Mark Spitznagel, the founder and chief investment officer of the enormously successful hedge fund Universa Investments, is in an odd position at the moment. He’s very worried about the financial markets— “I’m as bearish as I could possibly be,” he told me the other day, when I called him at his home in Michigan, where his goat farm produces some of the country’s finest artisanal chèvre. But he’s also comfortable knowing that it doesn’t really matter what he thinks about the direction of the markets.

Spitznagel, after all, is Wall Street’s foremost practitioner of so-called “tail hedging,” an investment strategy he has perfected with The Black Swan author and mathematician Nassim Taleb, to buy cheap, far “out-of-the-money” options contracts to protect against the rare, cataclysmic plunge. It is, as he likes to say, the ultimate “insurance” policy. Investors in Universa bleed small amounts of money as markets rise, but profit massively during sell-offs. During the financial crisis of 2008, the year Universa launched, Spitznagel returned more than 115 percent to investors. In March 2020, when the coronavirus sent the S&P tumbling nearly 30 percent, his flagship fund returned more than 3,600 percent—a bet that places him among Michael Burry and Bill Ackman as one of the most successful, as he likes to say, “risk mitigation” traders of all time.