Leverage Confirmed Trends in a Targeted Way with the Tareno Hawk-Eye Approach
It’s not the low point that matters, but the confirmed trend reversal
Hawk-Eye does not attempt to predict where the stock market will be in five or ten years. Such forecasts are subject to a high degree of uncertainty. Rather, the goal is to identify significant changes earlier than the broader market.
That is why Hawk-Eye deliberately avoids the first few percent of a new market move, when uncertainty is at its highest. Similarly, it does not attempt to capture the final few percent of a move when euphoria dominates the markets. The focus is on the middle section of a trend, which is said to account for about 80% of the positive movement. That is where the risk-reward ratio is most attractive.
Three Basic Rules of the Hawk-Eye Investment Process
The investment process follows three key principles:
Avoiding Value Traps:
Low valuations alone are not a buy signal. Our models only turn more positive once bad news no longer triggers further price declines. This may be an indication that negative expectations are already largely priced in.
Seizing Opportunities:
Investments are not necessarily made at the lowest point, but rather after a confirmed trend reversal. This increases the likelihood that a new uptrend will take hold on a sustainable basis.
Limiting Risk:
If the market no longer responds to good news by reaching new highs, this may indicate a loss of momentum. During such phases, we consistently reduce the risk for the Tareno Hawk-Eye Certificate.
Marvell Technology as an Example of the Hawk-Eye Approach
Marvell Technology is a prime example of the Tareno Hawk-Eye approach. Following a confirmed trend reversal, the stock met the quantitative criteria of our models and was systematically added to the portfolio.
After a price increase of about 180%, technical overbought conditions, euphoric sentiment, and a weakening market response to positive news indicated an increased risk. The models subsequently closed out the position entirely and locked in the gains.
Identifying Systematic Patterns in Market Behavior
Our quantitative models scan several thousand stocks worldwide every day for precisely these patterns. The goal is not to predict the performance of individual companies with exact precision. Rather, it is to identify recurring market patterns early on, evaluate them systematically, and implement our strategies in a disciplined manner.
The Tareno Hawk-Eye Strategy thus combines quantitative analysis, rigorous risk management, and a clear focus on confirmed market changes.
Would you like to find out more?
Do you have any questions about the Chart of the Month or would you like to find out more about our Hawk-Eye strategy? Our fund manager, Manuel Schmedler, looks forward to hearing from you.
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Disclaimer
This document has been prepared for marketing and information purposes and constitutes neither an offer nor a solicitation to subscribe to or buy or sell units in this investment fund. It does not constitute investment advice. Only the current fund documents (in particular the prospectus and KID) are authoritative. Past performance is not a reliable indicator of future results.
Images: Marijke Vosmeer, Luzia Hunziker, Jürg Kaufmann, Istock, Unsplash / Graphics: Tareno AG / Bloomberg