The Samwise Portfolio

⚠ Disclaimer: The Samwise Portfolios are for educational and informational purposes only and does not constitute financial advice. All investments involve risk, and there is no guarantee of profit or protection against loss. Past performance does not indicate future results. Always conduct your own research and consult with a licensed financial professional before making investment decisions.

Here is precisely how the Tarly Portfolio strives to produce its 20-40% annual returns. First, as with the other Samwise Portfolios, purchases are made in the Tarly Portfolio during major stock market corrections as outlined in the Samwise Four (4) Part Framework, Rule #2 of Samwise Rules of Investing and Chapter 5 of our Core Investment Principles. In fact, the Tarly Portfolio has already deployed 80% of its capital at the lows of the September 2024. By waiting to make purchases during major market corrections, the portfolio inherently reduces risk by ensuring a relatively low cost-basis.

Second, by purchasing high-quality stocks, the Tarly Portfolio is able to consistently produce high returns at a reduced risk premium. Stocks such as Apple and Nvidia trade in highly predictable patterns and are particularly attractive because they are easier to forecast—analyst targets are generally met, and we can accurately predict where these stocks will likely be 1 to 2 years out into the future.

Additionally, the core capital of the Tarly Portfolio is invested in the NASDAQ-100, ensuring strong diversification across the tech sector and providing exposure to a broad range of top-performing companies. The portfolio is already up 24% in its first fiscal quarter with the Nvidia (NVDA) being the portfolio’s top performing stock at +31% returns. The portfolio is tracking way ahead of its performance objectives of 20-40% annually. This illustrates just how important Rule #2 of the Samwise Rules to Investing really is. By purchasing during corrections, we are more likely to see immediate strong returns creating a buffer to our cost-basis.

Third, and most importantly, the key to producing generational wealth is figuring out a way to remain long at all times while constantly hedging out the risk of a potential bear market that can strike at anytime. The Tarly Portfolio is long only and remains long at all times. Once the portfolio gets long, it stays long. It faces down bear markets with hedging. That is the key to long-term success in the stock market. Hedge the down years, ride the positive years higher.

By strategically following Part 3 of the Samwise Framework, the Tarly Portfolio reduces the cost-basis of each position by selling “premium” and/or “covered calls” against its long positions during market rallies. Doing so also reduces risk by indirectly reducing the capital allocation of various positions.

As with other Samwise Portfolios, the Tarly Portfolio follows Part 2 of the 4-Part Framework and uses intermediate-term rallies as an opportunity to purchase 1-year expiring put hedges to protect the portfolio against crashes, bear markets another exogenous events. The puts are rolled forward during the final quarter of the fiscal year or during periods where the stock markets has sustained major rallies thereby resulting in large build-in profits for the portfolio.

The put hedge is critically important to remaining long the market as indicated by Rule 8’s “Embrace the Bull, Hedge the Bear” investment maxim. Puts ensure the portfolio is protected during periods of market volatility while still benefiting from long-term growth. By rolling them forward, the Tarly Portfolio effectively locks in profits while maintaining the ability to participate in future market gains, reinforcing its strategy of always staying long with minimal risk exposure.