Making Money with Lower Risk

Reviewing our first month's performance

Dear subscriber

This second webinar of the year talks about:

• this week’s research blog on implied volatility and how we use it to gauge risk vs. return opportunities;

• our first month’s performance - +0.94% vs. -1.11% for the S&P-500. Lower risk (not just over the past one month) with a decent return (the goal is 6-8% per annum, over the whole cycle, not a cherry-picked bad or good period). That’s what The Theta Tortoise is all about, and it’s our job to prove this framework delivers on its ambitions. We’ll continue to track and share our portfolio and performance transparently (as we always do).

• and our current portfolio, metrics, what’s left in terms of time decay

Let’s talk a bit more about performance, because the below excerpt features exactly what our (new and potential) premium members should expect. And why we believe this strategy is truly different from a traditional 60/40 portfolio, or any other approach that’s supposed to be lower risk.

In the end, it’s all about appreciating the concept of the sequence of risk vs. return. One could be dollar-cost averaging into a broad ETF, but the efficacy of such strategy drops as your capital base continues to grow.

If you can accumulate solid profits (say 10%) in one year, stay invested, but understand that the biggest negative outlier risks happen when expected volatility is lower, your portfolio can still go down 3-4% in one year with the market being down 25-30%. The difference: gaining that 3% loss back is doable, 25%-30% not so much.