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Black Swan Fund Universa Investments Up 20% Last Monday

Black Swan hedge-fund Universa Investments LP, advised by The Black Swan author Nassim Nicholas Taleb, has recently profited more than $1 billion on a option shorting strategy that profits when financial markets melt down.

According to a Wall Street Journal source, Universa Investments was up close to 20% on the recent Black Monday, a trading session where the Dow Jones Industrial Average was off over 1,000 points, before recovering to finish down 588 points on the day.

The sources noted that Universa Investments' returns for the year topped 20% as of earlier this week. Universa invests in positions designed to hedge close $6 billion in client assets. It is unclear from the Journal article how many of those gains were realized and if they were lost

Statement from Universa Investments founder Mark Spitznagel

“This is just the beginning,” commented Universa founder Mark Spitznagel, in reference to recent market volatility. Spitznagel's ongtime collaborator Taleb, who advises Universa, is a professor at New York University and had become famous for his negative forecasts on the global economy.

“The markets are overvalued to the tune of 50%, and I’ve been saying that for some time,” noted Spitznagel, who has been calling for a global stock correction relating to the "easy-money" policies by central banks around the world for some years now.

WSJ describes Universa Investments strategy as follows:

The firm focuses on finding cheap, shorter-dated options on the S&P 500 and other instruments it expects to rise in value amid a notable downturn. During the past week, the value of put options that Universa bought over the past one to two months jumped, said people familiar with the matter. A put option confers the...


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