Mark Spitznagel likely knows risk management can be a lonely, solitaire existence if one has the wrong attitude. In fact, the Austrian economic philosopher can be used as a litmus test to determine if you are a risk manager or a “hope” investor.

If one recoiled with horror at the idea that a central bank inflated asset bubble has been built and it won’t take much to pop, as Spitznagel recently did, then you are a “hope” based investor. If, however, you find Spitznagel’s mathematical logic that this bubble could burst due to any number of variables, logic and otherwise, then one might think it is time for thought change on Wall Street. Astute investors need to demonstrate they are, in fact, truly elite when it matters most – during stock market crisis – and only then can they wear the crown of the noncorrelated investing professional. Watch the world with a degree of dispassion so that analysis allows for clear thinking regarding hedging and risk management — and above all, don’t be sheep.


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