Results of Funds and Strategies for February 2025
Andrei Movchan
Mar 17, 2025UNITED STATES OF ARGENTINA
In terms of the number of events important for the global economy, we have seen one of the most eventful months in recent years. The unconventional U.S. president approached the task of restoring America's greatness on a large scale and did not delay the implementation of his pre-election threats with bureaucratic formalities, preferring to act with direct orders and — almost even more — with information leaks into the public sphere. It is too early to draw conclusions about the real strategy of the Trump administration, but the intention is already clear: to reduce the budget deficit by sharply cutting inefficient spending; to reduce the trade balance deficit through a tariff war; to lower taxes, which, combined with an increase in the cost of imports, should provoke growth in industrial and entrepreneurial activity in the U.S.
However, the actions of the U.S. government are already clearly meeting fierce resistance not only from those doomed to suffer (corrupt officials, trading partners, or Europeans who have been parasitizing on U.S. military budgets for many years), but also from those for whom, in many ways, the U.S. economic recovery program was initiated. It turned out that budget cuts hit not only the incomes of officials who have 'sat on the flows,' but also those who received crumbs from the master's table — scientists whose grants are being curtailed 'for company'; vulnerable segments of society whose support programs are subject to review; suppliers and contractors of odious government programs that will be closed. It turned out that tariffs can hit not only foreign suppliers but also their own logistics chains and even consumers. The positive effects of financial recovery are somewhere in the future — there, in years, new factories will be built, new jobs will be created, cheap domestic goods will flood the market, partner countries will invest money in the U.S. and make other concessions. But the negative effects will manifest much sooner, and their anticipation is already manifesting right now, moreover actively fueled by the propaganda of the American left; the establishment losing money and privileges; Europeans offended by the disappearance of freebies and other fighters for happiness today at the expense of tomorrow.
As a result, Trump barely started doing something — and the economic expectations of Americans went down, as did their agreement with the new policy. This effect is painfully familiar to us from countries with problematic economies and a competitive political environment (the so-called Argentine type). In such countries, a rather rigid and stable cycle is established: left-populist regimes solve their current problems by sharply increasing the money supply, distributing benefits, and corrupting the bureaucracy. At some point, tired voters replace them with right-wing populists who promise them economic revival through right-wing reforms. However, the path of such reforms lies through a crisis — budget cuts, restructuring of economic relations, loss of jobs by officials, etc. Most often, right-wing populists manage to bring reforms to the peak of the crisis, and at this moment they are swept away in elections or as a result of a coup by the left — the distribution of money begins again, the cycle is completed.
There is a considerable likelihood that the U.S., with the arrival of Trump, fits into such an 'Argentine' cycle. It is quite possible that in two years Trump's actions will be blocked by Democrats in Congress and the Senate, and in four years a left-wing president will enter the White House, 'saving the nation' by resuming the old policy. Understanding this greatly reduces Trump's chances of success: if I were an entrepreneur in the U.S. today, I would not rush to invest, considering the changes that Trump proposes and produces — the risk of a reversal in the very short term is too great.
I mentioned the word 'risk,' and in the markets, any risk increases volatility; and it is not surprising that volatility in global and American markets increased in February – March, the markets themselves started 'looking down,' the dollar began to depreciate, and the yields on American debt slightly decreased. Apparently, we are entering a period of uncertainty that will last a long time.
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Against the backdrop of rising volatility and uncertainty, conservative market-neutral products, including Movchans’ Group products, perform best.
The fund ARGO SP increased its share value in February by 0.79–0.95%. Since the beginning of the year, the fund shows 1.04–1.31%, 'heading for' 6–8% per annum in 2025; let's hope the trend does not change.
COSSACK gave a growth of 0.88% — i.e., almost 2% in 2 months.
FISTR, seems to have finally formed as a successful strategy — plus 0.95–1.23% for the month.
GEIST with a growth in share value of 0.42–0.52% outperformed the S&P 500 by 2% in February — in periods of high volatility and uncertainty in the markets, GEIST knows how to outperform even indices of American securities.
ARQ SP against the backdrop of stock market corrections grew very little — by 0.05–0.13%. Large inflows in January — February provided the fund with a large cash reserve, and the stronger the market goes down in the near future, the better the investments of this fund will be — a correction is extremely desirable for it now.
Finally LAIF SP due to increased volatility showed a slightly better result than usual — plus 0.42–0.56%. Volatility continues to grow, and we expect continued growth in strategy profitability.
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As I already said, we have entered a period of uncertainty in the global economy and markets. This will be a period of high volatility, unexpected movements, and increased inefficiency. It cannot be said that we love such times (no one loves them), but we are certainly much better prepared for them than fans of 'market investments' and non-professionals who have benefited from the endless growth of most indices in recent years. We continue to work within the same strategies, only we will be a little more cautious; the year promises to be challenging but profitable. We will discuss the development of events in a month.
