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Weekly Update 6 January 2025

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This content is provided for information purposes only. It is not a recommendation to buy, sell or hold any security.

2024 was a year when the assets I like the least performed the best.

US Growth stocks ($VUG) returned +33%, $BTC more than 100%.

The assets I like to invest in, Value stocks and non-US stocks, posted far less exciting returns. US Value stocks ($VTV) returned +16%, non-US stocks ($VEA) +3%. seekingalpha.com/etfs-and-funds/etf-tables/key_markets

The result is that US stocks outperformed non-US stocks by 20%, while Growth stocks outperformed Value stocks by 19%. This is the biggest outperformance of US stocks over non-US stocks since 1997 and the biggest 2-year outperformance of Growth over Value ever.
https://x.com/charliebilello/status/1874674541882114149
https://x.com/charliebilello/status/1874852807641346210

In this extremely unfavourable environment I am happy that the portfolio beat the MSCI World index by 4 percentage points, returning +23% against the +19% return of the index. The outperformance was due to an overweight in European banks in Q1 and Q2 of the year.

From the end of May to the end of the year, the portfolio lost 6%, in line with European stocks which also lost 6%. During this time the portfolio was positioned in stocks that benefit from lower interest rates. This worked in Q3 but in Q4 there was offsetting underperformance.

Overall, 2024 was an OK to a good year: nothing great, nothing terrible. It is the fourth consecutive year in profit. The 4-year track record shows an outperformance of 13% a year, relative to the risk undertaken. This is a good base to build on in future years, given that the track record was achieved during a time when Value stocks underperformed Growth by 5% a year. The exact same track record achieved with Growth stocks would be far less impressive. bullaware.com/factsheet/triangulacapital

The next 10 years look exciting from a relative performance point of view.

The US stock market is up to 60% overvalued and may be due for a reversal.
https://x.com/PeterBerezinBCA/status/1871184104898593119
https://x.com/TaviCosta/status/1870937369215631367

Non-US stock markets are much cheaper. Bonds also look fairly valued. corporate.vanguard.com/content/dam/corp/research/pdf/isg_vemo_2025.pdfwww.kkr.com/content/dam/kkr/insights/pdf/2025-outlook-glass-still-half-full.pdf

Therefore, the portfolio is concentrated in non-US stocks. This hasn’t worked for the past 10 years but may well work over the next 10. The evidence says that although valuations are not that important on 1-year horizons, they become the dominant driver of returns on 5-to-10-year horizons. That is why looking at past returns when allocating capital is frequently not a good idea. www.aqr.com/Insights/Perspectives/2035-An-Allocator-Looks-Back-Over-the-Last-10-Years

My strategy remains the same. I look for cheap geographies and for cheap stocks within those geographies. The opportunity set for this strategy, I believe, is good in early 2025. The past returns of Value stocks are relatively weak, which tends to mean future returns will be better. I look forward to the rest of the decade.

𝟮𝟬𝟮𝟰 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲
@triangulacapital +22.7%
SWDA.L +18.7%

𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗵𝗮𝗻𝗴𝗲𝘀
None

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

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© 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.

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

This page is provided for information purposes only. It is not a recommendation to copy the Triangula Capital strategy or to buy, sell or hold any security.

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.

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” 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.