3 ms·

Their business model is investing on behalf of their clients as a hedge against tail risk. They need people to know about their success in order to remain in bu

Their business model is investing on behalf of their clients as a hedge against tail risk. They need people to know about their success in order to remain in business. They've been going strong for at least 12 years.

paulpauper 7y ago
12 years is not even a full market cycle. How about 30 years. this method would have done very badly from 2000-2008 due to lack of sudden crashes combined with weak market performance. This incurs losses on both the equity part and the hedge.
- tomhoward 7y ago
  Taleb and Spitznagel have been investing based on this philosophy since 1999. The huge gains Taleb made in the 2007-2008 crisis are what made him famous and forced people to take his ideas seariously. They can only report results on the period of time they've been in business, but so far their strategy seems to have held up for about 15-20 years. They seem to know what they're doing, and given the stakes, have likely thought about any pitfalls you or I could imagine, along with many others we couldn't imagine. References: https://en.wikipedia.org/wiki/Mark_Spitznagel https://en.wikipedia.org/wiki/Mark_Spitznagel https://www.wsj.com/articles/triumph-of-the-market-pessimists-1537522201 https://www.wsj.com/articles/triumph-of-the-market-pessimist... https://www.zerohedge.com/news/2018-09-22/how-fund-betting-end-world-outperformed-sp500 https://www.zerohedge.com/news/2018-09-22/how-fund-betting-e...
- MR4D 7y ago
  It would have done fantastic in that timespan! Remember, the dotcom crash had huge drops across almost all of the tech sector for a few years straight. Plus, 9/11 happened in that time frame and took out travel stocks. It is those huge drops that Universa counts on. So he would had done well - probably on the level of a Bobby Axelrod (yes, I know Bobby is fictional, but he's a great composite character of raw trading instinct based on his 9/11 trades).
- chosenbreed37 7y ago
  That's true. I wonder if the actual objective is insurance. In the good times you lose out. But you don't mind because it's insurance against bigger losses when things go south. As an example it is reported that the organisers of the Wimbledon tennis tournament have spent 34million on insurance premiums over a period of time. Due to covid-19 they are cancelling the tournament and getting a payout of 100million+. Probably not priced correctly but you get the point. In the good years they're hemorrhaging money...
  - tomhoward 7y ago
    Yes, it’s an insurance policy, not a standalone investment strategy.

paulpauper 7y ago

12 years is not even a full market cycle. How about 30 years. this method would have done very badly from 2000-2008 due to lack of sudden crashes combined with weak market performance. This incurs losses on both the equity part and the hedge.

tomhoward 7y ago
Taleb and Spitznagel have been investing based on this philosophy since 1999. The huge gains Taleb made in the 2007-2008 crisis are what made him famous and forced people to take his ideas seariously. They can only report results on the period of time they've been in business, but so far their strategy seems to have held up for about 15-20 years. They seem to know what they're doing, and given the stakes, have likely thought about any pitfalls you or I could imagine, along with many others we couldn't imagine. References: https://en.wikipedia.org/wiki/Mark_Spitznagel https://en.wikipedia.org/wiki/Mark_Spitznagel https://www.wsj.com/articles/triumph-of-the-market-pessimists-1537522201 https://www.wsj.com/articles/triumph-of-the-market-pessimist... https://www.zerohedge.com/news/2018-09-22/how-fund-betting-end-world-outperformed-sp500 https://www.zerohedge.com/news/2018-09-22/how-fund-betting-e...
MR4D 7y ago
It would have done fantastic in that timespan! Remember, the dotcom crash had huge drops across almost all of the tech sector for a few years straight. Plus, 9/11 happened in that time frame and took out travel stocks. It is those huge drops that Universa counts on. So he would had done well - probably on the level of a Bobby Axelrod (yes, I know Bobby is fictional, but he's a great composite character of raw trading instinct based on his 9/11 trades).
chosenbreed37 7y ago
That's true. I wonder if the actual objective is insurance. In the good times you lose out. But you don't mind because it's insurance against bigger losses when things go south. As an example it is reported that the organisers of the Wimbledon tennis tournament have spent 34million on insurance premiums over a period of time. Due to covid-19 they are cancelling the tournament and getting a payout of 100million+. Probably not priced correctly but you get the point. In the good years they're hemorrhaging money...
- tomhoward 7y ago
  Yes, it’s an insurance policy, not a standalone investment strategy.