When Looking at Fire Volatility Strategy results

If you’re looking for a strategy that has been on fire lately but is based solely on volatility, run for the hills. These strategies blow up all the time in a dramatic fashion and usually only have a lifespan of around a year before your account goes to 0…Most strategies have only been around for a short period of time that acts as a lure of the gold-rush effect of amazing returns because hence it’s volatility. Investors beware of such strategies.

A Quote from the Article below:

“Volatility fires almost always begin in the debt markets…Volatility regime shifts are driven by the credit cycle. Volatility is derived from an option on shareholder equity, but equity itself can be thought of as a perpetual option on the future success of a company. When times are good and credit is easy, a company can rely on the extension of cheap debt to support its operations. Cheap credit makes the value of equity less volatile, hence a tightening of credit conditions will lead to higher equity volatility.”