INVESTMENT STRATEGY AND PHILOSOPHY
The Escudo strategy
Focused on capital preservation, dividends and modest growth with lower risk and volatility than overall market. One can use it for current income generation i.e. monthly or quarterly cash withdrawals. Its is quite surprising the dividend yield level in a near zero rate world. Once interest rates “normalize” Bonds should be a component.
The Futurus strategy
Looks for long term capital growth. Its secular, it is not tied to tech, EV or any doctrine. I look for consistent growth, mispriced valuations and special opportunities that come in many shapes and sizes. This will utilize leverage of 2x or 5x to amplify returns and preserve cash but leads to higher volatility. Crypto is tempting but I prefer you speculate on your own with that.
Bottom Up (Company) Analysis
As you can see from my many posts, I do serious company and sector specific research, I crunch numbers, build financial models, review quarterly results and talk to management to arrive at an investment thesis, a valuation, a critical analysis of companies and sector drivers before I buy or sell.
Top Down (Macro)
One needs to place into context and apply the varied moving parts of a global economy into investment decisions. What does it mean if a Chinese real estate developer goes bankrupt, what happens if the US Federal Reserve hikes rates, what are the repercussions or benefits of inflation, what does a Covid19 antiviral treatment mean, what does work from home imply and the list is endless!
Avoid drawdowns, losing a significant amount in given month or year. This requires cutting positions when the base case changes for the worse, when drivers and macros change. It means to hedge at times, to re-balance portfolios weights and to not use capital on dead ideas. Know underlying rate risk such as FX risk, execution risk and the list goes on.
Valuations and Capital Flow
Institutional money i.e., pension funds, hedge funds, mutual funds, treasury desks, bank proprietary trading, all combine to move markets whether from bonds to equities, from value to growth, from develop markets to emerging markets and it’s not a good idea to stand in the way.