Universa tail fund returned 3,600% in March
A lot of this boils down to having a better understanding of uncertainty and probability, especially in terms of being non-naive when it comes to extreme volatility and risk. If you find ways to bet on this in a rigorous manner, the payoff is disproportionally larger. For the lay investor, the hard part is that this essentially means losing money 95% of the time [in those positions], something most people aren&#x27;t comfortable with. That and some technical difficulties, like liquidity, etc.<p>Of course, the bets needs to be sized correctly. This is not something you&#x27;d put all your money into, and this is part of the design from the beginning. See Kelly Criterion <a href="https:&#x2F;&#x2F;www.amazon.com&#x2F;KELLY-CAPITAL-GROWTH-INVESTMENT-CRITERION&#x2F;dp&#x2F;9814383139" rel="nofollow">https:&#x2F;&#x2F;www.amazon.com&#x2F;KELLY-CAPITAL-GROWTH-INVESTMENT-CRITE...</a> for how these people think about it in a rigorous way.<p>For those who are interested to read more on how this is done, have a look at the papers here: <a href="https:&#x2F;&#x2F;www.universa.net&#x2F;riskmitigation.html" rel="nofollow">https:&#x2F;&#x2F;www.universa.net&#x2F;riskmitigation.html</a><p>Spitznagel has also written a book called Dao of Capital which talks about the logic and underlying philosopy of these ideas: <a href="https:&#x2F;&#x2F;www.amazon.com&#x2F;Dao-Capital-Austrian-Investing-Distorted&#x2F;dp&#x2F;111834703X" rel="nofollow">https:&#x2F;&#x2F;www.amazon.com&#x2F;Dao-Capital-Austrian-Investing-Distor...</a><p>There&#x27;s also Dynamic Hedging by Taleb <a href="https:&#x2F;&#x2F;www.amazon.com&#x2F;Dynamic-Hedging-Managing-Vanilla-Options-ebook&#x2F;dp&#x2F;B000UG9JQA" rel="nofollow">https:&#x2F;&#x2F;www.amazon.com&#x2F;Dynamic-Hedging-Managing-Vanilla-Opti...</a> which talks about these options and their structure in more technical manner, though I haven&#x27;t read it.