Latest news with #Universa
Yahoo
12-05-2025
- Business
- Yahoo
'Black Swan' hedge fund Universa reaps 100% return amid tariff chaos, investor says
By Carolina Mandl NEW YORK (Reuters) -"Black Swan" hedge fund Universa Investments posted a 100% return on capital in a turbulent April for markets as U.S. President Donald Trump's administration unveiled new tariff-based trade policies, an investor who allocates money to the fund told Reuters. A so-called tail-risk hedge fund with $20 billion in assets under management, Universa specializes in risk mitigation against "black swan" events - unpredictable and high-impact drivers of market volatility. Funds of its kind use cheap credit default swaps, stock options and other derivatives to profit from severe market dislocations, like an insurance policy. Universa's founder and Chief Investment Officer Mark Spitznagel declined to comment on the fund's performance in April. He told Reuters he believes financial markets will perform in a Goldilocks zone for a while, with the economy not growing too fast or too slow, before further turbulence. "I expect a euphoric high before it is over, but when that happens... it's going to be the worst crash I think that we will have seen in our lifetime," he said, adding U.S. stock markets could fall 80%. He said he saw April's market turbulence as a "temporary blip." Universa - which counts "The Black Swan" author Nassim Nicholas Taleb as its distinguished scientific adviser - tends to perform well when unexpected events happen, posting a roughly 4,000% gain in March 2020 as stocks worldwide sank as the COVID-19 pandemic broke out. Spitznagel said the tariffs may have a recessionary impact on the economy at a time that the Federal Reserve is keeping interest rates at historically high levels. "The Fed is way behind (the curve)," he told Reuters. "Despite a slowing economy, (Chair Jerome) Powell's holding the line." Last week the Fed held rates steady in the 4.25%-4.50% range, citing a cloudy economic outlook amid tariff threats, as risks of both higher inflation and unemployment had risen. The Fed hiked rates aggressively in 2022 and 2023 to tame a surge in inflation, a process that Spitznagel sees as the beginning of a pop in the economic bubble after years of monetary easing that drove investors to riskier assets. "This crash is going to come eventually," he said.
Yahoo
09-04-2025
- Business
- Yahoo
The stock market will go down 80% ‘when this is over,' says bearish investor Mark Spitznagel
One of Wall Street's most notoriously pessimistic — and successful — investors, Mark Spitznagel, said the stock-market plunge that's followed President Donald Trump's tariff rollout isn't the epic market crash he has been calling for, but rather the turmoil along the way to the big event. 'I expect an 80% crash when this is over. I just don't think this is it. This is a trap,' he wrote in commentary to MarketWatch on Monday, adding that when the real crash happens, investors will know it. After two big days of selloffs, here's what history suggests will happen next 21 stocks that Wall Street analysts now think are bargains in this year's worst-performing sector My cousin died before receiving our uncle's $2M inheritance. Will the rest of the family receive this money instead? 'I'm stuck': I'm a single mom with a 6-year-old child. What can I do to earn money fast? 5 things that make this stock-market selloff truly unusual Spitznagel is the founder and chief investment officer of hedge fund Universa Investments, which employs a strategy that aims to take positions that will benefit from rare, unpredictable but highly impactful events. It's known as a 'Black Swan' fund — a term to describe such events popularized by scientist, author and former options trader Nassim Nicholas Taleb, who was influential in the firm's strategy. Universa made headlines in the first quarter of 2020 for returning 4,144% as the market crashed in March from fears of the COVID pandemic. Spitznagel told MarketWatch that Universa is still trading this market like a crash even though he's not convinced one has arrived. 'This is another selloff to shake people out. This isn't Armageddon. That time will come as the bubble bursts,' he wrote. 'This is a most contrarian view right now. Promise.' Stocks were off session lows but posting losses in a wildly volatile session Monday that saw swings from sharp losses to sharp gains and back again. The Dow Jones Industrial Average DJIA was down more than 200 points, or 0.57%, while the S&P 500 SPX slightly recovered by 0.35%, and the Nasdaq Composite COMP was down 0.84%. The S&P 500 fell a cumulative 10.5% on Thursday and Friday after President Donald Trump last week unveiled sweeping tariff measures. The S&P 500 and other major indexes saw their steepest two-day selloff since March 2020, when stocks plunged as the COVID-19 pandemic forced an economic shutdown. Spitznagel has been calling for a bigger crash — one that would be the worst since 1929. The investor emphasized he isn't in the business of predicting the timing of market crashes. However, he has previously voiced concerns over mounting U.S. debt, which he sees posing a key risk to markets. In 2024, he warned investors about not getting caught off guard when the stock market does turn for the worse, and end up being the 'sucker' that sells when the market is down and buys when it's up. He advocated having positions agnostic to market turmoil — a difficult ask for the average person. 'We've had our clients riding this bull market for years,' Spitznagel wrote on Monday. 'All the doom and gloomers think it's over and they have this figured out. Take it from a professional doomer, they don't. And they definitely don't have the right position for it.' In a 2023 interview with Fortune, he noted that retail investors could ride out storms without needing to resort to complex trading strategies by simply buying low-cost, broad index funds, and even adding to their positions when the market is down. The key for retail is to not overextend their exposure to a point of being forced to sell at a bad time in the market. Read more: How investors are evaluating tariffs as stocks finish lower 'Frankly, I'm terrified': I'm 63 and nearing retirement. How should I invest my $80,000 inheritance? 'She has been telling him lies': My sister convinced my father to sign everything over to her. What can I do? Apple's stock is the latest to see a 'death cross,' and it won't be the last Even 'safe haven' trades like Treasurys are falling on Trump's tariffs. What does that tell investors? Sign in to access your portfolio
Yahoo
28-01-2025
- Business
- Yahoo
Black Swan's Taleb says Nvidia rout Is hint of what's coming
(Bloomberg) — The Black Swan author Nassim Taleb is warning that Monday's brutal selloff in Nvidia Corp. (NVDA) is just a taste of what's in store for investors who blindly piled into Wall Street's AI-driven stock rally. Texas HOA Charged With Discrimination for Banning Section 8 Renters Budapest Mayor Aims to Block Orban's Plans to Build 'Mini Dubai' Vienna Embraces Heat Pumps to Ditch Russian Gas Billionaire Developer Caruso Slams LA Leadership Over Wildfires Hoboken PATH Station Will Close for Almost a Month on Jan. 30 Future pullbacks could be two- or even three-times bigger than the 17% slump posted by Nvidia at the start of this week, Taleb said on the sidelines of what's become known as Hedge Fund Week in Miami. That drop wiped $589 billion from the chip maker's valuation, making it the worst in market history. 'This is the beginning,' Taleb told Bloomberg News in an interview after the close of markets on Monday. 'The beginning of an adjustment of people to reality. Because now they realize, now, it's no longer flawless. You have a small little chip on the glass.' The frenzied selling was triggered by sudden fears that US tech giants may not dominate the field of artificial intelligence as expected. The concerns follow the emergence of DeepSeek, a Chinese AI startup that has demonstrated a lower-cost approach to developing the technology. Investors interpreted that as a threat to both demand for and reliance on Nvidia's advanced chips. Taleb said investors have until now been too focused on a single narrative: That the company's shares would keep rising as it maintains its dominance of AI. Monday's retreat was actually 'very little' considering the risks in the industry, he said. Taleb, whose best-selling book explores the extreme impacts of rare and unpredictable occurrences, is also scientific adviser to Universa Investments. That's a tail-risk hedge fund, which effectively offers a form of insurance to help protect portfolios from violent market events. The former options trader is well-known on Wall Street for his gloomy pronouncements, not all of which have proved accurate. In early 2023, he said many investors were ill-prepared for the era of higher interest rates when assets may no longer be 'inflating like crazy.' The benchmark US equity gauge is up almost 50% since, in large part because of the frenzy for all things AI. Taleb and Universa's argument is not that investors should run from the market, and hence miss such gains. Rather, they advocate allocating a sliver of portfolios toward protection from unexpected shocks. Taleb said too many investors have been bidding up prices of firms related to AI without properly knowing the details of how it functions or is able to succeed. He described technology firms as 'gray swans,' because investors underestimate the deviations in their prices that are possible in a day. (Updates with context surrounding Universa's investment approach.) What Trump's Tech Billionaires Are Buying Forget Factories, Small US Towns Want Buc-ee's Gas Stations The CDC Won't Give the Public a Full Picture of Fertility Treatment Risks Elon Musk's Inaugural Highs (and Lows) How Kendrick Lamar Turned Beef With Drake Into Music Superstardom ©2025 Bloomberg L.P. Sign in to access your portfolio
