Mark Spitznagel and his investment firm Universa Investments captured my interest when they generated a 3,612 percent return in March 2020.

They were able to do this using a technique known as tail hedging, essentially buying deep out of the money options on the market in anticipation of large drops in the market.

If you want to cut to the chase and learn exactly how they do that as well as how you can do it, I detailed it here.

I bought Spitznagel’s book The Dao of Capital to learn the technique, and I wasn’t disappointed. But I was pleasantly surprised at his underlying philosophy, too, which is based in deep patterns of nature.

This link to nature is a recurring theme I’ve found in many of the more original and insightful books I’ve read.

Ray Dalio in his book Principles professed to being fascinated by the workings of nature, evolution in particular, and he used those insights as part of a personal philosophy he credits for his success.

Benoit Mandelbrot, too, looked to nature for his insights into fractals, a fundamental pattern that is found in forests, star clustering, and financial markets.

Forests, for example, form a leitmotif for Spitznagel’s book. They’re a fundamental theme or pattern he returns to regularly.

Spitznagel describes the way a forest works as one example of an even deeper pattern, which he calls the “roundabout” approach. Meaning: much in life cannot be achieved directly. Rather, goals require a roundabout approach—one in which a proximate goal is achieved before the ultimate goal is achieved.

The idea of the “roundabout” approach is embedded throughout Spitznagel’s book. He references it in everything from how trees “battle” for dominance in the forest to strategy in war.

Spitznagel describes the competition between two types of trees in forests: conifers (e.g., pine, cedar, hemlock, spruce, and fir) and angiosperms (e.g., maple, oak, ash, birch, and willow). Conifers are slower-growing relative to angiosperms. Angiosperms tend to “win” initially, covering wide areas of the forest. But their overgrowth invites fires, a natural and recurring event in forests.

Conifers have a few factors that allow them to thrive in this environment—but in an unexpected, roundabout way. Conifers can survive on the “edges” of the forest, in the less desirable, windier rocky outcrops. Their seeds are wind borne. This allows them to spread widely to the edges of the forest in the first phase, as the angiosperms are “winning." Then, when the fire comes, it allows them to quickly return to forest center as fire “pulls” their seeds back into the center of the forest. Finally, certain cones open only in intense heat and flame, allowing them to emerge quickly after a fire.

All of this means that over the long-term conifers “win” over angiosperms, even though they initially “lose,” ceding the forest to them.

In war, this initial loss for an ultimate win may be a retreat. Incidentally, I was finishing up Tolstoy’s War and Peace as I started Spitznagel’s book. I was amazed to see that this same philosophy was central to War and Peace.

War and Peace centers around Napoleon’s invasion of Russia in 1812. The Russians, commanded by General Kutuzov, technically “lost” the Battle of Borodino and then “gave up” Moscow to Napoleon. But the impact on Napoleon’s army was immense and unexpected, certainly for Napoleon.

Napoleon’s soldiers, upon entering Moscow, became undisciplined. Moscow burned, preventing them from gathering proper rations for their return journey. The Russian winter arrived, hindering their return. The Russian roads were more difficult to travel than they expected, slowing their return. And Russians attacked them throughout their journey, whittling down their numbers.

Of the 685,000 soldiers that comprised Napoleon’s Grande Armée at the start of the invasion, about 100,000 returned to France.

Russia ultimately won the war, but initially it looked like they had lost.

This is the heart of Spitznagel’s strategy: lose initially to win in the long-term.

As I said above, you can read more about one specific application of this philosophy to investing in his use of tail hedging for extreme market events. But the book as a whole is very much worth reading for the rich philosophy that underlies his investing strategy.