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Weekly Update 18 November 2024

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This content is for information only. It is not an offer or recommendation to buy, hold or sell any investment, nor legal, tax, or financial advice. All information is provided as is and may change without notice. Past performance is not indicative of future results.

Trumpโ€™s second term presents both opportunities and risks for the portfolio.

Opportunities include:

1. Trump manages to end the war in Ukraine. This would lower oil prices, benefiting the European economy, and compress the geopolitical risk premium on European stocks.

2. Trump stimulates the economy too much, inflation surges, US interest rates increase, and US stock outperformance ends because the US has to rein in its fiscal deficit.

3. Trumpโ€™s tariffs hit the US economy harder than those in the rest of the world.

Risks include:

1. A deteriorating US fiscal situation increases interest rates everywhere, not just in the US, leading to a global sell-off.

2. Trade flows are affected to such an extent that a global recession follows.

3. Trumpโ€™s tariffs raise the value of the US dollar, leading to further US stock outperformance.

US stocks have outperformed international stocks for the last 14 years. Historically, periods of outperformance have lasted 8 years on average.
www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP014.pdf

Some argue for a reversal in 2025. Resurgent inflation could force the Federal Reserve to keep monetary policy tight, while in Europe and China there is scope to ease. This could lead to European and Chinese stocks outperforming in 2025.
www.business-standard.com/markets/news/bofa-strategists-say-buy-china-europe-ahead-of-trump-s-inauguration-124111501411_1.html

I like to buy cheap stocks, which can be found in geographies with problems and risks. The portfolio is concentrated in Europe because that is where I can find attractively valued stocks. There are no plans to add any significant US exposure.

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@triangulacapital +28.4%
SWDA.L +18.6%

๐—ฃ๐—ผ๐—ฟ๐˜๐—ณ๐—ผ๐—น๐—ถ๐—ผ ๐—ฐ๐—ต๐—ฎ๐—ป๐—ด๐—ฒ๐˜€
Intermediate Capital Group was sold, Teleperformance bought.

Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.

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ยฉ Triangula Capital L.L.C-FZ 2025 | All rights reserved.

Disclosures

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

eToro (Europe) Ltd., a Financial Services Company authorised and regulated by the Cyprus Securities Exchange Commission (CySEC) under the license # 109/10.

eToro (UK) Ltd. is authorised and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263.

Your capital is at risk. Other fees may apply. For more information, visit etoro.com/trading/fees.

Triangula Capital is not a registered investment advisor and does not offer investment advisory, fund management or wealth management services.

The content on the website is provided for informational and educational purposes only and does not constitute (i) an offer or solicitation to buy, hold or sell any security or other financial instrument, (ii) investment, legal, tax, accounting, or other professional advice, or (iii) a personal recommendation as defined under MiFID II.

Information on the website is obtained from sources believed to be reliable, but is supplied on an โ€œas-isโ€ basis without warranty as to accuracy or completeness. Opinions, estimates, and forward-looking statements reflect the authorโ€™s judgement as of the date of publication and are subject to change without notice.

Triangula Capital and affiliates may hold positions in the securities mentioned on the website and may trade them without further disclosure. No liability is accepted for any direct, indirect, or consequential loss arising from the use of this material. Readers should conduct their own independent research and consult qualified advisers before making any investment decision.

2009-2020 performance figures are from Pietari’s personal Interactive Brokers account. They are time-weighted returns calculated in accordance with the Global Investment Performance Standards (GIPS). From 2021, performance is calculated by eToro.

Past performance is not indicative of future results. All investments carry risk, including the risk of total loss.

Track Record

It is often said that past performance is not a guarantee of future performance.

That is true. But there is also some evidence indicating that portfolios that performed better in the past, do perform better in the future.

“[…] top-decile prior-alpha funds produce annual future alphas of about 150 bps, net of fees”ย Source

Risk warning: That is only one study. In general, past performance is not indicative of future results.

Aligned Incentives

Pietari invests the majority of his net worth in the strategy. This ensures that his interests are aligned with investors who copy the strategy.

“Funds with high-incentive contracts deliver higher risk-adjusted return, and the superior performance remains persistent. The top incentive quintile of funds outperforms the bottom quintile by 2.70% per year” Source

Risk warning: Pietari holds accounts with multiple brokers and may therefore have a conflict of interest when deciding which accounts he should trade in first.

Unconstrained Investments

The strategy has fewer constraints on its investments than traditional mutual funds.

The strategy portfolio can be invested in stocks, bonds or cash and these allocations can vary over time.

Compared to traditional mutual funds, the strategy also:

  • holds fewer securities
  • trades more
  • avoids following the index

Each of these points has been shown to be an important predictor of portfolio performance.

“We […] find that portfolio concentration is directly related to risk-adjusted returns for institutional investors worldwide” Source

“A one-standard-deviation increase in turnover is associated with a 0.65% per year increase in performance for the typical fund” Source

“We find that truly active funds significantly outperform closet indexers. Further, we find that the truly active funds are able to outperform their benchmarks on average by 1.04% per year” Source

Risk warning: Concentrated portfolios with few positions can suffer large losses if bad news arrives about any of the companies in the portfolio.

Cheap Stocks in Cheap Sectors

The strategy invests in geographies and sectors where values have collapsed due to macroeconomic problems.

Within these geographies and sectors, the strategy overweights stocks that trade at low valuations on measures such as price-to-earnings or price-to-net asset value.

Every stock in the strategy portfolio must also be a good company, with no obvious red flags or long-term threats to its business model.

The aim of the strategy is to maximize returns, even if this means taking more risks than usual.

Risk warning: The strategy portfolio tends to be concentrated in risky stocks, which means that its losses in any market downturn will likely exceed those of the market index.