XIV Crashes of 10% or more Rankings – We’ve avoided 30 of 33 now

by | Sep 10, 2016

 

I’ve stressed repeatedly over the years  (perhaps at times sounding like a broken record)  that our VTS Tactical Volatility Strategy focuses on safety and risk management above all else.  There’s no better way to prove that than tracking it’s performance during those times when you’d definitely want an increased focus on preservation of capital.

The VIX Index can and does spike up violently from time to time  (click here to see the top 20 VIX Spikes in History)  which in turn causes the XIV ETN to crash.  It’s at these times that our conservative trading strategy really pays off.

 

As you can see in the chart, only 3 times in a total of 33 XIV crashes over 10% since inception was our strategy actually in a trade that lost money.  6 times the strategy was in the VXX which profits from the decline.  In total the strategy was actually very profitable during the 33 worst days for the XIV because we were mostly either in cash or in VXX making money off it.

30 out of 33 times we were either safely in cash, or actually profiting from the decline by being in the inverse ETF VXX.  That’s what we mean when we talk about risk management.  Over 90% success rate at avoiding the worst days. 

 

We were in trades on 9 of the largest 33 XIV Crashes in history.  Here’s how our strategy performed on those 9 days we were in trades:

 

High annual returns are great and we’re proud that we’ve achieved over 75% a year on average, but the real secret to long-term investment success is mitigating losses and reducing drawdowns to the lowest possible level.

 

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