I doubt the hedge fund is *just* black swan option plays. The dude wrote a book on dynamic hedging, was a prop trader and market marker at multiple well known shops. I'm sure he knows what he's doing.
Yes Taleb has a PHD, wrote a book and appeared on CNBC, he really must know what he's doing. Just like the guys at LTCM. Here's another 'great trade' of Taleb's, flashback to 2010: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azLmks3BmQm4 Anyone who followed his advice is down 50% while equity markets are up 100% during the same time frame.
Waitng for black swans to happen loses more in the longer-term than it wins in the short-term unless you are lucky, take the money and retire.
I agree with last post. Sounds a bit like the broken clock theory. You have to look at track record. People have been calling for a correction for years. And volatility has been at all time lows. They still get kudos for having position on. I believe even when long term bullish, you should always be somewhat hedged. Don't have to be a bear to make money in a down market.This is why we have futures and options. Not all about leverage. Or short stock you don't like. ETF's come to mind. Sectors, countries, take your pick. This way you can always catch at least some of these pullbacks. You know they're going to happen. When and how much you really can't predict. Like they say, nobody has a crystal ball. Headlines hit every day we can't possibly see coming.
Sexy (returns) sells -- no matter how rare or astronomical it may seem or be; no one wants to read about the depressing losers.
These long vola funds had a dismal close to 2015 and were down on the year. Of course no more press releases or Bloomberg articles.
Interesting point, Butterball. Looks like the original "$1 billion" claim was bogus anyway: http://allaboutalpha.com/blog/2015/09/07/billion-dollar-claim-from-black-swan-fund-not-from-taleb/ Taleb himself backed away from taking credit for having much to do with the fund almost immediately. As you said Butterball, these stories hit the press like a storm without much investigation, and then when they reverse or they're simply proven wrong, there's little follow-up. It reminds me of the "wunderkind trader" stories that pop up now and again where some 18-year-old supposedly made $50 million in a year trading their lunch money, then a week later it comes clear that he just made the whole thing up. Evidently, a significant portion of the journalists in the financial sector don't do much digging.
Did they? How Horribly written article. Sosnoft looks at one random 2 month strikes open interest to prove universa didn't make 1bn? Doesn't look at shorter date strikes or other strikes around the one, doesn't even consider Otc options?! Not saying universa claims arent a lie. But the analysis in this article is terrible and doesn't prove universa didn't make 1bn.