I’m sorry for breaking protocol here, I realize that nobody likes multiple daily emails and blogs but given the current situation I think it’s definitely warranted. I have over 2000 people on my VTS newsletter and I can’t possibly answer all the questions that I received. I may be sending out a few extra emails in the coming days and some of them may seem very redundant, but if there’s any developments I feel the community needs to see I will be doing that. Apologies
So first things first, breathe! Just, breathe… My girlfriend is a yoga instructor and during the bloodbath yesterday she was helping me with that. Breathe in, breathe out. 4 of our strategies were in cash this week and one of them was in gold. Our portfolio actually made a little money yesterday and it was still terrifying.
The VIX index ended the day up 115%. The previous record was 64% in 2007. This was a bloodbath. From a volatility market perspective, this was our October 1987 Black Monday.
1) I am truly sorry to those of you who went rogue against my signals and bought the XIV / SVXY despite us being in cash across the board. I’m not a spike the football type of person, I’m not the I told you so type. Simply put, I’m sorry for your losses but I promise you if there’s anything I can do to help in the coming months or years in rebuilding I will. You don’t have to pay me money to get my advice so feel free to reach out.
2) I know it was probably incredibly tempting to go against my recommendations. There is an army of brand new volatility “experts” emerging in the last year who were telling everybody to just buy them with both hands. Every dip, recommending short vol, short option spreads, there was nothing too risky. They are all over Twitter, in blogs, making YouTube videos, giving reckless recommendations. I won’t call out any names, they know who they are. I’ve been fighting a real battle here as I know some of my fellow volatility investing veterans have been as well, trying to explain to people the asymmetric risk here. It was never free money. These are very complicated products.
Now I believe they are fantastic products and definitely worth investing in. We will find the ones that survive and keep going everyone, the reward is worth the risk.
But obviously it has to be done carefully with a healthy amount of respect for how quickly things can go off the rails. If you were swayed by some of these reckless traders out there I’m truly sorry for that.
3) Some of the volatility products may be toast. XIV and SVXY look bad right now and they may not trade today, or ever again. However let’s not make any definitive statements just yet. We need to see what happens when the markets open. Sometimes after hours shenanigans are not reliable so let’s just see where things open. These banks and market makers are going to need some time to sort this mess out.
4) Obviously Volatility Trading Strategies and the community we have built here will keep going, stronger than ever.
I’ve been a full time investor for 15 years. 1 ugly day is not going to change the course of my destiny, and I certainly hope it’s not going to change any of yours.
We still have goals. We still have retirement funds to build. We still have families and friends to take care of. We will keep going. There’s plenty of ways to invest. We never put all of our eggs in one basket. We are diversified, we have multiple strategies and there will always be new ones coming. New and exciting ways to grow our retirement funds while managing risk.
As I always say, we live to fight another day. We are unscathed. Not a visible scratch on us, but inside, we are humbled by this. We will learn from this.
It’s part of us now and every one of us is a better investor today than we were yesterday because of it.
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