The Origin
I started trading in 2011. Greece was imploding — sovereign debt at 40 cents on the dollar, European banks being quarantined from the financial system, the ECB still debating whether to act. I was buying.
I lost on some of those positions and made on others. But the net lesson was more valuable than the financial result: markets price fear, not fundamentals. When everyone is certain of an outcome, the price already reflects it. When no one can see a path out, assets go cheap enough to matter.
That observation — price diverging from value under stress — has been the foundation of every significant position I've taken since.
Four Questions Before Any Trade (My Investment Framework)
Before entering any position, I work through four questions in sequence:
1. What is the fundamental value?
Not the consensus target. My own estimate. For equities: discounted cash flow with a conservative terminal growth rate and a discount rate that reflects actual risk, not the risk-free rate plus a spreadsheet adjustment. For real estate: net yield after taxes, maintenance, and vacancy. For bonds: real yield after expected inflation.
If I cannot answer this question, I do not trade.
2. What is the current price relative to that value?
I want a margin of safety — not 2-3%, but a real one. Minimum 20-30% for equities. In deep-value situations (distress, spin-off, temporary impairment), I want 40% or more. If the price is at or above value, I wait. Most of the time, I am waiting.
3. What is the specific catalyst?
Value without a catalyst is a trap. Deep discount can get deeper. In 2011, Greek debt had a forced seller (EU banks reducing sovereign exposure), a political floor (ECB intervention was a near-certainty), and a reset event (restructuring + haircut). I had a thesis for when and why the discount would close.
Without that thesis, even a 50% discount is just a number.
4. What is the maximum permanent loss?
This is the most important question. Not "where is my stop" — that is a tool. The question is: if my thesis is entirely wrong, what is the permanent capital impairment? Can I operate normally after that loss?
I size positions where permanent loss — not mark-to-market drawdown — does not change my financial life. That means 3-7% of portfolio per position, with rare high-conviction bets going to 10-12%.
How I Think About Each Asset Class
Equities are the core of the portfolio. I focus on companies generating consistent free cash flow, returning it to shareholders, and trading at a discount to intrinsic value. I do not buy growth stories. I buy current cash flows at a discount.
Bonds are a tactical allocation. In a normal rate environment, equities dominate. When real yields spike above 3-4% on investment-grade corporate debt, bonds become interesting on a risk-adjusted basis. At 2026 IG spreads, the relative case is clearer than it has been in years.
Options serve two purposes. First: income on equity holdings via covered calls on positions where I would sell at the strike anyway. Second: defined risk on speculative ideas where I want a hard cap on downside. I do not write naked puts for income — the tail risk is not adequately compensated.
Real estate is about yield, not appreciation. If net yield after all costs is not above 6-7%, I am not interested. Exceptions exist for structural demand markets where yield compression is driven by genuine fundamentals rather than leverage.
Three Portfolio Mistakes That Actually Cost Money
After fifteen years, most losses trace to one of three patterns:
Thesis creep. You buy something because of a specific catalyst. The catalyst fails. Instead of exiting, you find a new reason to stay. This is how 3-5% losses become 30-50% losses. The rule is simple: if the original thesis is broken, exit. A new thesis requires a new entry decision, not a rationalization.
Sizing for the upside. When a position is working, the temptation is to add. When it is not working, the rationalizations multiply. The correct behavior is the opposite: size at entry, based on downside, before the position moves.
Ignoring liquidity. Small-cap stocks, illiquid real estate, and deep-OTM options share one feature: you cannot exit when conditions change. In stress scenarios, illiquidity converts manageable losses into forced liquidations. Liquidity has a cost. It is worth paying.
The Weekly Review
Every Monday before markets open, I run a fixed review:
- Positions vs. thesis: is the original entry reason still intact?
- Macro signals: VIX, DXY, credit spreads (IG and HY), yield curve slope
- Earnings and guidance: any material revisions to free cash flow estimates?
- Portfolio concentration: am I within the position and sector limits I set at entry?
This is not about predicting markets. It is about verifying that the positions I hold still match the theses I entered with.
On Patience
Most markets are fairly priced most of the time. The ratio of genuine opportunities to available capital is heavily skewed toward waiting. If you are actively trading every week, you are probably generating transaction costs and responding to noise, not investing.
The best portfolio decisions I have made were entries in periods of genuine panic — 2011 Greece, the 2020 COVID drawdown, the 2022 rate shock — and exits when the discount closed. Between those moments: active monitoring, no trading.
This site — averin.com — is where Ruslan Averin tracks the analysis behind these decisions. Not advice. Not recommendations. A running record of how I think about markets, with positions when they are relevant.
— Ruslan Averin