Our Volatility Trend Strategy is taking a break in 2024

Jan 02, 2024


VTS Community,


Happy New Year! 

Hope everyone had a great holiday season and you're refreshed and ready to tackle 2024.  As we talked about in the most recent livestream  (link here if you missed it)  I'm not much of a New Years Resolution kind of guy, and that's especially true with investing.  The stock market doesn't know the difference between February, July, or January 1st.  Having said that, it's always a decent way to force a mental reset given that it does always feel like something significant happened from the 31st to the 1st  :)


1)  Our VTS Volatility Trend Strategy will be taking a break

You may have noticed already as you were scrolling down through the top of the email, but the Volatility Trend Strategy is not going to be included in the Total Portfolio Solution to start the year. 

* We'll go with the other 4 strategies @ 25% allocations each

2)  Important note for VTS members: 

* We will do a small rebalance of positions tomorrow to reflect the new portfolio allocations.  It's very easy to rebalance, but I do want to do that in a separate blog so that's coming.



3)  This change is not written in stone

I realize that for the few of you that really did like the strategy, this may be disappointing news and I'm sorry about that.  However, decisions have to be made, this isn't the first time a strategy was temporarily removed from the portfolio and I'm sure it will be far from the last.  This is a normal part of portfolio management.

-  The Iron Condor strategy was in the portfolio from January 2012 through present, minus about a year or so when it was temporarily removed.

-  The Tactical Volatility Strategy was the same, launched in January 2012 and a roughly 11 year staple for us, but it also had a little over a year in between where it was not included.

So just because Volatility Trend is being removed for now, that doesn't mean it's gone.  Let's just call it temporarily on hold...



4)  Why is the Volatility Trend Strategy being removed?

My job as a portfolio manager is to put what I think is the best portfolio forward to tackle the current market environment.  I have many strategies with different strengths and weaknesses to choose from. 

Sports analogy, I'm a basketball coach with a full roster of great players and it's my job to put the best starters on the court.  There's several reasons I can highlight that all combined have contributed to my decision for removing it to start 2024:


a)  The Volatility Trend Strategy performs best in mid to high volatility environments, which we don't currently have.  Performance is always paramount to me, and right now it's just not ideal for such a strong counter trend strategy. 


b)  The Volatility ETPs themselves are priced fairly low, which reduces the strike selections we have available.  VXX @ 15.50 and UVXY @ 8.50 isn't a total deal breaker, but it's not ideal at this time.  Certainly on the next reverse split, or market crash to increase the prices, the strike selection will open up dramatically.


c)  To be perfectly blunt, a pretty high percentage of the emails I get are asking questions about this strategy, so I definitely need to do a far better job in the future making more education available.  The existing course is a good start, but some extra videos/livestreams would be helpful here.


d)  Volatility Trend is also the least popular among the community.  I get a lot of people saying they don't like it, and many people have told me directly they don't even trade it.  I don't hear the same things about the other 4 strategies we have.  Options Trading on Volatility ETPs does require additional education, which takes time to roll out.


e)  This is a spoiler for a future project coming sometime in 2024, but with the VTS Options Academy relaunching I do believe people will enjoy the VXX/UVXY Wheel of Fun Strategy a lot more than the Volatility Trend.  When that launches, I suspect many people will consider that their favourite strategy we have.



5)  The Volatility Trend Strategy course will remain available

I've decided not to remove the mini course on this strategy, so that those who do actually enjoy it can continue with their learning.  I will also of course answer any and all questions about it both in emails and on livestreams if you have them. 

Like I said, the strategy isn't gone, and I do personally like it a lot.  Just because it's not ideal at this time doesn't mean we'll wipe it from memory  :)



6)  Apologies if this comes as bad news

As they say:  "If you try to please everyone you end up pleasing no one"

Decisions have to be made, portfolios have to be constructed, strategies have to be allocated, websites have to be built, data has to be presented, etc.  There's many points within an overall business where there's a multitude of potential directions to take.  Clear definitive calls have to be made.  I fully realize some people will align perfectly with my thinking on some of those things, and others will not.  Again, apologies to anyone who's disappointed with this, but it's the best thing for our portfolio and that's what I always default to.


I'll discuss a couple other minor changes in upcoming blogs, but the suspension of the Volatility Trend Strategy is the only material change this year.

Let's attack 2024 with our best strategies.  Happy New Year everyone!

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