VTS Community,

I mentioned yesterday that the S&P 500 has spent the majority of 2018 in a drawdown thus far, 90 trading days and counting since the last all time high on January 26.  It’s significant but there have been four other periods much longer than this just since the financial crisis so patience is a virtue in these kinds of markets.

Our “core” Tactical Balanced Strategy is designed with the primary focus being smoothing out drawdowns during difficult market periods and this year has been a good opportunity to see it in action.  Not that I’m happy about the markets being a disaster this year, of course we prefer up-trending markets as well, but we don’t always get what we want so a good back up plan is key to long-term investing success.

Since we’re 5 months into 2018 it’s time to check in on all the major asset class performance year to date.  There’s a few small pockets of success but for the most part it’s been a lackluster year thus far.  We’ll see if things pick up in the 2nd half.



Energy is doing well and there’s some of the tech names that are lifting the markets as well but for the most part not great.  Balanced index funds, hedge funds, bond investors, none are performing well.  The bond part is especially important because of course a good chunk of the investing world is invested in fixed income assets.  And even if you’re not it still matters because a lot of the sustainability of pension funds and things like social security rely on this segment of the market.  If forward return is near zero it doesn’t bode well for the next wave of retirees.


Volatility:  You’ll notice I’m showing both the SVXY buy and hold return, and also below it I show the return when removing the Feb. 5 aftermarket rebalance of the ETF.  I won’t go as far as to say Feb. 5 was a “one off” event because I was talking a lot for the year prior how such an event could occur if the volume on the short side continues to grow, but I think it’s important to see how it traded when removing that rare aftermarket rebalancing debacle.  It’s still down nearly -41% year to date in live market hours so 2018 so far has been a game of mitigating losses for the short volatility crowd much more than it’s about big gains as in previous years.

We’re definitely seeing volatility dissipate in the last few weeks here and it would be nice if that continues, but it’s still an environment where a single Tweet or political scare could send the VIX for a ride again.  Not all out fear anymore, but shall we say still some jitters  🙂


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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