Long Chaos, Any Flavor
Christopher Wallace@chris
+3.6%
since Sep 30
The idea
I believe some kind of market shock is likely in the next few months, though I have no idea which flavor it takes, so this basket owns every payoff at once: volatility and tail-risk funds, safe havens like gold, long Treasuries and the dollar, gold miners for extra leverage on the metal, defense contractors, and oil. The volatility sleeve is the only piece that bleeds while waiting, so it's kept small on purpose. I hold 10% in cash as its own hedge, avoid single-name bets outside a few large, liquid names, and plan to hold this for as long as the risk of a shock feels elevated.
What it owns
- These positions own volatility directly or profit when investors flee risk, so they jump hardest the moment a shock hits the market. · ProShares VIX Short-Term Futures ETFIt tracks short-term VIX futures and jumps hard the day volatility spikes, making it the most direct play on a shock in the near term., Alpha Architect Tail Risk ETFIt pairs crash protection with income strategies to offset the cost of tail risk, providing put protection that does not decay while waiting for a shock., AGF US Market Neutral Anti-Beta FundIt is long defensive stocks and short speculative ones, so it profits when panic pushes investors away from risk even without a full market crash., Cambria Tail Risk ETFIt owns far out-of-the-money S&P puts and Treasury bonds, paying most when a violent market drop occurs rather than a slow decline.27%
- Gold, long-dated bonds and the dollar are where capital runs during almost any kind of shock, from credit events to growth scares to geopolitical flare-ups. · SPDR Gold MiniShares TrustIt is a cheap and efficient way to own gold directly, the asset that draws panicked capital across almost every type of shock., iShares 20+ Year Treasury Bond ETFIt holds long-term Treasury bonds, which rise during growth scares and credit events when capital flees to safety., Invesco DB US Dollar Index Bullish FundIt tracks the dollar, which strengthens when the world gets scary as capital seeks the default safe currency in a crisis., iShares Silver TrustIt swings harder than gold during flights to safety, adding volatility to the haven sleeve when panic drives precious metals higher.25%
- Defense contractors rise when chaos takes the form of conflict or war, the one shock flavor that safety havens alone do not cover. · Lockheed MartinIt builds air defense and missiles that get ordered quickly when geopolitical tensions spike, and benefits from a long-dated government order book., Northrop GrummanIt manufactures bombers and nuclear systems that receive funding when the world feels dangerous, with stickier revenue than shorter-cycle programs., RTX CorporationIt manufactures Patriot systems and interceptors that get ordered quickly when geopolitical tensions flare, with civilian aerospace offsetting risk during calm periods.16%
- An oil or gas supply disruption sends energy prices up while most other assets fall, hedging against the inflation side of a crisis. · Exxon MobilIt profits from oil spikes but also pays a dividend and holds value during calm periods, providing energy exposure without pure decay while waiting., United States Oil FundIt tracks oil prices directly through futures, capturing the energy side of a shock such as supply disruption or infrastructure damage within hours., Cheniere EnergyIt is the biggest US exporter of liquefied natural gas, capturing demand from any global gas supply disruption, pipeline cuts or shipping route threats that oil alone misses.12%
- Gold miners amplify the moves in the metal itself, delivering extra gains if panic drives gold higher. · Agnico Eagle MinesIt amplifies gold moves through operating leverage, so when panic drives gold higher, the miner's profits rise faster than the metal itself., Newmont CorporationIt is the largest gold producer, so it amplifies gains from gold when panic bids up the metal, as long as costs remain in line.10%
- Cash10%