Pietari Laurila, also known as triangulacapital, says his goal is to outperform the MSCI World Index in the long run (5+ years). His strategy is value investing, but if you want to copy him, make sure you can stomach high volatility in the short term. Pietari is a Popular Investor on eToro and he brings over 17 years of experience managing stock portfolios. His username on eToro, “Triangula Capital,” is also the name of his investing strategy, and he invites all potential copiers to visit his website to see his more than ten-year index beating track record.
Tell us a little about yourself!
I’ve been a full-time investor for the last 10 years. I grew up in Finland and moved to London in 2007. I received a M.Sc. degree in Computer Science from Aalto University and after graduating, worked for consulting firms, banks and tech startups from 2005 to 2011.
In my spare time, I like to play chess and travel.
Tell us about your financial background.
I began investing in 2004 after taking a course on finance at Aalto University. The course sparked my interest in the subject and I continued studying it further on my own.
Early on, I came across a book by finance professor Vijay Singal titled Beyond the Random Walk. The book presented a number of strategies that had historically beaten the market.
In my course, a key message has been that markets are fairly efficient, meaning that it’s difficult or impossible to beat the market. Singal’s book contradicted that message.
I combined a few of the strategies from Singal’s book and developed and modified them. My expectations when I opened my first trading account in 2004 were low, but to my surprise, the strategies immediately started working. By 2011, my account had grown sufficiently that I decided to become a full-time investor.
What is your strategy and have you changed it recently to adapt to the volatile markets?
I invest in value stocks that trade at low price-to-earnings (P/E) or price to net asset value (P/NAV) ratios.
My strategy also has a strong global macro element. This means that I concentrate my investments in countries or industries that have recently experienced problems and where cheap stocks can be found. The problematic countries or industries can change from one year to the next.
After choosing a country or industry, I rank stocks within it with a computer program that I created. The stocks scoring the highest are then analysed manually.
Finally, I buy stocks into the portfolio that are also technically oversold.
The name of my strategy, Triangula, originates from the combination of these three types of analyses: macro, fundamental and technical. The strategy is concentrated — the portfolio has only 10–15 stocks in it, and they can all be from the same country or industry. Stocks typically stay in the portfolio for two months.
Any successful investor needs to continually adapt his or her strategy to keep up with the times. I invested in micro caps for a decade before developing my current strategy, which has remained more or less unchanged for the last five years. Even then, minor elements keep being tweaked as necessary.
MIT finance professor Andrew Lo explains in his book Adaptive Markets, that if a strategy works well for a while, it will attract competitors whose actions will eventually destroy the profitability of the strategy. When that happens, it’s time to move on and develop something new. No strategy will work in competitive markets forever.
Where do you do your research?
For daily company research, I use MarketScreener, Seeking Alpha, TIKR and Yahoo! Finance. I also look at the investor relations websites of companies I’m interested in and get their regulatory filings from the SEC or foreign regulators.
To develop and update my strategy, I will, once a year, read through the abstracts of articles published in major finance journals such as The Journal of Finance and The Journal of Financial Economics. I also follow SSRN and VoxEU.
How has eToro impacted the way you invest?
I invest in the same style as before, but eToro makes it easier to execute my trades.
One way eToro does this is by allowing investors to purchase fractional shares. You say how many dollars you want to invest in a stock, and the platform works out the rest. There is no need to calculate how many shares to buy and round the number up or down.
Another time-saving feature is that there is no need to convert from one currency to another — this is also handled automatically by the platform.
Which assets or industries are you focusing on now?
Most of my investments are in the Financials sector.
Financials suffered over the past decade from low interest rates and regulatory changes brought in as a consequence of the 2008–2009 financial crisis.
The majority of the regulatory headwinds are now behind us, while economically, the 2020s will probably turn out to be very different from the 2010s. Inflation has already staged a comeback, and I believe it will prove more persistent than central banks or market analysts currently assume.
Asset manager Bridgewater recently published a report discussing how inflation is no longer just a supply problem, but rather a consequence of high demand for everything — raw materials, energy, housing and workers.
Financials have done well in inflationary environments in the past, so I’ve positioned the portfolio to benefit from higher interest rates which inflation should eventually bring about.
What was your favourite trade over the past 12 months?
French insurer CNP Assurances.
I bought shares at the beginning of September for about 15 euros per share. My thesis was that CNP was too cheap absolutely and relative to where European interest rates were trading.
Before the COVID crisis started, CNP shares had been changing hands for about 17 euros. Markets and interest rates had recovered in general, but CNP shares had not. I could not see any reason why the company should have suffered permanent damage from the crisis.
As often happens, the shares fell over the following month. I was not so happy about that. But on October 22nd, they started rising and continued rising on October 25th and 26th, without explanation. Then, on the 27th, everything stopped. No one could buy or sell the shares. I suspected there was a takeover, but could not be sure until the next day, when the news came out that the company had been bought out by La Banque Postale. I sold the shares for an almost 50% profit.
Do you invest in any asset classes outside of stocks, commodities and crypto?
The vast majority of my net worth is invested in the Triangula strategy, because it has a good track record and, although the past is not a guarantee of the future, I believe there is a good chance the strategy will outperform the market going forward.
If I were to invest in other asset classes, I would look into real estate. A paper published in The Quarterly Journal of Economics in 2019, “The Rate of Return on Everything, 1870–2015,” shows that housing was the best asset class to invest in over the past 150 years. It had returns close to stocks, but much lower volatility.
Future returns from housing have been compressed by the fall in real interest rates that happened over the past 40 years, but they are still attractive relative to bonds or cash.
There is a saying “as safe as houses” which has held true since Victorian times when it was coined, even if the higher inflation world we may be entering may act as a headwind for housing returns over the coming decade.
What is your long-term trading goal?
When I opened my first trading account in 2004, my goal was to achieve independence and freedom. Working as a full-time investor achieves this, although you remain fully responsible for your performance. The freedom and independence can only be maintained in the long run if your account keeps growing.
On eToro, my goal is to share my investing knowledge and hopefully help other people in their journeys towards their financial goals.
Any message to copiers or potential copiers?
Ben Inker, an asset manager at GMO, recently said the current market presents the most compelling opportunity he has seen since the 1999–2000 Internet bubble to invest in value stocks. I believe this is correct. Value stocks can be expected to outperform their growth [stock] counterparts by up to 5% a year over the coming decade.
Value stocks remain one of the only places in the global markets where expected returns approach +10% a year. The world stock market index is closer to +5% a year. For this reason, I believe value stocks merit consideration in any long-term stock portfolio.
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