Don’t mistake possibilities for probabilities. Anything is possible. It’s the probabilities that matter. Everything must be weighed in terms of its likelihood and prioritized. Ray Dalio Dear investors, and friends, As a standard practice you’ll get to read this annual letter in which I try to condense what the year has been and more. In particular if you’re not new, you’ll know that it’s an opportunity to remark on the more abstract trait of the investing practice. Those, in my opinion, are the foundations upon which to build all the rest. As routine, the annual performance of your capital and mine are presented here. The final column is in bold as it is a key metric, called CAGR. By CAGR we mean Compound Annual Growth Return. It is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span]. The performance was very good as compared with the benchmark both on an annual basis and over the four-year period. I know that you already know it, but it is still worth recalling that even a slight difference in interest rate can translate into a substantial gain over a long investment horizon. The following example helps: take an initial capital of $10k invested over 20 years. On one hand compounded at 10.0% per year, on the other hand at 10.5%. At the end of the two decades even the small 0.5% premium resulted in a significant difference in the final amount ($6,387.35 more, $73,662 vs. $67,275). So, when investing for the long term, even a small increase in interest rate can be beneficial. Reportedly, missing the best days or months in a long string of returns, can significantly impact your returns. If you missed the market's 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83% in the recent 20-year period (1994-2023). The performance has been sound. Thanks to all the copiers and friends that entrusted me with a part of their capital. You can be assured that it will be invested with the exactly same caution and prudence as I invest mine. Your capital is totally aligned with mine. Next year could be either good or bad. It will not matter much for us. Indeed we choose valuable and profitable businesses that will reward us greatly in the span of 5 to 7 years. You will end up wealthier. We will end up wealthier. Wrapping up the Year 2024: In a year marked by war, disasters, and political turbulence, 2024 delivered an unexpected truth: capitalist democracies, led by America, showcased unmatched ???????????????????????????????????????? ???????????? ????????????????????????????????????????????????, even as authoritarian regimes faltered. -???????????? and Suffering in 2024: Conflicts raged across three continents, with Gaza, Lebanon, Ukraine, and Sudan as focal points, and devastating natural disasters added to global hardships. -Decline of Multilateral ????????????????????: Autocrats broke the rules, and Western alliances are accused of double standards with resulting weakened trust in the global system set up after World War II. -Resilience of ????????????????????????????????????????????: Elections in 76 countries showcased democratic vitality, with peaceful political transitions and a rebuke to incumbents in Britain, India, and South Africa. -Economic ???????????????????????????????? of Democracies: The U.S. economy thrived, growing three times faster than the G7 since 2020, with the S&P 500 rising over 20% in 2024, contrasting sharply with China's stagnation. -Authoritarian ????????????????????????????????: China's economic slowdown and Russia's costly war highlighted the vulnerabilities of authoritarian systems. -Shifting ????????????????????????????????????????????: Iran's retreat in Syria and setbacks for its proxies marked victories for people power and reduced authoritarian influence in the Middle East. -???????????????????????????????????????????????????? for Progress: Despite vulnerabilities, democracies demonstrated adaptability and strength, setting the stage for technological and political advancement in the years ahead. ???????????????? ???????? ????????????????????????????: The US is well placed to keep on being the reference standard both for financial markets and reserve currency in the coming 5-10 years. Nonetheless, we are taking into serious consideration alternatives. We are exploring the ????????????????????????????????, the ???????????????????????? and the ???????????????????????????????????????? markets. We believe value can be found there, along with reliable legal and political structures. The podium as biggest economy has also another country in it. At this time we do not feel comfortable in investing in China. It is our top priority that of preserving capital. Perhaps more skilled investors with fluency in Chinese feel comfortable investing there, and we undoubtedly understand that great opportunities can be found there as well. Again, at this time we do not feel comfortable in investing there.........................2020...........2021.........2022.........2023.........2024............CAGR
S&P500...........16.26%......26.89%.....-19.44%....23.70%…..23.20%………..12.61%
peterlavi..........26.92%......26.12%.....-26.70%....27.26%.....26.49%……....13.56%
???????????????? ???????????????? ???????????????????????? ????????????????????????????????????????’???? ???????????????????????????? ????????????????????
Stay well, with an active mind, and body. Until next year, peterlavi - Pietro Lavisci
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