As it’s the first day of August and the markets are seemingly asleep again, we can take a snapshot view of how the year is going for various asset classes so far.
So technology stocks and crude oil are the bright spots this year, which tend to also bring up a few of the others as well like the S&P for example. I’ve already shown that all of the gains in 2018 so far have come from just 6 companies, tech companies. And the DBC commodities ETF again is largely seeing gains due to the weighting of oil.
The laggards are inverse volatility and Bitcoin. Now I do include the ex Feb 5 aftermarket rebalance in SVXY because that was a very rare event but even without it, the short vol trade from a buy and hold perspective has been killed this year. Now of course we don’t buy and hold so our strategies are doing much better than that, but the underlying hasn’t given us very much to work with so it’s been a lot of “treading water” so to speak. And Bitcoin, well you all know I’m not a fan because of it’s unquantifiable nature but I do like to keep an eye on it for interest sake. Ugly for sure but it’s had worse drawdowns in the past so we’ll see if it can recover.
One of my favorite passive index funds the Vanguard VBINX is up just a couple percent and hedge funds only half that so a rough year so far for both active and passive investors.
Speaking of not much to work with, when we isolate the three underlying ETFs for the VTS Tactical Balanced Strategy (MDY, IEF, GLD) it puts in perspective the value of tactical trading rather than buy and hold.
A buy and hold portfolio of 50% MDY, 25% IEF, 25% GLD would be down -0.18% on the year, yet we’ve put up a decent return (10.57%) by being tactical and only holding the most advantageous positions at the time. The weakness of the strategy is when stocks just go straight up because of course all we can do then is also be in stocks and match the return. But any time there is choppiness or market crashes we can hopefully do better by being selective.
Finally we’re now just 5 months away from setting the new “longest bull market in history” record. Make it to January 1, 2019 without a 20% decline in the S&P 500 and it would be official!
Current VTS Total Portfolio Solution Allocations
6.7% VTS Conservative Vol Strategy – Volatility strategy for lower risk tolerance investors
6.7% VTS Aggressive Vol Strategy – Volatility strategy for higher risk tolerance investors
6.7% VTS Tactical Volatility Strategy – Volatility strategy using stock replacement through options
Want to see our current positions and daily trade signals?
Consider Subscribing – Free 2 week Trial for all subscriptions
Sign up for the Awesome VTS Newsletter – Free 1 month access
The Volatility Advisor
Making volatility investable through education and active management
Start your FREE 2 Week Trial Now
Gain full access to all 4 of our successful trading strategies for a full two weeks, absolutely free.
It's time to start growing your retirement fund