Financial journeys rarely move in straight lines. Mine began in 2005 and, after many experiments, led to a strategy that blends business fundamentals with momentum—plus risk controls to keep drawdowns manageable. This article distills that path and explains the launch of my first equity fund in plain English.
Why Share This Journey
Many investors feel pulled between complex signals and simplified narratives. I’ve tried both. What actually works—consistently enough to build long-term wealth—is far more practical:
- Own businesses that are winning (fundamentals).
- Enter when the market confirms demand (momentum).
- Protect the downside (hedging and rules).
This approach is not theory. It’s the result of testing, setbacks, and improvements across very different market regimes.
Early Lessons (2005–2015): When “Edge” Starts to Disappear
I started in Brazil’s stock market in 2005 while studying medicine, then pursued in-person training (online education options were limited back then). In 2012, I launched Investidor de Sucesso to help beginners invest on B3 with simple, do-it-yourself strategies.
I also explored:
- Short-term trading and automated systems (Forex and equity indices).
- Technical analysis as the primary decision tool.
Some years were excellent (notably 2014–2015). Others were mixed. Over time, a pattern became clear: as more capital chased similar technical signals, edges faded. Quant funds with better tools and lower costs crowded out simple approaches. Pure technicals can still work—but for most individuals, maintaining a durable edge is hard.
Key idea: When too many players discover the same advantage, it stops being one.
The Crypto Chapter (2020–2022): Momentum in an Inefficient Market
In 2020, I shifted attention to crypto—then highly inefficient and momentum-friendly. A rules-based “buy what’s strongest” process (and exit when leadership fades) produced standout results. One flagship effort—A Nova Moeda—returned roughly 3,200% in six to seven months during the bull phase.
Just as important: we exited near the 2021 peak and adjusted for the 2022 bear. The lesson wasn’t that crypto is easy. It was that:
- Rules beat opinions.
- Momentum works best with discipline.
- Risk management determines how much of your gains you keep.
First Principles: How Capitalism Actually Pays Investors
After crypto’s cycles, I rebuilt my approach from the ground up—first principles:
- Markets finance innovation. New products, platforms, and business models expand value.
- Profits and credible potential drive valuations. Cash flow today or a high-confidence path to future cash flow is the anchor.
- Supply and demand set prices in the short to medium term. When big money accumulates shares, prices trend.
From these basics, a robust framework emerges:
- Start with fundamentals. Favor companies with earnings growth, defensible moats, and runway (new markets/products).
- Layer in momentum. Use price strength and relative performance to confirm institutional demand—and avoid “value traps.”
- Control risk. Accept that drawdowns happen; use hedging and position sizing to keep them shallower and shorter.
Plain definitions:
- Momentum: Winners tend to keep winning for a period because capital flows in waves.
- Drawdown: The drop from a peak to a subsequent low before a new peak.
- Hedge: An insurance-like position (often options) designed to soften market declines.
Applying the Framework to U.S. Stocks (Since 2023)
Since 2023, I’ve applied fundamentals + momentum in U.S. equities. In a VIP advisory track, this approach outperformed the S&P 500, with clients averaging near 50% per year over the period. Past performance is not a guarantee, but the process held up because it is:
- Intuitive: Own businesses that are actually executing.
- Disciplined: Entries/exits use rules, not moods.
- Adaptive: As leadership rotates—from chips to software to biotech—momentum helps shift capital on time.
Launching the Fund: A Practical Vehicle for Innovation Exposure
With the process battle-tested, I’m launching my first investment fund, focused primarily on U.S. equities.
Structure and Access
- Domicile: Ireland
- Custody: BNY Mellon
- Brokerage: Interactive Brokers
- Eligibility: Global investors (with regulatory exceptions for U.S. residents)
- Minimums: From US$ 25,000 via StoneX (varies by platform)
- Fees: 2% management and 20% performance (discounts for US$ 1M+ allocations)
Portfolio Design
- About 65 stocks, diversified enough to reduce single-name risk.
- Selection: fundamentals first (earnings growth, durability), then momentum for confirmation.
- Hedges: typically options to reduce drawdown magnitude and smooth volatility.
- Process: systematic core with targeted discretion to refine selection and timing.
What this means for investors: a ready-made, rules-based way to participate in AI, biotech, and new energy—without day-to-day monitoring—while prioritizing capital preservation.
Important: Hedging doesn’t erase losses; it aims to limit them so you can stay invested through innovation cycles.
The Step-by-Step Playbook (In Plain English)
1) Screen for business quality
Look for growing earnings, high returns on capital, sound balance sheets, and a moat (tech lead, scale, network effects, or brand).
2) Confirm with momentum
Price leadership, breakouts on strong volume, and relative strength vs. sector/market indicate institutional accumulation.
3) Build diversified exposure
Hold ~65 names to reduce single-stock surprises while keeping enough concentration in clear leaders.
4) Hedge intelligently
Use index puts, collars, or volatility overlays to keep max pain tolerable during shocks.
5) Review and adapt
Leadership changes. Let data (not narratives) tell you when to rotate.
Why Not Pure Value—or Pure Momentum?
- Pure value can get stuck if “cheap” stays cheap. Without improving fundamentals and buyer interest, rerating may never come.
- Pure momentum can chase fads and reverse sharply when sentiment flips.
- Blend them: fundamentals anchor long-term potential; momentum times when to deploy and when to step aside.
2025 Outlook: Innovation Tailwinds vs. Currency Debasement
Three forces shape my view for 2025:
- Debt and demographics: Many countries face heavy debt loads and aging populations—pressuring budgets.
- Monetary responses: Over long cycles, this often results in currency debasement (money supply growth outpacing real output), which can show up as inflation or asset inflation.
- Innovation waves: Breakthroughs in AI, biotech, and energy keep accelerating adoption and capital flows.
Positioning implications
- Innovative equities remain the core engine of compounding. Think “picks and shovels” of AI—from chips to enabling software to automation and robotics.
- Bitcoin as a digital gold sleeve; select altcoins for asymmetry—but size carefully.
- Gold (or gold miners) as a macro hedge.
- Fixed income mainly to stabilize volatility, likely at a smaller allocation if inflation risk persists.
Within the fund, I employ modest exposures to instruments such as Ethereum and gold ETFs, keeping equities central while acknowledging macro hedges.
Who This Is For (and Not For)
A good fit if you:
- Want diversified U.S. innovation exposure without micromanaging.
- Prefer a rules-based process with risk controls and hedging.
- Value adaptability when leadership shifts.
Probably not a fit if you:
- Expect straight-line returns or guarantees.
- Prefer to concentrate in a few speculative names without hedges.
- Can’t tolerate normal market swings—even moderated by risk tools.
Practical Examples (How It Looks in Real Life)
- Why fundamentals first: Suppose Company A is growing earnings 30%+ with a credible new product line. That’s the kind of engine we want to own.
- Why momentum second: If Company A also shows relative strength vs. its sector and breaks out on strong volume, it signals large-buyer demand now.
- When to wait: If fundamentals look good but the stock lags, we may hold off—the market may be telling us something we don’t see yet.
- When to hedge: If market risk rises (volatility spikes, breadth weakens), we add hedges to soften potential drawdowns.
The Human Factor: Discipline Over Drama
Markets test psychology more than knowledge. Learning valuation or options is achievable; sticking to rules under pressure is harder. That’s why the strategy uses:
- A systematic backbone to reduce emotional decisions.
- Discretionary judgment to incorporate real-time context models might miss.
- A constant focus on capital preservation—so you can keep compounding.
Final Thoughts
You don’t need a magic indicator. You need a repeatable system grounded in business reality, confirmed by market behavior, and protected by risk controls. The next waves of innovation are here. The question is whether your approach lets you participate confidently—and stay invested when volatility tests your resolve.
Disclaimer: This article is for informational and educational purposes only. It does not constitute financial, investment, or legal advice, and should not be taken as a recommendation to buy, sell, or hold any asset. Always conduct your own research and consult with a qualified professional before making any financial decisions. The author and publisher are not responsible for any actions taken based on the information provided in this content.
