The Trade Busters 39 - Trinity System, Part 3: The Vibranium Shield
Oct 25, 2021
The podcast discusses the concept of the vibranium shield, a financing hedge combo that absorbs market volatility. It explores the bomb shelter strategy for extreme market events and the importance of discretion in trading strategies. The episode also covers budget calculation, target returns, and the performance of the vibranium shield hedge. It concludes with a discussion on hedging on non-crash years and surplus returns.
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Episode notes
Financed Hedge Concept
- The Vibranium Shield is a financed supplemental hedge that sits idle until a major market crash triggers large gains.
- Financing keeps out-of-pocket cost near zero most years while shifting payoff to crash events.
Hedging Requires Discretion
- Hedging is messy and path-dependent; crashes never behave identically and require discretion.
- The Vibranium Shield's entries can be mechanical, but exits often demand judgment during volatile events.
Allocation And Entry Frequency Matter
- The strategy uses rolling tranches sized by a percent allocation and entry frequency (daily vs monthly) to match account budget.
- Entry frequency determines per-tranche spend and how many concurrent tranches you hold.