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Weekly Update 24 February 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.

$SPX500 dropped almost 2 percent on Friday due to disappointing US economic data.

The Michigan consumer sentiment survey fell; new housing starts and existing home sales were down; and the S&P Global US Purchasing Manager Index (a measure of the rate of economic growth) hit a 17-month low.

It appears that US government job cuts are hitting consumer sentiment. Elon Musk’s Doge department could end up cutting 300-400,000 jobs, which could result in a total increase in unemployment of 1 million workers.
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If the government layoffs continue, this could be good for US bonds because the US budget deficit will then stay under control in the medium run. However, an increase in unemployment would be bad for the US economy in the short run. The US dollar could decline, while defensive sectors such as Staples and Healthcare could benefit.

While the US economy is slowing down, the euro area is doing a little better, at least in relative terms.

Europe has a bigger manufacturing sector as a share of the economy than the US. It thus comes as good news for Europe that the global manufacturing cycle is improving. Euro area manufacturing growth hit a 9-month high in February.

It is also positive for Europe that the outcome of the German election implies the next German government will probably expand the budget deficit, which can be expected to boost the German and European economies.

Overall, 2025 is shaping up to be a year of US underperformance. US stocks and the US dollar are expensive. This expensiveness could be sustained as long as the US outperformed other economies, but now the economic trend in the US appears to be worsening.

At the same time, non-US markets are reasonably valued, and economic trends outside the US appear to be improving. Even Trump’s tariffs may turn out to be a paper tiger. If the US economy weakens further, Trump may be constrained in how aggressive he can go with tariffs for fear of increasing inflation in the US.

I have added more exposure to a European economic recovery in the portfolio by reducing defensive exposure and adding cheap cyclicals.

𝟮𝟬𝟮𝟱 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲
@triangulacapital +6.7%
SWDA.L +3.8%

𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗵𝗮𝗻𝗴𝗲𝘀
Vonovia and Cellnex were sold, Akzo Nobel and Elis bought.

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.