In 2007, Spitznagel founded the hedge fund Universa Investments, where he is the Chief Investment Officer, and which offers a type of insurance against extreme market risk. In 2018, The Wall Street Journal reported that “a strategy consisting of just a 3.3% position in Universa with the rest invested passively in the S&P 500 had a compound annual return of 12.3% in the 10 years through February, far better than the S&P 500 itself”. Moreover, “Universa was among a handful of funds that made huge gains" during the financial crisis of 2007–2008. In 2010, it was alleged that a large trade by Spitznagel in the minutes leading up to the 2010 Flash Crash was among its primary triggers.
Investment approach
Spitznagel's self-described investment strategy is focused on risk mitigation in portfolio construction, and is intended to allow his clients to take more systematic risk. In general terms, he does this by owning far out-of-the-moneyput options on stocks. He has called “investing Übermensch” Friedrich Nietzsche’s slogan “amor fati”—or the love of one’s fate—“the secret to successful investing.” Spitznagel is dismissive of Modern Portfolio Theory, and specifically its emphasis on correlations and mean-variance, and skeptic of market forecasts, although, according to a New York Times article, he predicted two market routs in the past decade, first in 2000 and then in 2008, as well as the “2000s commodities boom.” He has described what he does as lowering what he calls the “volatility tax” paid by investors—"the hidden tax on an investment portfolio caused by the negative compounding of large investment losses.” He detailed in an investor letter how “mathematically, it is the rare big loss, not the frequent small losses, that matters most to long-run compounding,” and called the Swiss mathematician and physicist Daniel Bernoulli “Universa’s Patron Saint.” Spitznagel wrote a book in 2013 titled The Dao of Capital: Austrian Investing in a Distorted World about the Austrian School of economics and its ostensible application to investing. Paul Tudor Jones said of Spitznagel's book that it “shows how a seemingly difficult immediate loss becomes an advantageous intermediate step for greater future gain, and thus why we must become ‘patient now and strategically impatient later’.”
Spitznagel is among the many financial executives and hedge fund managers who moved their residence and operations to Florida. In 2014, he moved his hedge fund offices from Los Angeles to Miami, citing Florida's “more hospitable business and tax environment” than California's. There is no income tax or estate tax in the state of Florida. According to The Wall Street Journal, Spitznagel splits his time between his Miami office and Michigan, where his family lives. He and his wife built, own, and operate Idyll Farms, a farm in Michigan that pastures dairy goats and produces artisanalchèvre. A Bloomberg article claimed that the farm is making "some of the best goat cheese in America.” Spitznagel also reportedly flies planes and practices ashtanga yoga.
