After spending more than twenty years developing my approach to investing and trading, I’ve found that each proposed trade/investment (equity, options, cryptocurrencies, crowdfunding, etc) starts with questions like these:
Why will the trade work?
What can go wrong?
What’s the timeframe?
What’s the best way to play it?
What’s the downside risk to the trade?
What’s the potential upside of the trade?
I’ve developed an algorithmic program to help me answer these questions and develop a quantitative, repeatable process doing so. The WiNR Ratio it kicks out estimates the likely annualized returns adjusting for risk/reward. Likewise, whenever I analyze an equity investment opportunity with a time frame of at least three years, I use several fundamental metrics to get a sense of the company’s valuation:
Balance sheet
Projected 2-3 year forward P/E ratio
Projected 2-3 year topline growth rate
Dividend yield (if any)
Those inputs, along with other proprietary metrics including ways of measuring a company’s “Revolution Factor” go into an algorithmic system that calculates what I call the WilPOWR Rating. These new programs and the fact that we now have a repeatable, quantifiable, trackable process of analysis, trades and investments in these proprietary systems gives us yet another potential edge for the hedge fund.
The investment objective of the Fund is to achieve superior returns, consisting of both capital appreciation and current income, focusing on maximizing profits while minimizing risks over the next 10,000 days (which is about 30 years) by investing mostly in stocks (and mostly in tech stocks in sectors like The Artificial Intelligence Revolution, The Robotics Revolution, The Blockchain and Cryptocurrency/token Revolutions, The Driverless Revolution, The 5G Revolution and many other new and yet-to-be-thought-of Revolutions to get positioned in front of), along with some options, cryptocurrencies/tokens and crowdfunded assets.
Employing a combination of a top-down approach and a fundamental bottom-up investment selection, 10,000 Days Capital Management LLC (the “Investment Manager”) attempts to (i) identify investment opportunities in companies and technologies with the most potential to revolutionize their industry (and perhaps the world) with good risk/return characteristics and attempts to select the best of these well-researched and well-understood investment strategies to buy and (ii) manager also attempts to select companies who are negatively impacted by those revolutionary companies and technologies to sell short. Likewise, the Investment Manager opportunistically takes small short and/or put positions in stocks that have spiked to what it considers to be obviously ridiculous valuations on hype and press release promotional push.
In making investment decisions, the Investment Manager researches technological and societal trends and employs a proprietary investment analysis process to select the best ideas out of a broad universe of investment opportunities across various markets, including publicly-traded equities, cryptocurrencies and crowdfunded assets. Because of the select number of positions, the Investment Manager seeks to understand each investment in depth, analyzing key variables and events from on the ground research. Each investment idea goes through a proprietary screening process. Positions are also eliminated if the Investment Manager changes its fundamental view of the situation as events or valuations change, or new information is available. The Investment Manager seeks to understand each of his long position’s secular advantage in the position and the catalysts for upside potential as well as with its short position’s secular disadvantage and the catalysts for downside potential.
The fund uses the Investment Manager’s proprietary approach of spotting Revolutionary Trends before they go mainstream and investing in them early while navigating market bubbles and crashes.
In publicly-traded equities, this means digging into the financials, positioning and management of companies in that sector and investing in them early and trading around those core positions by advantageously trimming or adding to core positions.
In options, this means buying calls and puts selectively to help hedge the portfolio or expose the portfolio to additional profit opportunity.
In cryptocurrencies and tokens, this means understanding the nuances of this new asset class and recognizing that the market will be prone to extreme volatility, including bubbles and crashes and capturing alpha by buying the cryptocurrencies and tokens that are most-likely to change the world while shorting the fraudulent and/or silly cryptocurrencies and tokens that come along the way. The Investment Manager has an intense focus on understanding each market where cryptocurrencies and tokens trade.
In crowdfunded assets (ie, private investments), this means vetting management individually to understand their vision as well as how they plan to execute and finance that vision and using only platforms (such as Republic.co) that also vet the companies before they are even evaluated by the Investment Manager.
The asset classes and strategies are managed with an eye towards the broader economic and political cycles that drive so much of the markets. This top-down economic/market view helps manage risk by reducing exposure when the economy and markets look vulnerable to large pullbacks and/or crashes as well as helping attain additional upside potential for partners by increasing exposure when the economy and markets appear to be in the early part of a growth cycle.
Why 10,000 days? Cody Willard, the portfolio manager of the fund, has had the most success when he bought early and held onto core positions for the long-term. Stepping back from the day-to-day desire to grow your money quickly and trying to catch tops and bottoms and swings in the markets, you’ll see the big money has been made by finding the most Revolutionary companies on the planet and investing in them for a long time. Doing a little trimming and reducing exposure when stocks are through the roof. Scaling in and adding to exposure when stocks get crushed.
The 10,000 Days Investment Manager looks out over the next 1, 5, 10, 20, 30 years and seeks to invest in assets that could revolutionize the way we live.