Safe Haven: Investing for Financial Storms

by: Mark Spitznagel (0)

What is a safe haven?

What role should they play in an investment portfolio? Do we use them only to seek shelter until the passing of financial storms? Or are they something more? Contrary to everything we know from modern financial theory, can higher returns actually come as a result of lowering risk? In Safe Haven, hedge fund manager Mark Spitznagel—one of the top practitioners of safe haven investing and portfolio risk mitigation in the world—answers these questions and more. Investors who heed the message in this book will never look at risk mitigation the same way again.

The Reviews

I felt the interplay of history, philosophy and of course pirates with the technical material was very helpful to a nontechnical person like me to understand concepts presented. I believe I have a broadened view of what can serve as a safe haven and feel more at ease (and cautious) with investing in these volitale times!

I waited for months to read this book in a way I have not waited for many books. In short, pretty disappointed. Make no mistake, there is some wonderful content and it is worth reading just for the collection of quotes from other great thinkers contained in its pages. The problem being, the primary lesson to be learned by reading this book is, "No financial risk insurance other than mine works and you need to figure out how to do it on your on your own because I'm not going to teach you." In all fairness, Spitznagel says as much in chapter one but you keep reading this thing thinking, "He's gotta give me something..." In fact, you have to do some external digging before you to confirm that even if the book is a sales pitch for Universa Investments, it takes $50 million out of a $1.5 billon pool of assets to gain admittance to Spitznagel's tail risk mitigating alchemy. I use that term very deliberately as scientific method is such a prominent pillar of the book and yet none of his method is actually disclosed. Not terribly scientific. Now, I am all in for a challenge, relish the hunt, and love the truly Douglas Adams style of telling a story based on what something isn't; but there was virtually no proactive payoff to the time invested in reading the majority of this book. If you want to gain some wonderful insights into what the author claims doesn't work; by all means, dig in! There is some very provocative stuff in his explanations and models of why things don't work as Safe Havens, but I found myself asking, "So what the hell should those of us not on the Forbes list do?" If you are looking for anything proactive beyond, "When you are worth $1.5 billion, give me a call." you may want to invest your time elsewhere. Hint: If you just want the author's very relevant "Don't list" skip to chapter 6.

Cons:1. The author spent a fair few pages in "Dao of Capital" describing a strategy (basically valuation-based) for reducing the cost of hedges by limiting their use to "expected events." In several places in "Safe Haven" he unequivocally states that trying reduce the cost of some of the more expensive hedges by prediction or expectation is folly. There is no mention of his previous writing on this subject. Now, I can understand how he might have rethought a valuation-based strategy in the intervening eight years -- but he needs to tell readers explicitly that he no longer believes the cost-reduction strategy in "Dao" is viable if that is the case. Readers who are familiar with the earlier work will be very confused as to what his actual position is on this subject.2. I agree that subtitling the book "Safe Haven Investing" is misleading. This may very well have been Wiley's decision and not the author's. I agree with the author that the vast majority of people don't have the time, temperament, or ability to employ the only strategy ("insurance") he ends up recommending in a cost-effective way such that the cost/benefit graphs in the book would look the same. I also agree he couldn't explain it in a book anyway. That still doesn't excuse the subtitle.Pro:The book does indeed deliver on what the author tells us is his aim: to explain why hedging can increase returns. And the graphs of how he thinks about the cost of various strategies is instructive and potentially useful.Mathematically-inclined readers who spend a few minutes proving the various examples to themselves will get the most of what this book has to offer.

Book Review:Nassim: I’m smarter than you, history, Mark is smarter than you.Mark: I’m smarter than you, I make a lot ofMoney, I’m not going to tell you how, I wrote the book Safe Haven, how dare you ask meHow I make my money. I’m smarter than you.The End

I must admit, similar to many of the harsh reviewers, I was hoping to see a more prescriptive exposition that guides retail investors in hedging tail risk. Instead, this book addresses much more foundational questions and in the end, provides a framework for identifying and characterizing safe haven investment strategies. Mark Spitznagel has beautifully introduced us to very counterintuitive ideas around the tradeoff between arithmetic and geometric returns. Taking the time to sit with and internalize those lessons will pay dividends far beyond the presentation of a singular, prescriptive approach. It empowers the reader to instead craft and evaluate strategies that fit within a larger investment thesis that meets the needs of the reader. Such a gift once you've done the work to appreciate what is on offer in the book. If you are willing to walk that path, you will not be disappointed.

The book argues that risk mitigation strategies should and can result in higher return after cost. The concept is written in an abstract way while sharing examples from dice, merchants and pirates, etc. I think the author intentionally didn’t want to share real examples because what can work today doesn’t guarantee it will work all the time and it is dependent on your portfolio. Plus, the strategy that he recommends is insurance which is most likely related to options which makes even more advanced to put in a book.I understand some of the readers were not happy they didn’t have concrete examples, but I thought it is only fair. The writer after all went to great to great lengths to explain a concept that is complex but also contrarian to a lot of what we read in finance books.Well written book. Reading all this theory is a small price for grasping this concept and how to mitigate risk in a profitable way.

I think thiw may just be me, but I found his methods VERY difficult to understand.

I first came across the book when I was looking for the recent update of Mark’s friend: Nassim Nicolas Taleb; a famous and outspoken inventor and author. If Nassim’s writings are more from the philosophical aspect on how to survive (and hopeful thrive) in an environment disproportionately impacted by rare events, this book provides the first step to connect the philosophy to real world implementation. While it illustrates under the context of investing, the underlying message can be applied to almost all aspects of life.The book has changed my thinking process, and I can strongly recommend. However, I do want to point out that it felt a little dry at my first read. One of the reasons is that I was treating it purely as a leisure read and didn’t concentrate much. However, the insights started shocking me when I later re-read it seriously. It’s not a technical book, but is a little more technical than Nassim’s books. Prepare yourself and enjoy the feast.

As a PhD in the analytical engineering sciences, I fully understand and endorse the mathematical principals and approach. My one contrary remark is that the methods ignore that circumstances are often known and a circumstance blind analysis does not capture that reality. The author would dismiss this as having a crystal ball, with some validity but not entirely. The other gap is not showing the effects of continued investment (when working) or continued withdrawal (when retired) with a specific endpoint (e.g. death) which could result in a nonstationary policy.

On a ideas level it’s really good. But the marketing for the book implies you can learn what to do to provide yourself with a safe haven and that’s simply not true unless your super rich and can go into the authors fund. I doubt 99% of fund managers can really gain anything. Good book but should really have been marketed clearly as having no usable advice for anyone not running a pension fund.

I'm a big Spitznagel fan. This book just doesn't get anywhere. He's telling us to invest for the longterm w/ very little practical info. Don't waste your time on this 1.

Must read for those who seek to make their portfolios “antifragile” (to borrow the word from Nazim Taleb).Prepare for rather intensive logical and mathematical journey but it’s worth it.The forces explained in the book (e.g. geometric effects) are totally applicable in business aspects other than investment portfolio management.

you have to read between the lines you will not be told how to invest or to make money BUT if you know how he will tell you some secrets between the lines.

Safe Haven: Investing for Financial Storms
⭐ 4.1 💛 344
kindle: $17.00
hardcover: $19.96
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