Tactical Short 2nd Quarter 2024 Recap

McAlvany Weekly Commentary

Bubbles Being Bubbles MWM Q2 2024 Tactical Short Conference Call August 8, 2024 David: I think we picked a fantastic week to be talking about volatility in the markets. There's some pretty remarkable things happening in the last week to 10 days, even the last three or four days. And I think you'll be pleased to gain some insight from Doug's commentary today. What we'll do is cover the performance aspects for Tactical Short as we get started. Then Doug's formal remarks. We'll open it up for Q&A thereafter. We have a variety of questions that have already been submitted. We'll handle those questions first. If you're interested in adding an additional question, you certainly may. If you go to the wealth management website, you can look in the bottom right-hand corner and there is a chat box there. Feel free to submit an additional question. If there's something that you'd like for us to expand on or clarify, happy to take a crack at it as best we can. And again, that's on the bottom right-hand corner of our main website. So without further ado, good afternoon. Thank you for participating in our second quarter 2024 recap conference call. As always, a special thank you to our valued clients and account holders. We greatly appreciate those client relationships. With first-time listeners on the call today, I'll begin with some general information for those unfamiliar with Tactical Short and you can find more detailed information available also on our website, mwealthm.com/TacticalShort. Make sure that if you are not already, on a weekly basis, Saturdays, grab a cup of coffee and avail yourself of the Credit Bubble Bulletin. It is a tremendous service that Doug has been doing for a couple decades now. And a labor of love, certainly. Labor of passion and interest. He is very intent on documenting what has happened in the credit markets that has brought us to this point, and you won't find better insight, in my opinion, on the topic. And a quick— While I'm at it—and Doug, this is commendation 2.0—what Doug does on a daily basis, if you're on our website, you can look at Credit Bubble Daily and he's organized a host of news articles for you to look at, the most prescient of the day. And if you're interested in saving yourself an hour, two hours a day of finding the most important information points, do that. I've done that for years, and I owe Doug a lot of hours. It's been fantastic. Okay, the objective of Tactical Short is to provide a professionally managed product that reduces the overall risk in a client's total investment portfolio, while at the same time providing downside protection in a global market backdrop with extraordinary uncertainty and extreme risk. This strategy is designed for separately managed accounts. It's investor friendly, with full transparency, flexibility, reasonable fees, and no lockups. We have the flexibility to short stocks and ETFs, and our plan has been to, on occasion, buy liquid listed put options. Shorting entails a unique set of risks. We are set apart both by our analytical framework as well as our uncompromising focus on identifying and managing risk. Doug will explain some of the interesting and intriguing aspects of that, both in second quarter and as we find ourselves now in the third quarter as well. Our Tactical Short strategy began the quarter with short exposure at 80%. The target was held steady at 80% throughout the quarter, focused on the challenging backdrop for managing short exposure. A short in the S&P 500 ETF, the SPY, remains the default position for high risk environments. That's what it has been, and that's what it continues to be. I'll update you on performance and then pass the mic. Tactical Short accounts after fees returned negative 3.06% during the second quarter. Negative 3.06. The S&P 500 returned 4.28. So for the quarter, Tactical Short accounts returned negative 71% of the S&P 500's positive return. As for one year performance,