{"id":2586,"date":"2020-04-08T05:29:20","date_gmt":"2020-04-08T05:29:20","guid":{"rendered":"https:\/\/www.maxlee.info\/blog\/?p=2586"},"modified":"2020-04-09T05:32:32","modified_gmt":"2020-04-09T05:32:32","slug":"investor-whose-explosive-strategy-returned-4144-in-march-says-a-true-crash-in-stocks-is-still-to-come","status":"publish","type":"post","link":"https:\/\/www.maxlee.info\/blog\/news\/investor-whose-explosive-strategy-returned-4144-in-march-says-a-true-crash-in-stocks-is-still-to-come\/","title":{"rendered":"Investor whose \u2018explosive\u2019 strategy returned 4,144% in March says a \u2018true crash\u2019 in stocks is still to come"},"content":{"rendered":"

Mark Spitznagel points to easy-money central banks<\/strong><\/p>\n

<\/p>\n

\"And
And the biggest black swan is…<\/figcaption><\/figure>\n

Published: April 8, 2020 at 4:49 p.m. ET, By Shawn Langlois<\/p>\n

If you listened to Mark Spitznagel, the founder of Universa Investments, back in March<\/a>, you probably made a nice little profit \u2014 or at least avoided some of those nasty losses \u2014 when the coronavirus outbreak blew up the long-running bull market.<\/p>\n

\u201cWhen the market crashes, I want to make a whole lot and when the market doesn\u2019t crash, I want to lose a teeny, teeny amount,\u201d he said. \u201cI want that asymmetry… that convexity.\u201d<\/p>\n

Spitznagel, a former trader, is a prot\u00e9g\u00e9 of Nassim Nicholas Taleb, the author of the 2007 bestseller \u201cThe Black Swan,\u201d a metaphor used to describe unpredictable, highly disruptive events \u2014 the kind that could blow up markets. The coronavirus clearly qualifies<\/p>\n

To take advantage of what he saw as a top-heavy market at the time, Spitznagel made far out-of-the-money \u201cexplosive downside protection\u201d bets to profit from a meltdown.<\/p>\n

So what happened when the meltdown came? 4,144% is what happened.<\/p>\n

While 401(k)s were crumbling around the country, that\u2019s how much Universa Investment\u2019s bold tail-risk hedging strategy paid off, according to a letter cited by The Wall Street Journal<\/a>.<\/p>\n

Like Spitznagel explained, however, it\u2019s meant to be only a small, mitigating part of a broader approach. In other words, as the WSJ explained, last month the S&P dropped 12.4%, while an investor with 3.3% in Universa\u2019s tail-risk hedge strategy and the rest in an index fund tracking that benchmark would have made 0.4% \u2014 a small number, sure, but positive nonetheless.<\/p>\n

What does Spitznagel see going forward from here?<\/p>\n

\u201cIf the pandemic doesn\u2019t pop this bubble then, of course, it will be something else that eventually accomplishes this,\u201d he said, reiterating his long-held belief that easy-money central banks and the bubble they continue to pump will eventually lead to a major global reversal.<\/p>\n

How bad could it get when it really goes sideways? \u201cI expect a true crash to take back a decade [worth of stock-market gains],\u201d he told The Wall Street Journal last month<\/a>.<\/p>\n

No sign of a popping bubble in Wednesday\u2019s session, with the Dow Jones Industrial Average DJIA, +3.44% closing up almost 800 points while the S&P 500 SPX, +3.40% and tech-heavy Nasdaq Composite COMP, +2.58% also tallied big gains.<\/p>\n

Source: www.marketwatch.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Mark Spitznagel points to easy-money central banks<\/p>\n","protected":false},"author":1,"featured_media":2587,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-2586","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/posts\/2586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/comments?post=2586"}],"version-history":[{"count":0,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/posts\/2586\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/media\/2587"}],"wp:attachment":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/media?parent=2586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/categories?post=2586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/tags?post=2586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}