'Black Swan' investor Mark Spitznagel says to guard against disaster but take risks too

A "Black Swan" investor says to guard against disasters — but take risks too.

Mark Spitznagel has built his career on protecting his clients' portfolios against extreme, rare, and unpredictable events known as "black swans" or "tail risks."

Yet the Universa Investments founder and chief told Business Insider over coffee in London this month that simply preparing for the worst isn't a winning strategy in life.

Not taking enough risks can be the "biggest mistake someone makes," Spitznagel said. "You need to be exposed, you need to bet your beliefs."

His career advice mirrors what he says Universa offers to clients: a tail hedge that not only stops them from blowing up, but allows them to be more bullish in their bets.

Spitznagel also warned against obsessing over the power of compounding money over time.

In his 20s, Warren Buffett famously felt like he was paying $300,000 for a haircut. The legendary investor firmly believed that's how much he could make over time if he invested the money instead of handing it to his barber.

Spitznagel said that mindset can be a "curse" because people have to live their lives: "What's the point of compounding if you're not around to see it?"

The veteran trader, who ran a hedge fund with "The Black Swan" author Nassim Taleb before starting Universa in 2007, recommended people focus on "mitigating the big losses, not the little ones."

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"It's not just that it kills you, but it goes down so much, it takes forever to crawl out," he said.

He gave the example of an investor taking a 50% loss on a position, then having to make a 100% gain just to break even.