‘Black Swan’ Events – A Money Maker?

Gr8 paper

The Investment Review

A few days ago I read about Universa Investments LP, a so-called Black Swan Fund.

It’s founder, Mark Spitznagel, promises huge payoffs if a financial crisis hits & says investors are pouring into these types of doomsday funds. Universa returned about 115% to investors in 2008, according to Bloomberg.

My first thought was “This is blatantly a fad! A fund manager exploiting the lack of knowledge of rich clients to attract money”. My second thought was “Who would be stupid enough to put money into a fund which – by definition – loses money on a daily basis, waiting for a crash to happen”. Bear in mind that on top of the ongoing losses, (black swan) hedge funds typically charge a 1.5 percent management fee and take 20 percent of any profit. My third thought was “Just how likely is it that investing in a fund like this will get you a…

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