Mark Spitznagel (; born March 5, 1971) 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 Miami ( ), officially the City of Miami, known as "the 305", "The Magic City", and "Gateway to the Americas", is a East Coast of the United States, coastal metropolis and the County seat, county seat of Miami-Dade County, Florida, Miami-Dade C ...

.Universa Investments L.P.
firm website He is known as a pioneer in so-called “

tail The tail is the section at the rear end of certain kinds of animals’ bodies; in general, the term refers to a distinct, flexible appendage to the torso. It is the part of the body that corresponds roughly to the sacrum and coccyx in mammals, r ...

- hedging”Tail-Risk Hedge Pioneer Spitznagel on Safe Havens
Keynote address, ''Bloomberg Invest New York'' Summit, June 7, 2017 or “black swan” investing, an investment strategy intended to provide “

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

-like protection” against stock market crashes.

Early life and education

Spitznagel has a graduate degree in

mathematics Mathematics is an area of knowledge that includes the topics of numbers, formulas and related structures, shapes and the spaces in which they are contained, and quantities and their changes. These topics are represented in modern mathematics ...

from the

Courant Institute of Mathematical Sciences The Courant Institute of Mathematical Sciences (commonly known as Courant or CIMS) is the mathematics research school of New York University (NYU), and is among the most prestigious mathematics schools and mathematical sciences research cente ...

New York University New York University (NYU) is a private research university in New York City. Chartered in 1831 by the New York State Legislature, NYU was founded by a group of New Yorkers led by then-Secretary of the Treasury Albert Gallatin. In 1832, the ...

and an undergraduate degree from

Kalamazoo College Kalamazoo College, also known as Kalamazoo, K College, KC or simply K, is a private liberal arts college in Kalamazoo, Michigan. Founded in 1833 by Baptist ministers as the Michigan and Huron Institute, Kalamazoo is the oldest private college in ...

. When he was 16 years old, Spitznagel was apprenticed by 50-year veteran

corn Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. Th ...

and

soybean The soybean, soy bean, or soya bean (''Glycine max'') is a species of legume native to East Asia, widely grown for its edible bean, which has numerous uses. Traditional unfermented food uses of soybeans include soy milk, from which tofu an ...

trader

Everett Klipp Everett Edward Klipp (October 8, 1926 - January 28, 2011) - Known as the "Babe Ruth" of the CBOT ( Chicago Board of Trade), he was a mentor to Frank Peard, John Horner, Mark Spitznagel and countless other floor traders. Klipp was born in Manteno, Ka ...

.Patterson, Scott
Spitznagel Bets Reputation on Inflation
''The Wall Street Journal'', June 17, 2009Veteran Trader of the Chicago Board of Trade
''Chicago Tribune'', January 31, 2011 Spitznagel became an independent pit-trader at the

Chicago Board of Trade The Chicago Board of Trade (CBOT), established on April 3, 1848, is one of the world's oldest futures and options exchanges. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form CME Group. CBOT and three other excha ...

and later a proprietary trader at

Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...

New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * '' ...

.Meet Mark Spitznagel, the Investor Behind Universa’s Big Gain
''The Wall Street Journal'', August 31, 2015 In 1999, Spitznagel and author and financial mathematician

Nassim Nicholas Taleb Nassim Nicholas Taleb (; alternatively ''Nessim ''or'' Nissim''; born 12 September 1960) is a Lebanese-American essayist, mathematical statistician, former option trader, risk analyst, and aphorist whose work concerns problems of randomness, ...

(who was Spitznagel's professor at NYU) established the

Empirica Capital Empirica Capital LLC was a hedge fund founded in 1999 by Nassim Nicholas Taleb in partnership with Mark Spitznagel, that used Taleb's black swan strategy. The firm closed in 2005 as Taleb took time off for health reasons. The investment strategy ...

“tail-hedging” fund.

Malcolm Gladwell Malcolm Timothy Gladwell (born 3 September 1963) is an English-born Canadian journalist, author, and public speaker. He has been a staff writer for ''The New Yorker'' since 1996. He has published seven books: '' The Tipping Point: How Little T ...

Blowing Up
, ''The New Yorker'', April 29, 2002

, '' What the Dog Saw: And Other Adventures''. Little, Brown and Company. 2009

Investment career

In 2007, Spitznagel founded the hedge fund Universa Investments, where he is the Chief Investment Officer, and which offers a type of insurance against extreme market risk.Mark Spitznagel beats drum for tail risks as markets stall
''Financial Times'', May 16, 2016 In 2018, ''

The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...

'' reported that “a strategy consisting of just a 3.3% position in Universa with the rest invested passively in the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...

had a

compound annual return Compound annual growth rate (CAGR) is a business and investing specific term for the geometric progression ratio that provides a constant rate of return over the time period. CAGR is not an accounting term, but it is often used to describe some ele ...

of 12.3% in the 10 years through February (2018), far better than the S&P 500 itself” (and portfolios with “more traditional hedges”).Triumph of the Market Pessimists
''The Wall Street Journal'', September 21, 2018 Moreover, “Universa was among a handful of funds that made huge gains" during the

financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...

. In 2010, it was alleged that a large trade by Spitznagel in the minutes leading up to the 2010 Flash Crash (when the

Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...

lost over 9% of its value during the day) was among its primary triggers.Did a Big Bet Help Trigger 'Black Swan' Stock Swoon?
''The Wall Street Journal'', May 11, 2010

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 In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggrega ...

. In general terms, he does this by owning far out-of-the-money

put options In finance, a put or put option is a derivative instrument in financial markets that gives the holder (i.e. the purchaser of the put option) the right to sell an asset (the ''underlying''), at a specified price (the ''strike''), by (or at) a s ...

on stocks. He has called “investing

Übermensch The (; "Overhuman") is a concept in the philosophy of Friedrich Nietzsche. In his 1883 book ''Thus Spoke Zarathustra'' (german: Also sprach Zarathustra), Nietzsche has his character Zarathustra posit the as a goal for humanity to set for itse ...

”

Friedrich Nietzsche Friedrich Wilhelm Nietzsche (; or ; 15 October 1844 – 25 August 1900) was a German philosopher, prose poet, cultural critic, philologist, and composer whose work has exerted a profound influence on contemporary philosophy. He began his ...

’s slogan “''

amor fati is a Latin phrase that may be translated as "love of fate" or "love of one's fate". It is used to describe an attitude in which one sees everything that happens in one's life, including suffering and loss, as good or, at the very least, necessa ...

''”—or the love of one’s fate—“the secret to successful investing.”''Amor Fati''
(Universa website), January 2019 Spitznagel is dismissive of

Modern Portfolio Theory Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk. It is a formalization and extension of diversificatio ...

, and specifically its emphasis on

correlation In statistics, correlation or dependence is any statistical relationship, whether causal or not, between two random variables or bivariate data. Although in the broadest sense, "correlation" may indicate any type of association, in statistics ...

s and

mean There are several kinds of mean in mathematics, especially in statistics. Each mean serves to summarize a given group of data, often to better understand the overall value (magnitude and sign) of a given data set. For a data set, the ''arithme ...

variance In probability theory and statistics, variance is the expectation of the squared deviation of a random variable from its population mean or sample mean. Variance is a measure of dispersion, meaning it is a measure of how far a set of numbers ...

(or

Sharpe ratio In finance, the Sharpe ratio (also known as the Sharpe index, the Sharpe measure, and the reward-to-variability ratio) measures the performance of an investment such as a security or portfolio compared to a risk-free asset, after adjusting for its ...

s),Future Financial Crises Will Be Deeper, Universa's Spitznagel Warns
''Bloomberg TV'', September 14, 2018Universa's Spitznagel on Fed Policy, Hedge Funds and Insuring Market Risk
''Bloomberg TV'', February 5, 2019 and skeptic of market forecasts, although, according to a ''New York Times'' article, he predicted two market routs in the past decade, first in 2000 and then in 2008,A Hedge Fund Manager Who Doesn’t Mind a Losing Bet
''The New York Times'', June 29, 2011 as well as the “ 2000s commodities boom.” He has described what he does as lowering what he calls the “

volatility tax The volatility tax is a mathematical finance term, formalized by hedge fund manager Mark Spitznagel, describing the effect of large investment losses (or volatility) on compound returns.

” paid by investors—"the hidden tax on an investment portfolio caused by the negative

compounding In the field of pharmacy, compounding (performed in compounding pharmacies) is preparation of a custom formulation of a medication to fit a unique need of a patient that cannot be met with commercially available products. This may be done for me ...

of large investment losses.” 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 Daniel Bernoulli FRS (; – 27 March 1782) was a Swiss mathematician and physicist and was one of the many prominent mathematicians in the Bernoulli family from Basel. He is particularly remembered for his applications of mathematics to mechan ...

“Universa’s

Patron Saint A patron saint, patroness saint, patron hallow or heavenly protector is a saint who in Catholicism, Anglicanism, or Eastern Orthodoxy is regarded as the heavenly advocate of a nation, place, craft, activity, class, clan, family, or perso ...

.”Spitznagel
''Universa Decennial Letter: What’s Past is Prologue''
March, 2018 Spitznagel wrote a book in 2013 titled ''The Dao of Capital: Austrian Investing in a Distorted World'' about the

Austrian School of economics The Austrian School is a Heterodox economics, heterodox Schools of economic thought, school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motiva ...

and its ostensible application to investing.

Paul Tudor Jones Paul Tudor Jones II (born September 28, 1954) is an American billionaire hedge fund manager, conservationist and philanthropist. In 1980, he founded his hedge fund, Tudor Investment Corporation, an asset management firm headquartered in Stamford, ...

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’.”
The Dao of Capital: Austrian Investing in a Distorted World
'. New York: John Wiley & Sons. September, 2013

Political and economic views

As a

libertarian Libertarianism (from french: libertaire, "libertarian"; from la, libertas, "freedom") is a political philosophy that upholds liberty as a core value. Libertarians seek to maximize autonomy and political freedom, and minimize the state's e ...

and advocate of

Austrian economics The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...

, Spitznagel has been very critical of

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...

monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...

interventionism. For instance, he has written pieces on

Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...

and about the Fed's alleged culpability for “increasing wealth disparity,”Spitznagel
How the Fed Favors The 1%
''The Wall Street Journal'', April 19, 2012 which focused on the economic distortions that ostensibly result from

money creation Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region,Such as the Eurozone or ECCAS is increased. In most modern economies, money creation is controlled by the central bank ...

. The Sveriges Riksbank Prize in Economic Sciences winner and

New Keynesian New Keynesian economics is a school of macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroec ...

New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...

columnist

Paul Krugman Paul Robin Krugman ( ; born February 28, 1953) is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for ''The New York Times''. In 2008, Krugman was th ...

has critically addressed these positions.Krugman
Plutocrats and Printing Presses
''The New York Times'', April 20, 2012 In his book and in a 2015 op-ed, Spitznagel connected every similar high point in the Tobin's Q-ratio since 1900 with past monetary interventionism and subsequent stock market losses, which he called “perfectly predictable, by economic logic alone.”Spitznagel
The Myth of Black Swan Market Events
''The New York Times'', February 13, 2015 Along with entrepreneur

Peter Thiel Peter Andreas Thiel (; born 11 October 1967) is a German-American billionaire entrepreneur, venture capitalist, and political activist. A co-founder of PayPal, Palantir Technologies, and Founders Fund, he was the first outside investor in Fac ...

, Spitznagel was a major supporter of the 2012 Republican presidential campaign of

U.S. Congressman The United States House of Representatives, often referred to as the House of Representatives, the U.S. House, or simply the House, is the lower chamber of the United States Congress, with the Senate being the upper chamber. Together they ...

Ron Paul Ronald Ernest Paul (born August 20, 1935) is an American author, activist, physician and retired politician who served as the U.S. representative for Texas's 22nd congressional district from 1976 to 1977 and again from 1979 to 1985, as well ...

, a friend and fellow libertarian who “shares pitznagel'scontempt for the Federal Reserve”Hedge-fund manager Mark Spitznagel to host Ron Paul fundraiser
''Digital Journal'', March 6, 2012 and his desire for a

non-interventionist Non-interventionism or non-intervention is a political philosophy or national foreign policy doctrine that opposes interference in the domestic politics and affairs of other countries but, in contrast to isolationism, is not necessarily opposed t ...

foreign policy. Spitznagel was also senior economic advisor to the 2016 Republican presidential campaign of Ron's son,

U.S. Senator The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States. The composition and powe ...

Rand Paul Randal Howard Paul (born January 7, 1963) is an American physician and politician serving as the junior U.S. senator from Kentucky since 2011. A member of the Republican Party, he is a son of former three-time presidential candidate and 12 ...

.Hedge fund manager Mark Spitznagel to advise Rand Paul
''CNBC'', June 20, 2015

Personal life

Spitznagel is among the many financial executives and hedge fund managers who moved their residence and operations to

Florida Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and to ...

.More investors leaving U.S. northeast for Florida
''Reuters'', September 13, 2016 In 2014, he moved his hedge fund offices from

Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the largest city in the state of California and the second most populous city in the United States after New York City, as well as one of the world' ...

to Miami, citing Florida's “more hospitable business and tax environment” than California's.Spitznagel’s Universa Moves To Miami
, ''FINalternatives'', Feb 19, 2014 There is no

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

estate tax An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and property) of a person who has died. International tax law distinguishes between an es ...

in the state of Florida. According to ''The Wall Street Journal'', Spitznagel splits his time between his Miami office and

Michigan Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...

, where his family lives. He and his wife built, own, and operate

Idyll Farms Idyll Farms is a pasture-based goat farm and creamery in Northport, Michigan that produces artisanal farmstead chèvre. Operation Idyll Farms’ Alpine goats are pasture-fed using rotational grazing practices. Ownership The farm is owned by hed ...

, a farm in Michigan that pastures dairy goats and produces

artisanal An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functional or strictly decorative, for example furniture, decorative art, s ...

chèvre Goat cheese, or chèvre ( or ; from French ''fromage de chèvre'' 'goat cheese'), is cheese made from goat's milk. Goats were among the first animals to be domesticated for producing food. Goat cheese is made around the world with a variety of ...

. A ''

Bloomberg Bloomberg may refer to: People * Daniel J. Bloomberg (1905–1984), audio engineer * Georgina Bloomberg (born 1983), professional equestrian * Michael Bloomberg (born 1942), American businessman and founder of Bloomberg L.P.; politician and ma ...

'' article claimed that the farm is making "some of the best goat cheese in America.”Zimberoff, Larissa
A Hedge Fund Pioneer Is Making Some of the Best Goat Cheese in America
''Bloomberg Pursuits'', November 7, 2017 Spitznagel also reportedly flies planes and practices ashtanga yoga.

References