2024: 10 key learnings
To treasure for 2025 and beyond
Thank you, 2024.
As the year comes to an end, I wanted to share some final thoughts with you and start 2025 with positive vibes.
Before we start this brief episode, a sincere thank you to all of you for sharing such a fantastic year, my first one on Substack!
So, what did 2024 teach us?
10. You can’t ignore growth, fact
I’m not saying you should only invest in risky rocket ships.
However, removing growth from the equation can put you in a tough situation from the start. Mr. Market loves it and you should too.
In my opinion, owning mature or declining businesses is fair, as long as the plateau on the core business can be somehow shadowed by the rise of new business lines or optionalities.
➡️New year’s resolution: to keep healthy revenue growth as a mandatory requirement for my holdings, be them aggressive or defensive positions.
9. Beta matters, Sharpe… maybe (or maybe not)
In full transparency, I don’t know the Sharpe ratio of my portfolio.
Don’t get me wrong: it makes perfect sense to calibrate your exptected returns based on the level of ‘risks’ you take. The thing is, I don’t see standard deviation as a fair meaure of business risk, which is what I care about, thus making Sharpe irrelevant to me.
Instead, I consider Beta extremely important. I personally track the overall beta of my portfolio almost weekly.
The reason? I see volatility as an opportunity, rather than a measure of risk.
➡️New year’s resolution: loyal readers may already know that my first goal for 2025 is to reduce my beta, now standing at a much too high 1.85. Beta is pure extra performance during bull cycles, but can amplify downturns during corrections.
8. ‘I don’t know’ is undervalued
Investing is hard, and businesses can be difficult to understand from the inside, let alone from the outside.
Saying ‘no’ or ‘I don’t know’ to many apparently juicy opportunities because we do not fully grasp the vision or the mechanisms of certain companies is totally okay.
I believe it’s actually one of the most powerful ways to prevent emotional mistakes.
➡️New year’s resolution: keep saying ‘no’ to anything I don’t grasp despite effort, while expanding my circle of competence to unexplored industries or areas.
7. Process matters, and so does luck
It has been a shining year for my portfolio (details coming out soon next year).
While I clearly reckon how my process-driven choices have contributed as success factors, I have to admit how a nice dose of luck has been the cherry on top.
In particular, hitting a 10-X on Palantir and the short-term euphoria related to the election of Donald Trump have both contributed to the yearly performance.
➡️New year’s resolution: luck favors the brave, they say. While I will continue to be brave, I will also protect myself from the zero-sum game of luck by further increasing my risk-first orientation.
6. There’s always a ‘Shocking Chart’
Countless broad market and macro-related charts have fueled selling urgency since the start of the year.
Warren Buffett indicator, incidence of Technology on total equities, US vs Rest of the World, Shiller PE, US consumer confidence, US Credit Card debt, Inflation revamps, and tons of others.
And yet the market keeps going up. Now, we know it: the bull cycle won’t last forever and I would warmly welcome the healthiest of corrections. But since macro has indeed influenced some of my selling decisions:
➡️New year’s resolution: always monitor macro-economic developments, but never let it contaminate my selling decisions.
5. Selling is hard if you make it hard
I’ve stressed this recently, but I honestly feel this is probably the most important point of the whole year.
The more selective and structured you are with your new entries, the easier selling becomes. By selecting high-quality companies only, you wipe out 99% of the reasons to sell from the very beginning.
➡️New year’s resolution: update my ‘dream watchlists’, seek excellence and remain very selective when it comes to new portfolio additions.
4. Quality over valuation
If you’ve been with me for a while, I truly hope you got used to forgetting about P/E.
If you let valuation and price conduct your research, you are allowing the wrong dog to lead the hunt. A price-first mindset directs us to cheap businesses, and not the good ones (Adam Seessel, in ‘Where the Money is’).
Valuation arbitrage may work once or twice, but in my opinion it is not a repeatable, scalable strategy to pursue.
➡️New year’s resolution: maintain quality as my investing north-star, while keep learning about valuation as an art and treat it as such.
3. Create your investing ‘bin’
Simplify and sleep better.
Ever since I eliminated a variety of indicators and KPIs to monitor, my strategy became much smoother and more effective.
New entries to my personal ‘bin’ this year were the Shiller PE, the stock market to GDP ratio, and many ‘market sentiment’ KPIs like the BofA bull and bear indicator.
➡️New year’s resolution: Keep ignoring backward-looking indicators, trailing-12-months PEs, short-sided valuation metrics.
2. Equity markets are not ‘fair’
And therefore, it does not make much sense to me to be obsessed with ‘fair value’.
Removing the idea of ‘fair value’ a while ago proved to work once again this year, especially preventing premature selling.
Thinking in terms of value intervals instead of a single buy price point has been a turning point for me, both for process and results.
➡️New year’s resolution: Keep working with my Risk-Reward models instead of a standard DCF.
1. With you, it’s more fun and I do better!
That’s the actual truth: having a community on Instagram and a presence here on Substack dramatically helps me always keep high attention and commitment on every decision.
But most importantly, sharing my investing journey with you is that makes this project truly special.
The continuous support I’m receiving and getting proof of, means everything!
➡️So, let’s keep growing together!
Happy Investing and Happy New Year!
Francesco