Nassim Nicholas Taleb (@nntaleb), the author of “The Black Swan” and “Antifragile," joins episode 83 of The Julia La Roche show alongside veteran Wall Street Journal reporter Scott Patterson (@pattersonscott), author of “Chaos Kings: How Wall Street Traders Make Billions In the New Age of Crisis.”
“Chaos Kings,” which features Taleb, recounts the story of Universa Investments, a Miami-based investment firm specializing in risk mitigation, deploying a tail-risk hedging strategy to limit losses from an outsized market event, like a Black Swan. Taleb is the Distinguished Scientific Advisor at Universa.
Led by Mark Spitznagel, Universa is among the best-performing investment managers of the last 15 years, reaping massive gains from market crashes. During the depths of the COVID-19 pandemic in early 2020, Universa delivered a stunning 4,000% return during the first quarter when markets sharply sold off. The firm has posted a 15-year average annual return on capital north of 100%.
0:00 Show open
1:00 Chaos Kings story
6:40 A problem with infrequent but large losses
9:45 Precautionary Principle
12:29 Tail risk hedging
15:30 Flaws of modern finance
17:17 Mark Spitznagel learning to “love to lose”
19:00 Fragilities, hidden risks, big picture macro environment
23:43 Addressing misconceptions around Black Swans
25:30 Optionality
30:16 Experience and execution of the strategy
31:49 Black Swans v. Dragon Kings
34:30 Predicting an event is one thing; benefitting is another thing
36:00 Sornette’s Dragon Kings
38:50 Universa’s 4,000% gain
41:45 Getting to know Nassim Taleb
46:01 Rethinking investing
49:01 New age of crisis
54:40 Parting thoughts
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#039 Stephanie Link On The Fed, Markets, And Working With Jim Cramer
#038 ‘Art & Equity’ With Blythe Masters, Brett Redfearn, Elizabeth Von Habsburg, and Carlos Domingo
#037 Axel Merk On The Fed's Sledgehammer Approach To The Economy
#036 Jim Rickards: We're Looking At A Global Recession
#035 Envestnet Co-CIO Dana D’Auria On Personalizing Portfolios
#034 Carson Block On Latest Shorts And The 'Mass Investing Delusion' Of ESG
#033 Jan Van Eck On Why Now Is The Time To Buy Bonds
#032 Scott Galloway: It's Never Been Easier To Become A Billionaire, But It’s Never Been Harder To Become A Millionaire
#031 Danielle DiMartino Booth On Recession, Housing, And Killing The Fed Put
#030 Vitaliy Katsenelson On The 'Dot-Com Bubble 2.0' Ushering In 'A Value Investor's Paradise'
#029 Steve Case On Peak Silicon Valley And The Rise Of The Rest
#028 Dr. Nomi Prins On How The Fed Created A ‘Permanent Distortion’
#027 Rick Rule: The Damage Will Be Severe But Survivable
#026 Brent Donnelly On Why It’s Starting To Feel Like 2001
#025 Alex Gurevich On Why Deflation — Not Inflation — Is The Real Concern
#024 "Convexity Maven" Harley Bassman On Repricing For Reality
#023 Nick Maggiulli On Why You Should ‘Just Keep Buying’
#022 Brent Johnson On The "Dollar Milkshake" Theory And Why A Currency Crisis Is Ahead
#021 Jim Rickards: We're Going To Wake Up This Winter With A Severe Recession
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