A founder of the "Black Swan Fund", who is good at profiting from tail risks, warned that there was a huge debt foam in the United States, and the Fed's policy would end in disaster.
In a recent interview, Mark Spitznagel, founder of the Black Swan fund Universa Investments, said that he did not think that US treasury bond bonds were safe haven assets, and warned investors that diversifying portfolios would do more harm than good. The company focuses on preventing extreme and unpredictable "tail risks" in the market.
Spitznagel was a former trader and a student of the author of the best-selling book "Black Swan" in 2007, Nassim Nicholas Taleb. He sounded the alarm bell for the largest debt foam in history, and warned that the efforts of the Federal Reserve to support the market and avoid recession paved the way for more serious disasters in the future.
Here is his latest viewpoint (compiled):
1. "We are in the midst of the largest credit foam in human history. I don't think this statement is controversial."
Monetary policy is the most destructive force in the global economy. Collapse, bankruptcy, and recession are natural, healthy, and self balancing processes, but monetary policy turns them into dangerous and destructive things. That's what they do when trying to eliminate recession and collapse. They created this powder keg, right? We live in a flammable time bomb
3. "treasury bond is not a safe haven, but a haven full of hope. Frankly, I think they are very cheap now, so I don't want to make them too bad. But as a strategic risk mitigation strategy, they do not solve the nonlinear nature of risk."
Reducing risk may ultimately be the most expensive thing we as investors can do. Usually, the treatment method is worse than the disease itself
5. "You need to consider reducing risk, rather than protecting yourself from the influence of the market. The most important thing is to protect yourself from the influence of the market. The market makes us do foolish things. We just need to establish our investment portfolio to protect us from this influence
As investors, we face this problem, which I call the Great Dilemma of Risk. If you take too much risk, time will make you pay the price. If you take too little risk, you will pay the long-term price
I am the most pessimistic person you have ever met. But we all agree that if you make a trade now and hope to make a profit in 20 years, it's likely to be buying the S&P 500 index, right? No matter what happens now, no matter how expensive it is now. So reducing risk really doesn't lie in what we think the world will become
As a company, we guard against very large losses. That's why we're there. It's not just because they're scary. It's not just because they're big. It's not just because they make headlines. It's because, mathematically speaking, they're the most important. Small losses are not important, what's important is big losses
He pointed out that an investment requires 100% return to offset 50% loss, and over time, significant losses may seriously affect compound growth.
Outstanding individuals like Dalio call diversification the 'holy grail of investment'. But he believes that's a lie, diversification is not the holy grail of investment. Peter Lynch aptly calls it 'diversification deterioration'
10. "It's easy to choose a 60/40 combination now, right? But I used to say that four or five years ago. When decentralization or 'diversification deteriorates' wins, you may lose less in a crash, but it's like a victory that's not worth the loss, because you'll ultimately have to pay the price for it in a recovery. This is a double-edged sword, right? You'll be cut by it
His view is that diversifying investment portfolios can limit losses, but it can also severely limit gains.