Exponential Disruption

January 31, 2025

The MIR20 strategy has stalled since the fall of 2024. Currently trading 4.5% below the November 2024 high. The relevant index MDY (S&P 400) is down 4.1% since it's 2024 high.

MIR20 total return currently 37.3% versus MDY at 32.3% (a 15.8% improved return).

The expense of the insurance Put options on the S&P 500, running at 3.28% annualized since inception. I have been purchasing sufficient Puts to cover the market value of the portfolio. Generally purchasing Puts that expire in 1 to 2 months, 10% OTM. They rapidly reduce in price without a market setback, so one really notices the rapid rundown in value. Planning to purchase one month , 10% OTM, to reduce annualized expense to 1% to 1.5%. This will mean that the portfolio is under insured.

Searching for companies that have increased likelihood of Exponential Disruption. Planning to reduce the focus on great companies that have more modest growth potential. Beaten up names such as Etsy and PayPal, NVidia have been added to the portfolio.

Investigating additional securities to increase portfolio individual positions to 20. It is becoming much harder to find good quality names with outsized potential.

Utilizing Market Surge software for increased search capacity. Additionally, ChatGPT for focus on companies achieving increased profit margins through AI use.

Tim Morton, CFA