Mark Spitznagel - Tail Hedging

Tail Hedging

In 1999, Spitznagel and author and financial mathematician Nassim Nicholas Taleb together created the first ever “tail-hedging” fund. Taleb went on to popularize the “black swan” concept in his books and Spitznagel went on to modify and implement the strategy (which became a major hedge fund investment asset class) at his very successful hedge fund Universa. (Taleb also played a passive role at Spitznagel's Universa, though Taleb has no ownership interest and is a “risk adviser” that “doesn't know their positions” and is “not involved in trading.”)

Taleb has said “One thing Mark taught me was that when someone isn't afraid of losing small amounts, they're almost invincible.”

Ironically, Spitznagel is indifferent to the concept of “black swan events,” calling them “largely insignificant in at least the last century of capital investment in the U.S., including the current crisis. Investors have indeed encountered surprising and pernicious events, but the fact is those who were surprised have essentially been those (in the extreme majority) with a brazen disregard for the central concepts of Austrian capital theory and monetary credit expansions.”