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Do not get emotionally attached with the company you are appraising

Hello dear reader (diary), it has been ages since my last post. I have been busy and short of ideas and considerations. Actually, I had some ideas but they were too confused to worth making them public. To make amends for my prolong absence I will write about a troublesome topic. Authenticity and sincerity in your forecasts and assumptions.

I know is incredibly easy to party for the company you have been reading about and analyzing for days and weeks. The CEO and CFO wrote touching letters promising you to make this world a better one and achieve outstanding goals. So with this enthusiasm you start modelling your spreadsheet with overconfident forecasts that deliver a 2x upside potential.

I understand that is irritating ending up with a target price below the current price. You may think that all the time spent in your analysis has been wasted and that you may have channeled all your efforts in another company that offered a better return. So as a result you tend to input overconfident growth rates and a lower WACC because you are dragged by your emotions. In fact, is easier to justify all your time with a Buy but we are not doing this to sell an idea or incentivize to make any particular trade. We should avoid embracing any biased action that can turn against us. Remember, unlike brokerage houses and IB, we are free from any conflict of interest. That's why most of the sell side researches out there are just waste paper.

Coming back to our story. You log in your broker and buy your beloved stock. At the first turbulence in the market you begin to revise your spreadsheet and start noticing that maybe (MAYBE) you have been too generous with your assumptions. That's the moment your blood runs too fast to your brain, you stop breathing regularly loosing your clear thinking. That's precisely the time where you'd better keep your mind clear and most importantly you need to have a rock solid investment thesis. At this point in time is almost impossible to revise your estimates in an objective way, you will certainly be conditioned by the current emotional and market status. Well nobody is dead yet, you could take the loss go back to your homework and decide whether to invest again or not. Or you can just close your eyes and hope that the crash does not hurt you too much - you can also be blessed by fortune after all.

I wrote this short story to highlight how crucial it is to be sincere with you future expectations. But also to warn you how easy it is to get carried away from your emotions putting your wealth at risk.


Make a sensitivity or scenario analysis. Understanding how sensitive your target price is against your assumptions is crucial to assess the soundness of your model and detect signs of overconfidence. It also allows you to know the change in the target price in case of a negative effect on your inputs. Adding layers to your analysis increases the chance to avoid painful mistakes.

Remember that in investing, not to invest is also a way to generate alpha.


05.2021 Macro View

I am publishing this post as of 12 May 2021. I wanted to publish it two days ago before yesterday's correction over the major DM indexes, but I have been quite busy lately. Despite yesterday's sell off my ideas remain the same but while reading it please keep this in mind.


The market begins to take inflation related topics seriously. There is growing evidence that supply remains a problem for many companies, just as demand is peaking up - particularly acute on materials and components. Some peculiar trends are starting to be visible. Commodities indices, perhaps a direct inflation hedge, are approaching 2011 highs. Within equities, investors are moving flows to value and short low volatility style. Growth and quality are under-performing given their historical negative correlation to inflation.

Friday's very disappointing US employment report suggests labor availability may be a gating factor on the speed of the reopening and thus it may delay the FED's tapering maneuver. Given the current numbers, tapering will likely not begin before January 2022.

We are leaving the early stage of the recovery on our back and entering a "mid-cycle transition".


Euro Stoxx 50 continues a lateral correction making you wonder if we will soon see a "real correction" - 5 to 8%. For the moment I stay cautious preferring defensive stocks.

Nasdaq 100 witnessed a stronger correction in April and I expect the correction to continue its course. At the moment I stay away from tech stocks.

SPX is currently trading at its maximum but it is not overbought (daily chart) yet. I find it more difficult everyday to spot opportunities in terms of price in the US market and that itself doesn't smell good. In any case this condition may persist for months.


EURUSD is now trading at 1.2150 after the disappointing employement figures the USD has loosen ground but from this level may now continue its downward trend that charactherized Q1 2021.

Fixed Income

Following a spike in late April, 10yr US treasury yield pulled back on 1.55 continuing its lateral movement. Given tapering may take place only from January 2022 and the inflation effects take time to show, I do not expect sharp movements on this end.


BRENT is yet trading at 70$/bbl but it clearly show a strong upward trend. I believe it may continue its bullish trend amid rising traveling and holidays demand.


I stay positive on financials since Inflation expectations will likely pull the yield curve higher and steeper, such that bull case is not solely predicated on buybacks. Other than that I still bend toward consumer staples and on the upper area of the quality curve.

Equity screening

Together with this blog post I am also introducing a new section where I share my current equity holdings. There is no better way to understand the style of an investor than looking at its portfolio. This will make a perfect introduction to this new post since I am going to talk about my process of stock picking.

As I mentioned more than once I heavily rely on intrinsic valuation (Discounted FCF or DDM) to determine whether a company is worth to be included in my portfolio. To run an accurate and full valuation is incredibly time consuming especially if the company is operating in a sector that you never covered before. So filtering the number of companies becomes crucial. I tend to apply two main filters to select the companies that deserve further analysis: 1) Industry Sector 2) expensiveness and balance sheet structure.

First filter

The first filter needs to be in accordance with the current market cycle we are in and the upcoming technological trends. What do I mean by that? Historically there are some sectors who perform better in certain contexts, e.g. financials do better when the interest rates are high, telecoms tend to outperform during market crashes. An extensive knowledge of the financial history may come handy in assessing the full potential of a specific sector in a certain moment. Lastly, a great amount of curiosity and critical thinking is the key to detect trends that may soon gain momentum. Intuition is essential to generate alpha. I'll make a concrete example involving this concept.

For the last months I have been quite bullish over hydrogen as replacement of fossil fuels especially in Europe where the countries committed important investments for this cause. Across this sector there are many public companies that are directly and indirectly involved. Key players ranges from manufacturers of hydrogen catalysts (e.g. Thyssenkrupp) to the distributors (e.g. Snam) that permit to transport the fuel cell from the producers to the final users. An interesting fact is that many of the pipes that are already distributing liquid natural gas can interchangeably run hydrogen fuel cells. To produce green hydrogen, the electrolyzers need to be powered by solar panel or wind turbines that transfer energy through cables (e.g. Prysmian). Also, Airbus is far beyond Boeing in the project of a passenger aircraft fueled by hydrogen. Perhaps the prices of the stocks that are linked to this trend take already account of this factors but it is worth promoting them to the next step.

This is just one example of how brainstorming over a sector makes you find several potentially interesting names. But, as I just mentioned, curiosity and critical thinking are essential to link the dots.

Second filter

The second filter concerns a quick look at the key ratios, with particular emphasis on:

  1. P/E (or EV/EBITDA)
  2. Interest coverage ratio
  3. Debt/Equity
  4. P/B

I use the P/E ratio as a general indicator for the expensiveness of a stock. It's not perfect but if compared with the P/E of the sector, it can quickly delineate if the company is trading at a discount or premium. EV/EBITDA tends to be more representative of the company's result since it ignores some tweaks that the accountants may use during the year. If the company is not profitable and has both negative PE and EBITDA, well that's not my stock. I make very few exception eg. when I decide to allocate a small fraction of my stake on early-stage tech companies. Contrarily if the PE ratio is shooting the moon I spend the next minutes wondering for what effing reason I didn't buy it a couple of months before - not the best mental model though.
Interest coverage ratio and debt/equity allow me to understand in the first place if the company is capable to payback the interest expenses and in the second place - but equally important - how the company is sensitive to the interest rate level. If the company makes use of huge amount of leverage you need to verify if it will have enough resources to face an increasing financial costs.I avoid buying highly indebted stocks when I expect a rise in the treasury yields, such as in this moment in time.
P/B gives me an idea of how much the price of the stock is backed by assets (better if tangible), but also you can feel the growth the street is expecting from the stock. In other words, if the PB is below 1 you are most likely looking at a business which has a negative growth rate expectation e.g. tobacco companies. If the PB ratio is 10 you are looking at a company for which the market has a stable growth expectation. Avoid using this ratio with tech companies because it's not of a great help.


I tried to put in writing what happens almost everyday in my mind. I hope you can find it easy to understand and helpful. Stay tuned for the publication of the monthly macro view and further contents about my investment process.
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What's my investment strategy?


As you probably know this blog is not about intraday strategies or doubtful golden rules. I am sure you can easily find swindlers out there that promise you stellar returns simply by clicking on their effing link.

I don't believe in a market that is predictable and bounded to the past. But I do believe in inefficiencies. And as soon as humans remain involved in the market those inefficiencies will persist. For this reason, an investor shall be active and prepared to take advantage from them. But what do I mean by inefficiencies?

Let's assume that after running your own due diligence you decide to buy a stock that is trading at 20% discount from your target price. For some days since you purchased the stock price has been dropping by 10% - and it did not pay any dividend. Your assumptions however are still valid; nothing really changed significantly. If your assumptions are frank there are at least two conclusions you can draw: some market participants do not share your same idea or the market made a blunder. If you strongly believe in the latter you have then a nice opportunity to fool the ones who are selling that stock - careful, don't be too arrogant.

The explanation above may seems unsophisticated and to some degree it is. But the message I want to pass is: "do not let the market says what a stock is really worth". Or using Ben Graham's words: "Mr. Market’s job is to provide you with prices; your job is to decide whether it is to your advantage to act on them. You do not have to trade with him just because he constantly begs you to."

My process

Said so, let's jump to my investment strategy which is composed by 4 steps.

1) stock selection
2) monthly cash-in
3) hedging activity
4) repeat

My stock picking process starts from a quite detailed fundamental analysis of the company. I like to model the business of the company that I am analyzing because it allows me to understand the key variables that drive the stock price. On the other side, I dislike complex businesses because they amplify the margin of error of your forecasts making your target price too unreliable. After forecasting the free cash flows, I go through a series of calculations to end up with the target price. For some companies I use the dividend discount model. I always pair the fundamental analysis with a multiple valuation aka relative valuation. I tend not to include too many companies in my portfolio - five to ten stocks depending on the market conditions. Remember these wise words: “Diversification is protection against ignorance. It makes little sense if you know what you are doing.” - Warren Buffett.

Every month I deposit part of my salary in the broker account and increase the position in the stocks which are under-performing or are having a negative total return. In this way I can take advantage of the divergence in prices to lower my average cost and increase my upside potential.

I do hedge from time to time selling futures of the indexes that give clues of an upcoming correction and for which I have an exposure. I find it more practical and cheaper than selling all my positions in bulk. By doing so I keep a neutral position on the market by limiting the systematic risk. If I get it right I use the proceedings to increase the position in the company that witness a stronger correction. If I don't get it right I get acquainted with the price of hedging, like in an insurance contract in which we pay a premium but we don't receive any compensation.

I repeat this process over and over again trying not to lose the big picture. "Wax on, wax off".

Additional info

Until now I never felt the need to re-balanced the positions because the majority of my stocks have been moving together. I do keep some liquidity aside to make some "swing trading" or to "buy-the-dip".


This is in short the strategy I adopt to invest my money. In the next days and weeks I will expand many concepts that in this post have been only touched upon for the sake of clarity and conciseness. Feel free to reach me out on Twitter or on the Guestbook to share your comments or just to say hi!

Why do I actively invest?

As first blog post of the main series, I am going to present my reasons for being so devoted to investing. Since I believe that framing is the key to lay solid foundations for a sound investment strategy, so let's start from "why?". It will come to aid in hard times when the market goes against you testing your nerves.

Once you answered this question you can pass to the other ones concerning your investment horizon, risk adversity, ethic, etc...

So why do I actively invest in the stock market?

Short answer: to retire early. Therefore investing is for me an absolute must.

I am not talking about trading in and out at crazy speed with unlikely results. For me investing means accumulating wealth in my broker account little by little as ants gather crumbs in summer in the wake of the winter. As a consequence 1) I tend to save a major part of my salary in order to pile up wealth, 2) I regularly increase or add positions in stocks that have recently drop still preserving their structural integrity.

Experiencing the markets everyday as part of my job is a precious edge since I can leverage my knowledge gathered along my professional life and assimilate the daily news flow. Differently from many other people who are engaging and endorsing the FIRE movement, I am yet not completely bought into the idea of passively investing in index funds even if all the studies about this topic bring valuable arguments to the table. And also I need to justify to myself the meaning of my everyday job! All kidding aside, as far as the markets are unpredictable, a careful and continuous assessment of the macroeconomic environment may offer you precious hints about a prudent equity exposure and sector allocation.

Another compelling side of investing and more particularly of the financial markets is the zero-sum game on which is based on. Warren Buffet once said: "The stock market is a device for transferring money from the impatient to the patient". Most of the active managers and retailers are very demanding from the stock they buy. They often make the irrational decision to close their investment in the worst moment ignoring the basic rule buy low sell high. Taking advantage from these individuals thrills me (I know it sounds perverse).

04.2021 Macro View


Euro Stoxx 50 looks overbought, small correction expected. 100% of my exposure to European equity has been hedged.

Nasdaq 100 is back to its maximums and approaching the overbought area. The slightly higher than expected inflation rate is going to sustain the US market for a little longer, but I do expect a correction soon. I stay cautious and away from "long duration" stocks which are the ones expected to suffer the most the moment the market's focus comes back to the treasury yield.

SPX continues to record highs everyday. I don't want to be too pessimistic but a correction is required to cool down investor's optimism and might coincide with a possible under performing earning season.


EURUSD pulled back on 1.19. It might be a second opportunity to take a long position in USD.

Fixed Income

10yr US treasury yield pulled back on 1.67, but it seems that its march to 2% is starting over. It might suggest a good month for financial companies. Also, its a good opportunity to sell futures on US treasuries.


BRENT is yet ranging at 63$/bbl but I believe that by the end of the month can start over its upward trend and come back to 70$. Overall positive thoughts over oil companies.

Other economic indicators


The US PMI continues to support an overall bullish view. The employment is a more controversial matter. From one side we have a rising Nonfarm payrolls number, from the other one we have a rising jobless claims. I struggle to find an unambiguous meaning.


The Euro Zone PMI is still supporting the European markets, while the unemployment rate registered a slight rise but yet nothing alarming. I personally prefer to stay market neutral until I don't see things clearly.

Introduction (part 2)

How will I organize my blogging activity?

Since blogging is for me a new thing I have a lot to learn about it, but at the same time I want to stay authentic and share thoughts as soon as they come to my mind. In other words, I'll try to publish in an organized way leaving room to some spontaneous extra-contents every now and then.

Firstly, at the beginning of each month I'm going to publish my impressions about the macro environment and the indicators that I use to support my decisions. Most of my analysis take into account both technical indicators, statistics and other economic measures. My intent is to get rid of all the noise and shed a light on what I consider really relevant.

Secondly, every couple of days I am going to publish some posts regarding investment ideas and strategies in which I am directly involved. They represent the bulk of the blog's contents. I'm not anticipating much about it, you will understand my approach gradually as I begin publishing content.

Thirdly, twice a month I am going to share some personal interests that can range from photography, organizational software/workflow, and much more!

Lastly, I take the liberty of transgress the schedule above, therefore in order to not miss any content please consider to subscribe! I can ensure you that you will not receive any spam! You will not regret it!



Hello dear passer-by, welcome to my blog, a scratch book of investment ideas, photography and much more.
Please do not take any content of this blog as a financial advise, in fact it represent exclusively an open personal notebook where I regularly jot down my thoughts in an organized way.

Who am I?

I work as an assistant portfolio manager in an asset management company based in Luxembourg. I am directly involved in trading stocks and derivatives for an investment fund and other individual clients. Job aside, I am also a photographer with a keen interest in documentary and street photography. Take a look at some of my works.


I created this blog for two main reasons. 1. It helps me journal my takeaways from the macro environment and financial markets. 2. (pretentious) Create a sincere like minded community leaving gurus and wizards out.