I recently received a certificate from eToro for five consecutive profitable years.
Looking back, those returns did not come from one big bet, but from the fact that at each stage, I was broadly positioned correctly for the prevailing macroeconomic environment.
In 2021, the portfolio benefited from a weighting toward cyclical stocks during the global reopening, as growth expectations, inflation, and commodity demand accelerated after the announcement of the Covid vaccine.
In 2022, when most of the market declined, a focus on value and balance sheet strength helped preserve capital.
In the years 2023–2025, the core theme of the portfolio was European financials, which proved to be a successful combination of low starting valuations, higher interest rates, and improved returns on capital.
However, past returns are not what truly matters. They explain where we have come from, but they don’t tell us where we are going.
Much more important is what is in the portfolio today, at today’s prices, and what kind of returns those assets can realistically generate over the next five or ten years.
The market does not reward history. In that sense, investing is very similar to professional sports. A tennis player can win a Grand Slam one year, but the scoreboard only cares about today’s match – not the highlights. Trophies do not help win a single point going forward.
Likewise, in investing, long-term success requires constant alertness and fresh thinking about which direction things are heading every year.
Looking ahead, I believe the financial sector is in a structural bull market. Banks today are structurally better businesses than they were ten or fifteen years ago – they are more profitable, have stronger capital structures, and are more disciplined in their use of capital. Yet, in many cases, their valuations still suggest very modest long-term returns. A truly optimistic narrative for the sector has not yet arrived.
At the same time, I believe emerging markets could become one of the major investment themes of the next five years. After more than a decade of underperformance relative to the United States, valuations are low and capital flows are cautious. Historically, this has often been a good starting point for strong long-term returns – especially if global economic growth becomes less US-led, the commodity market rally continues, and the weakening of the US dollar returns.
In the long run, consistency, patience, and risk management matter much more than any single trade or clever idea. I am grateful to be on this journey with you and will continue to focus on what I have always tried to do: buy undervalued stocks in undervalued sectors and let the returns follow over time.
𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗵𝗮𝗻𝗴𝗲𝘀
Itau Unibanco was replaced by Tencent.
EDIT. Tencent is a truly different pick compared to Pietari’s typical purchases. It will be interesting to see if he hits the mark regarding emerging markets.
