VTS Community

I’ve put together a short video talking about the VTS Tactical Balanced Strategy and how it’s done so far in 2018.  It may serve as a refresher for some of you, but our community is growing and it’s important to review the main goal of the strategy.

It’s been a very good year so far for the strategy, not only from an absolute performance perspective but more importantly from a risk adjusted perspective.  It’s always fun to make large gains when the markets cooperate, but what’s far more important in the long run is reducing portfolio drawdowns.

The video is down below so please enjoy that and ask any follow up questions, but since some of you like to read articles instead I’ll go through the basics as well.


Why do I say it’s more important to avoid portfolio drawdowns?  Take a look at these two charts:

S&P 500 missing the 25 best days:

S&P 500 without the 25 worst days:

Because down days in nearly all investing vehicles are more pronounced than up days, it’s always more beneficial to avoid more of them.  I’m not sure who originally said it but “stocks take the escalator up and the elevator down.”  Meaning things can drop a whole lot faster than they can rise, except if we’re talking about volatility then of course it’s the opposite.  And remember this old chart I keep showing:



It’s just a basic math problem.  The bigger the drawdown the harder it is to recover from.  That’s why when stocks crash it can take many years to recover.  After the dot.com crash for example it took the Nasdaq over 15 years to get back to the same level.  And not just stocks.  When investor portfolio’s got crushed in the financial crisis in many cases it took upwards of 5 years to recover.

Simply put, the most efficient way to make a good long-term rate of return is reducing portfolio drawdowns during bad periods and that’s what the strategy is designed to do.


It requires a lot of patience because avoiding major losses is not nearly as sexy as using leverage to boost gains.  But investing is not a sprint, it’s a marathon and those who focus on reducing drawdowns will cross the retirement finish line first.

Enjoy the video below:


Current VTS Total Portfolio Solution Allocations

10% VTS Conservative Vol Strategy  –  Optional replacement for lower risk tolerance investors

10% VTS Aggressive Vol Strategy  –  Optional replacement for higher risk tolerance investors

50% VTS Tactical Balanced Strategy

20% VTS Iron Condor Strategy

10% VTS Discretionary Strategy

Temporarily paused:  VTS Tactical Volatility Strategy


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