POSITIONING UPDATE: FEBRUARY 23, 2026

On January 15, we published “Playing Defense in a Hollow Rally.” Our macro risk assessment was elevated. We called for underweighting equities, overweighting defensives, avoiding the long bond, and said VIX in the mid-teens was complacent.

Here is what happened:

Defensive basket vs. SPY: XLU +7.9% and XLP +7.6% relative in five weeks. IWM and XLV flat. The calls that worked, worked big.

The outperformance is not flashy. It is structural. SPY lost 0.6% while XLU returned +7.3% and XLP gained +7.0% absolute. In a flat-to-down tape, that is the entire game.

The vol call is worth highlighting separately. We said VIX in the mid-teens was mispricing risk. VIX moved from 15.44 to 19.09, a 23.6% increase in the index level. The specific P&L depends on expression (VIX calls, put spreads on SPY, long VXX), but the directional read was correct and well-timed.