TardaGrada - Celebrating 6 years

Investing has been and will always be a journey.

For Warren Buffet, the ultimate benchmark for investors, it has lasted 65 years, with an annualized performance of 19.9% vs. the S&P500 of 10.4%. An absolutely stunning achievement and Mr. Buffet will remain the ultimate role model for every portfolio manager, certainly for us. While Mr. Buffet had the opportunity to accumulate assets during the secular bear market of the 70’s, we have started our test portfolio just 2 weeks before Covid broke out. Contrary to Berkshire Hathaway, TardaGrada has a completely different investment approach. The quantitative strategy was built from scratch in the year 2019 and a test portfolio has been implemented February 20^th. 2020.

Implementing a quantitative strategy is ultimately different than analyzing companies based on valuations. The crucial part comes when the strategy gives different results from what the human’s opinion is, or what its brain is recording. Studies have shown that our brain does not passively record the input it receives from the eyes to provide us with a visual representation of our environment. Expectancy induced illusory percepts are strongly modulated by mood. Our moods can cause us to see things that are not there. A significant degree of our perceptions is influenced by what is going on in our minds. We had to learn this, especially from mid-2023 until 2024. While the managers opinion fully agreed with the strategy’s results from 2020 until 2023, it very much disagreed in the following 18 months.

The past 5 years have shown that the strategy is smarter than we are. It is reliable and enables us to provide above average returns. It has been a journey. A journey of humble learning and education. The implementation of the strategy has improved substantially since inception, improving the portfolio management tools below:

• Asset scanning process: How to avoid missing good setups. The universe of equities eligible for the portfolio contains over 3000 companies.

• Asset allocation: A short-term setup can diverge from a long-term setup. Subtle risk management needs to be applied.

• Target trading: Don’t throw the baby out with the bathwater. Powerful trends tend to re-accumulate and usually, only a significant overweight needs to be adjusted.

• Relative sector performance: Sector allocations need to be traded actively. Only outperforming sectors are allowed to be overweight.

• Currency hedging: Must be applied in an opportunistic way to avoid unnecessary costs.

Applying the strategy in a disciplined way, will allow us to produce annual returns of 15 – 20%.