How I Generated Over 13% YTD While NASDAQ 100 is Down Over 6%

Year to Date (YTD) our portfolio has brought over a 13% return, significantly outperforming the majority of markets and traditional investors. Bought and sold on the free eToro platform, with my public profile (MJ_Lux), strategic positions within the international market have been the most effective method for long-term success. Leading the charge includes positions in Alibaba (BABA), showcasing an impressive 60% gain, as well as Stone Co (STNE) with gains of over 38% YTD.

Our eToro portfolio has become a first-hand example of an impressive market outperformance as the NASDAQ 100 is down more than 6% YTD, highlighted in the graph above. While volatile investments like cryptocurrency have witnessed ups and downs, in addition to American market overvaluation, holdings of diversified portfolios in China and Europe have risen. 

Diversification Away From American Markets 

Our approach of moving beyond U.S. markets has been a key driver of our success. While the majority of investors remained concentrated in the U.S. and faced significant volatility due to the political climate, job market fluctuation, and overvaluation of tech giants, our portfolio has taken a strategic approach across the international markets in both Europe and Asia. Additionally U.S. consumer confidence has taken a big hit, dropping at its fastest rate in over three years. This decline is due to growing concerns about President Trump's policies including the imposition of tariffs on China, Mexico, and Canada. The aforementioned concerns have driven us to open big positions in Anta (China), Stone Co (Brazil), and Bayer (German). Additionally, we capitalized on opportunities in Asia, particularly in sectors such as advanced manufacturing, consumer spending (Anta and Vipshop) and AI technology (Alibaba). These companies have shown resilience and significant growth amid global economic shifts.

Maintaining a Strong Cash Position

During the period, we have built a strong cash position, holding more dry powder for new deals. This flexibility has allowed us to take advantage of undervalued assets, allowing us for expansion over the long term and minimizing the exposure to market volatility. In light of the market downturn, we continue to have a cautious approach prioritizing liquidity. Fundamental factors for this recent change is due to the  political climate, overvaluations, and lack of consumer confidence. 

Going Against the Grain: Shorting Crypto and Heineken

Contrarian approaches have also had a major role to play in recent investment returns of over 13%, for instance: short-selling XRP (closed at +30%) and Heineken (HEIA.NV) (+21% at the time of the writing). The crypto space has seen cycles of positive and negative changes brought about by regulatory tensions and changes in market sentiment. Despite the extremely strong crypto community, we went big on shorting XRP, which became our biggest position. The unconventional approach has led to a massive outperformance when most investors were losing as much as 50%. 

Shorting these assets has demanded an important understanding of macroeconomic trends and market sentiment. Fears about crypto's long-term survival and changing regulatory environments have provided me with a window to take a successful short position on XRP. This was a brave move that paid off handsomely. 

Key Learning Indications: Investment Lessons

1. Market Cycles Are Unavoidable: No one asset class or market can keep outperforming. Diversification increases the probability that while one sector underperforms, another will outperform. This is seen through my global positions, not based on a single market.

2. Geographic Diversification Is Critical: Investing beyond popular markets such as America has enabled me to find success across global value positions, especially in China and Europe, validating the need for global diversification.

3. Being Contrarian Can Be Worth The Risk: Acting counterintuitive, shorting crypto or investing in under-the-radar sectors (value investing), has been effective. While many investors have chased “hyped up” assets, I identified overvaluation opportunities and took strategic short positions to mitigate downside risk.

Final Thoughts

Our portfolio’s performance of over 13% growth in comparison to the NASDAQ 100 decline of over 6% speaks to our diversified approach. As a result of our contrarian approach, we have been able to position ourselves ahead of the market while other investors have struggled with the current market volatility. Our global stance in the market highlighted by Chinese positions like Alibaba with over 60% growth YTD and European positions like Bayern up 24% YTD, showcases the importance of market diversification. Our bearish sentiment toward American markets provided downtown protection. Investing too heavily in these markets would expose us to the rapidly dwindling economic conditions, with threats of over-valuations, political tensions, and slowing consumer spending. 

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