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MacroFund

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*Active Management Fund* Exposure: All your balance.
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Sergejs Kovalonoks
Sergejs Kovalonoks @BalanceAM
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The big update is incoming, stay tuned. ... Show More
Sergejs Kovalonoks
Sergejs Kovalonoks @BalanceAM
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Welcome to all copiers who are interested in having exposure to low risk, well-balanced exposure to equities. The principles that govern decision making are rooted in the core concepts of evaluating the business quality and sustainability of the results controlling for the external factors which are mostly related to macroeconomics trends and technical matters. Most of the time, every company should undergo 3 step process to get into the portfolio. First, it is a purely technical screening, looking through the whole eToro universe with the goal to pick the most active fruits in terms of volumes and fundamental momentum. Secondly, we have an integral filter built from 5 to 10 criteria looking at the fundamental picture of the company trying to establish visibility between the market price and intrinsic valuation. Those who ranked the highest in terms of valuation gap and earnings quality can proceed to the third step. At the final stage, selected holding should fit well into the current economic cycle and have a tailwind based on its characteristics that play a huge role in the systematic approach of quantitative models. It is possible to see a company violating the final stage and still going into the portfolio, but this happens rarely and only when the company exhibits a very high-quality level of operating momentum. Additionally, you will find that sometimes we combine long and short positions, which is done with the goal to limit the volatility of the portfolio and also protect the strategy from high-risk events. Occasionally, we can use leverage x2 to boost certain positions and have much broader diversification; however, you will hardly see portfolio going above 15 holdings. It helps to stay highly active and have better speed and sensitivity when it comes to risk management. In the description, you will always find a note whether you should open current positions or not, it is always kept up to date. Also, I post portfolio updates weekly where you can acquaint yourself with the portfolio composition, style allocation, some fundamental ratios and summary of performance. From time to time I can also share some free insights and recommendations regarding capital allocation and describe some essential market triggers. Speaking about myself, I have extensive experience in managing institutional money and also have quite broad exposure to the trading environment. Over the last 15 years, markets quickly became my obsession, and till these days it still feels like I have barely started. My mission is simple - to help people accumulate wealth and preserve their capital. As long as I can do that, I will continue to participate in the markets and deepen my process even more. &quot;Rule number one: Don&#x27;t lose money. Rule number two: Don&#x27;t forget rule number one.&quot; - Warren Buffett Here you can find more information about me - <a href="https://etoro.tw/2IYbLXH" class="e-link" target="_blank" rel="noopener noreferrer ">etoro.tw/2IYbLXH</a> ... Show More
Sergejs Kovalonoks
Sergejs Kovalonoks @BalanceAM
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Sweet beloved lullaby proclaiming the power of easing financial conditions and a deep sense of presence of the plunge protection team softens the damage coming from cracks in the global economy. While the latest monthly data point out to a potential rebound in industrial activity, the overall composite of leading indicators is trending downwards. With each additional package of expensive liquidity injections, the market becomes more prone to disorganized correction that can snowball into something bigger. At the moment, we are in a higher gear when it comes to exposure to risky assets with more weight given to growth factor which continues to lead in 2019. You have to go to a great length if you want to survive the next phase of normalization which will reveal itself as soon as inflation beast will come out of hibernation. The primary challenge is to optimize portfolio to increase resilience to the next high vol event at the same time keeping upside potential open. At this level of valuation, the risk/reward parameters are becoming less lucrative, even in defensive sectors that continue to be in high demand due to more instances of yield curve inversions. We all know that the bond market is the king when it comes to assessing the quality of the global economy and right now the expectations are quite pessimistic. The more market climbs higher, the more vigilant you have to become. Even in the case of no recession in 2019 (the scenario that is most likely to happen), some folks will want to get out earlier for the sake of betting that this time is different maybe just a fairy tale. <a href="/markets/bx" class="e-link">$BX (BlackStone Group LP)</a> <a href="/markets/eog" class="e-link">$EOG (EOG Resources Inc)</a> <a href="/markets/jazz" class="e-link">$JAZZ (Jazz Pharmaceuticals)</a> ... Show More
Sergejs Kovalonoks
Sergejs Kovalonoks @BalanceAM
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If you are not convinced in the strength and duration of the current impulsive rally but at the same time cannot find alternative options to diversify away from equities, you can have a look at minimum volatility basket of stocks that proved to be quite resilient during correction phases. As we are getting closer to the point where convergence between bonds and equity markets can happen at any moment, especially when support from buybacks will no longer be able to offset the effect of higher material and labor costs, it is rational to start thinking about protecting the downside with more &quot;safe&quot; (as there is nothing safe in this world) holdings. Recommended stocks: <a href="/markets/y" class="e-link">$Y (Alleghany Corp)</a> <a href="/markets/utx" class="e-link">$UTX (United-Technologies)</a> <a href="/markets/es" class="e-link">$ES (Eversource Energy)</a> <a href="/markets/v" class="e-link">$V (Visa)</a> <a href="/markets/ma" class="e-link">$MA (Mastercard)</a> <a href="/markets/msft" class="e-link">$MSFT (Microsoft)</a> <a href="/markets/msi" class="e-link">$MSI (Motorola Solutions, Inc.)</a> <a href="/markets/ko" class="e-link">$KO (Coca-Cola)</a> <a href="/markets/vfc" class="e-link">$VFC (VF Corp)</a> <a href="/markets/ci" class="e-link">$CI (Cigna Corp)</a> <a href="/markets/var" class="e-link">$VAR (Varian Medical Systems)</a> <a href="/markets/ko" class="e-link">$KO</a> - Can do quite well if they will manage to penetrate the energy drinks market without compromising their relationship with <a href="/markets/mnst" class="e-link">$MNST (Monster Beverage Corp)</a> ... Show More
Sergejs Kovalonoks
Sergejs Kovalonoks @BalanceAM
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We are getting very close to overheating conditions where the premium paid for future performance via growth and momentum factors is below the optimal level to keep long exposure above 50% of capital. That doesn't mean we will move out completely, but the tendency to build a more extensive safety net will keep on going. It feels like investors are entirely aware of performance chasing mode that is happening right now on a low volume and decelerating leading economic indicators. Nevertheless, the expectations are kept high, especially for the 2nd half of this year, which in my view holds the most unwanted surprise. If you missed the rally, blaming the fed for such a rapid u-turn will not bring any fruits, it&#x27;s better to spend more time fortifying your next defense move which is complicated enough due to the absence of cheap asset classes. ... Show More

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