

Moreover, "Universa was among a handful of funds that made huge gains" during the financial crisis of –[12]

In , it was alleged that a large trade by Spitznagel in the minutes leading up to the Flash Crash (when the Dow Jones Industrial Average lost over 9% of its value during the day) was among its primary triggers.[13]

Investment approach

Spitznagel's self-described investment strategy is focused on risk mitigation in portfolio construction, and is intended to allow his clients to take more systematic risk.[14] In general terms, he does this by owning far out-of-the-moneyput options on stocks.

He has called "investing Übermensch" Friedrich Nietzsche's slogan "amor fati"—or the love of one's fate—"the secret to successful investing".[15]

Spitznagel is dismissive of Modern Portfolio Theory, and specifically its emphasis on correlations and mean-variance (or Sharpe ratios),[14][16] and skeptic of market forecasts,[14] although, according to a New York Times article, he predicted two market routs in the s, first in and then in ,[17] as well as the "s commodities boom".[4]

He has described what he does as lowering what he calls the "volatility tax" paid by investors—"the hidden tax on an investment portfolio caused by the negative compounding of large investment losses."[18] He detailed in an investor letter how "mathematically, it is the rare big loss, not the frequent small losses, that matters most to long-run compounding," and called the Swiss mathematician and physicist Daniel Bernoulli "Universa's Patron Saint".[19]

Spitznagel wrote a book in titled The Dao of Capital: Austrian Investing in a Distorted World about the Austrian School of economics and its ostensible application to investing.[20]Paul Tudor Jones said of Spitznagel's book that it "shows how a seemingly difficult immediate loss becomes an advantageous intermediate step for greater future gain, and thus why we must become 'patient now and strategically impatient later'."[21]

Spitznagel challenges conventional financial theories which assert that higher returns necessitate taking on greater risk.

In his book Safe Haven – Investing For Financial Storms, he argues that risk mitigation can simultaneously reduce risk and enhance returns. He uses analogies such as dice games to illustrate how defensive assets, even those with negative arithmetic returns, can increase geometric returns through effective compounding and avoiding large setbacks.

Spitznagel underscores the importance of incorporating risk-mitigating assets to offset sequence risk in investment portfolios.[22]

Political and economic views

As a libertarian and advocate of Austrian economics, Spitznagel has been very critical of central bankmonetaryinterventionism. For instance, he has written pieces on Ludwig von Mises[23] and about the Fed's alleged culpability for "increasing wealth disparity",[24] which focused on the economic distortions that ostensibly result from money creation.

Mark spitznagel nassim taleb biography Nassim Taleb [1] and Mark Spitznagel [2] , former partners and collaborators, are the reigning authorities on optimizing portfolio outcomes for when tail risks manifest. Taleb is a best-selling writer, itself a positive swan phenomenon, and can afford to be philosophical. Spitznagel, who must hold a portfolio of equities to justify his fees, cannot. Hypothetically, a Taleb portfolio is beyond robust. Extreme adversity will make it stronger and concurrently more valuable.

In his book[21] and in a op-ed, Spitznagel connected every similar high point in the Tobin's Q-ratio since with past monetary interventionism and subsequent stock market losses, which he called "perfectly predictable, by economic logic alone."[25]

Along with entrepreneur Peter Thiel, Spitznagel was a major supporter of the Republican presidential campaign of U.S.

CongressmanRon Paul, a friend and fellow libertarian who "shares [Spitznagel's] contempt for the Federal Reserve"[26] and his desire for a non-interventionist foreign policy.[27] Spitznagel was also senior economic advisor to the Republican presidential campaign of Ron's son, U.S. SenatorRand Paul.[28]

Personal life

Spitznagel is among the many financial executives and hedge fund managers who moved their residence and operations to Florida.[29] In , he moved his hedge fund offices from Los Angeles to Miami, citing Florida's "more hospitable business and tax environment" than California's.[30] There is no income tax or estate tax in the state of Florida.[29]

According to The Wall Street Journal, Spitznagel splits his time between his Miami office and Michigan, where his family lives.[6]

He and his wife built, own, and operate Idyll Farms, a farm in Michigan that pastures dairy goats and produces artisanalchèvre.

A Bloomberg article claimed that the farm is making "some of the best goat cheese in America".[31]

Spitznagel also reportedly flies planes and practices ashtanga yoga.[6]

See also

References

  1. ^ abThe Secret to Mark Spitznagel’s Success?

    Not Following the CrowdArchived April 14, , at the Wayback Machine, CIMS Newsletter, Fall/Winter,

  2. ^Universa Investments L.P., firm website
  3. ^Tail-Risk Hedge Pioneer Spitznagel on Safe Havens, Keynote address, Bloomberg Invest New York Summit, June 7,
  4. ^ abPatterson, Scott.

    Spitznagel Bets Reputation on Inflation, The Wall Street Journal, June 17,

  5. ^Veteran Trader of the Chicago Board of Trade, Chicago Tribune, January 31,
  6. ^ abcMeet Mark Spitznagel, the Investor Behind Universa’s Big Gain, The Wall Street Journal, August 31,
  7. ^Malcolm Gladwell, Blowing UpArchived February 24, , at the Wayback Machine, The New Yorker, April 29,
  8. ^Malcolm Gladwell, What the Dog Saw: And Other Adventures.

    Little, Brown and Company.

  9. ^Mark Spitznagel beats drum for tail risks as markets stall, Financial Times, May 16,
  10. ^Daniel, Will (April 6, ). "The hedge funder who's made billions providing 'insurance' against market crashes insists he's no permabear: 'Cassandras make terrible investors'".

    Mark spitznagel nassim taleb biography wikipedia Universa Investments "Universa" is an American investment management firm headquartered in Miami, Florida. It is known as a Black Swan fund that focuses on risk mitigation to protect investors from sharp market downturns. Universa and Empirica followed the Black swan theory which was about unexpected extreme events that have significant impact on the world and the financial markets. On March 1, , Universa moved its headquarters from Santa Monica, California to Miami, Florida to take advantage of the city's business and tax policies. In , The Wall Street Journal reported that "a strategy consisting of just a 3.

    Fortune. Retrieved August 5,

  11. ^"About us". . Universa Investments L.P. Retrieved August 5,
  12. ^ abTriumph of the Market Pessimists, The Wall Street Journal, September 21,
  13. ^Did a Big Bet Help Trigger 'Black Swan' Stock Swoon?, The Wall Street Journal, May 11,
  14. ^ abcFuture Financial Crises Will Be Deeper, Universa's Spitznagel Warns, Bloomberg TV, September 14,
  15. ^Amor Fati, (Universa website), January
  16. ^Universa's Spitznagel on Fed Policy, Hedge Funds and Insuring Market Risk, Bloomberg TV, February 5,
  17. ^A Hedge Fund Manager Who Doesn’t Mind a Losing Bet, The New York Times, June 29,
  18. ^The Volatility Tax, (Universa website), February
  19. ^Spitznagel, Universa Decennial Letter: What’s Past is Prologue, March,
  20. ^Black Swans Are A Myth, Government Intervention Is The Only Black Swan, Forbes, August 21,
  21. ^ abThe Dao of Capital: Austrian Investing in a Distorted World.

    Mark spitznagel nassim taleb biography images

    Taleb is the author of the Incerto , a five-volume work on the nature of uncertainty published between and notably, The Black Swan and Antifragile. Taleb criticized risk management methods used by the finance industry and warned about financial crises , subsequently profiting from the Black Monday and the — financial crisis. Taleb was born in Amioun , Lebanon , to Minerva Ghosn and Nagib Taleb, an oncologist and a researcher in anthropology. His parents were Greek Orthodox Christians , [ 11 ] and had French citizenship. His maternal grandfather Fouad Nicolas Ghosn [ Wikidata ] and great-grandfather Nicolas Ghosn [ Wikidata ] were both deputy prime ministers of Lebanon in the s through the s, and his four-times great grandfather was one of the board of directors to the administrator of Mount Lebanon.

    New York: John Wiley & Sons. September,

  22. ^Mark Spitznagel, Safe Haven – Investing For Financial Storms, Quantified Strategies, accessed November
  23. ^Spitznagel, The Man Who Predicted the Depression, The Wall Street Journal, November 6,
  24. ^Spitznagel, How the Fed Favors The 1%, The Wall Street Journal, April 19,
  25. ^Spitznagel, The Myth of Black Swan Market Events, The New York Times, February 13,
  26. ^Hedge-fund manager Mark Spitznagel to host Ron Paul fundraiser, Digital Journal, March 6,
  27. ^Americans Must Choose Non-intervention For Peace and Prosperity, Mises Institute [dead link&#;]
  28. ^Hedge fund manager Mark Spitznagel to advise Rand Paul, CNBC, June 20,
  29. ^ abMore investors leaving U.S.

    northeast for Florida, Reuters, September 13,

  30. ^Spitznagel’s Universa Moves To MiamiArchived September 10, , at the Wayback Machine, FINalternatives, Feb 19,
  31. ^Zimberoff, Larissa. A Hedge Fund Pioneer Is Making Some of the Best Goat Cheese in America, Bloomberg Pursuits, November 7,