As practical observers of equity market volatility, Little Harbor Advisors would suggest that the time is now for a systematic market-hedge. The dynamics between the VIX and the S&P 500 last year may mark a gateway to an impending crisis.

Applied to positively-skewed exposures like Alpha Seeker or Tactical Beta, the typical momentum approach of assuming recent performance to be indicative of future results is like using the handle of a hammer to pound a nail- it might be possible, but it’s not likely to produce the desired outcome.

Markets have a way of making the recent past feel permanent. But the history of volatility tells a different story: periods of calm have repeatedly given way to episodes of severe stress, often after warning signs emerge well in advance. Looking back at 2007–2008 shows why we believe investors should treat volatility not simply as something to endure, but as a potential source of information—and, with the right framework, opportunity.

Volatility is shaped by more than direction—time matters too. TCM’s approach is built around the idea that VIX-linked positions tend to behave more predictably when markets are firmly in either a bull or crisis regime, while the transition zone between the two can be far more difficult. Understanding where volatility sits in that cycle can help investors think more clearly about when protection may be worth owning—and when it may simply become an expensive drag.