TCM strategies pursue total return using a tactical risk management approach designed to produce not lower volatility but an up/down capture asymmetry (higher up than down capture) that enables attractive long-term growth with acceptable volatility. Now in the midst of the third major volatility spike in the past 8 years, TCM strategies continue to prove this concept out.

Unlike its competitors, TCM’s risk management philosophy is not just about hedging or volatility reduction but about striking a more profitable balance between cushioning declines and preserving upside. As demonstrated over the past 8+ years, an imbalance in either direction (too hedged or too risky) eventually leads to lower, not higher portfolio values.

While markets showed resilience in the face of several challenges, TCM stayed aligned with January’s rising trend while monitoring for VIX futures curve inversion that has historically accompanied the worst outcomes for the S&P 500 index. 

Rising rates have put renewed pressure on the financial system but with the S&P 500 just a few percent below all-time highs, signs of stress in the VIX have so far been minimal and importantly, have not yet shown up in corporate credit spreads, a key measure of systemic risk. 

US equity markets extended their rising trend in 2024 and when markets are trending higher, investment success often requires doing less, not more. With the bar now set very high for US stocks, the stage may be set for increased volatility in 2025.