Thriving firm's new bet: Hyperinflation

A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation.

The firm, Universa Investments, is known for its ties to gloomy investor Nassim Nicholas Taleb, the author of the 2007 best-seller "The Black Swan," which describes the impact of extreme events on the world and financial markets.

The new strategy, designed by Spitznagel, aims to post big gains if inflation and interest rates take off as they did in the 1970s. Universa will invest in options tied to commodities such as corn, crude oil and copper, as well as options on stocks such as oil drillers and gold miners.

"We think these things are going to see massive volatility," Taleb said in an interview.

The fund will also bet against Treasury bonds, which tend to weaken in inflationary environments. Last week, Treasury yields shot to their highest level since November as prices fell on inflation concerns. Oil topped $66 a barrel. Gold is creeping toward $1,000 an ounce.

My Comments: Nassim Taleb is an investment legend and coined the widely used term "Black Swan". More on him here...The markets don't care about his opinions or investments and they are going to do what they are going to do. But high inflation is something I've been expecting to happen and its nice to see bright minds on the same page.

Full article here...