In short: Insurance, and priced like it: the fund "sits in 10-year bonds and then buys a ladder of puts on the stock market. Not surprisingly, it's down this year because US stocks are doing great. But if and when we have US stocks do poorly, it's a pretty good solution." Framed as a choice for someone who explicitly wants to "bet on the market going down or puking," not a core holding.
TAIL is portfolio insurance. It parks its money in ten-year US Treasury bonds and spends a small amount continuously buying "put options" on the US stock market — contracts that pay off only if stocks fall sharply. Like any insurance policy, it costs a little every year and pays nothing in a good year. This has been a good year, so, as Faber notes without spin, it is down.
His framing is honest about what it is for: if you specifically want to "bet on the market going down or puking, that's a pretty good choice," and it becomes valuable if and when US stocks do badly. It is a hedge bought deliberately, not a fund to own for growth — and it makes most sense alongside the CAPE-44 worry rather than instead of being invested.
37:10We got 20 of them. And some are much more plain vanilla and some like our tail risk fund, hey, you want to bet on the market going down or puking, that's a pretty good choice. It sits in 10-year bonds and then buys a ladder of puts on the stock market. Not surprisingly, it's down this year because US stocks are doing great.
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