Brief talk with Mauricio Mexia - "Bullish Investment's" money manager and CEO
--Mexico- Today we had the opportunity to speak with Mauricio.
With over 25 years of experience in trading, managing funds, market analysis and investor relationships, "Bullish Investments" has proved how even in an " emerging " market that is Mexico and the LATAM region, a good strategy, discipline and above all passion for what you do, can really set a difference.
The proof is in the results, averaging above 50% over the last 5 years, demonstrating the ability to goe toe to toe with some of the biggest international players.
From the words of Mauricio himself, here are some of his perspectives, and strategies.
1. How do you adapt position sizing and leverage when transitioning from high-volatility assets like FX to more stable ones like equities?
At Bullish Investment, we utilize a proprietary algorithm called the "Parrot Algorithm" (Algoritmo Loro), which incorporates 10 different components, including five technical indicators plus an analysis of gold, the S&P 500, fundamentals, and so on.
Therefore, when all 10 indicators signal a probability of success above 80% or 90%, we allocate 10% of the capital, primarily to the EUR/USD pair. Now, if these indicators show a lower probability of success, we allocate 5% of the invested capital, always maintaining a stop-loss that restricts portfolio losses to a maximum of 2%. - MM
2. During periods of high inflation or geopolitical tension, what criteria do you use to balance the correlation between gold (as a safe haven) and your equity portfolio?
During periods of high geopolitical tension—such as the environment we have been navigating for about a year with the conflicts involving Iran, Israel, and the United States—we have observed that the asset that suffers the most or exhibits the highest volatility in response to geopolitical rhetoric or events is crude oil.
Typically, during times of tension, gold emerges as a safe-haven asset. Consequently, if gold appreciates, the US dollar usually depreciates, and vice versa; if gold depreciates, the dollar appreciates. This inverse relationship has been the common denominator for these two assets over the last year and a half, given the high volume of geopolitical issues.- MM
3. What is the historical maximum drawdown of your strategy, and what automated measures do you execute if that limit is reached?
It is crucial to be very precise on this point. We maintain a maximum risk per trade of 2% of the portfolio. Therefore, we rarely experience consecutive losing trades. We typically operate with a win rate above 90%, thanks to the aforementioned algorithm. Consequently, we average one losing trade out of every 15 operations. Our daily returns fluctuate between 0.5% and 0.8%. Thus, when a loss does occur, we have already accumulated profits, meaning the loss only impacts our gains.
Looking at it specifically, the most significant drawdown we experienced last year affected our profits. Rather than a traditional drawdown, it was an unrealized loss (minusvalía) on our gains or portfolio value of approximately 5%.-MM
4. What percentage of your FX trades are speculative in nature (based on technical analysis) versus hedging to protect your equity positions?
At Bullish Investment, we manage two separate portfolios. One is appropriately named the "speculative" portfolio, where we aim to keep capital liquid. In this portfolio, we exclusively trade FX pairs like EUR/USD and GBP/USD, which forms the core of our day trading strategy.
In our "wealth management" (patrimonial) portfolio, we do include equities, indices, and the S&P 500. We manage gold and the S&P 500 on a short-term basis, unlike equities. For stocks, we look at a maturity period of 3 to 6 weeks.
As managers, we allocate approximately 70% of resources to the wealth management portfolio and 30% to the speculative portfolio. This is generally how we manage institutional capital.- MM
5. What percentage of your own net worth ("skin in the game") is invested in this same strategy, and how do you manage personal conflicts of interest when trading?
At Bullish Investment, we invest approximately 30% of our own capital into equity and variable income markets, utilizing the exact same strategies we implement for our investors across both the speculative and wealth management portfolios.
To be more precise, that 30% of our capital allocated to variable assets is subdivided into 30% for the speculative portfolio and 70% for the wealth management portfolio mentioned earlier. -MM