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Comment by paulpauper | Hacker News Reader

very misleading and after taxes it is probably less

i would not be surprised if it much worse. if they truly had a good strategy why tell everyone?

For more investor funds. Also, his style of investing is supposed to make a killing during times like this- but when you are flat to down a few percent for all the boring years in between black swan events, things don't look great.

There is also ego and prestige, and Taleb seems to desire both to a great degree.

The problem is not Taleb's trading method, it would provide a great return if the US had free markets...what the fed is currently doing is more akin to communism, bailing out and buying up all the essential industries.

While I agree that the Fed may be overplaying their hand, I disagree that Taleb has an otherwise outperforming strategy. The cost of hedging against black swan events is not zero, and has increased substantially since the financial crisis- at least in part by his own work to increase awareness of them! Volatility used to be greatly underpriced by the market, and while that may still be true, its not nearly true to the extent it was pre-crisis.

We are not out of the crisis yet. Taleb has been banging this drum for decades, and profited handsomely in 2008, and IIRC also in 2001 and 1998. His lesson was not appreciated by the industry at large during those decades - and it is likely that a couple of years after the end of this crisis (whenever that may be, anywhere from a few month to over a decade), hedging black swans will be cheap again.

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.

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.

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://www.wsj.com/articles/triumph-of-the-market-pessimist...

https://www.zerohedge.com/news/2018-09-22/how-fund-betting-e...

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).

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...

Yes, it’s an insurance policy, not a standalone investment strategy.

Because it's boring and takes a long, unpredictable amount of time to return.

They guy has written 5 books about exactly what he does.

It's not a secret.

Even the Medallion fund doesn't do anything secret, they just win 50.7% of a lot of bets.

>Even the Medallion fund doesn't do anything secret, they just win 50.7% of a lot of bets.

lol no comparison between the two. Medallion has the strongest NDA in exsitance. After 30 years no one knows anything about it. Taleb writes books because more money in books than his method. Simons will never write a book about his method because his method actually works. It is possible that Taleb has a secret strategy but the method he is selling to the public is not going to make you rich, nor will it generate alpha.

Oh, so taleb is hedging his hedge fund by doing other revenue generating things?

Imagine that

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