Letter №1
April 2026
Dear subscribers,
This is Letter №1 | April 2026. It's an honest account of what we've been up to, the decisions we've made, and how we navigated April through the lens of the four Stoic virtues.
Our foundation is the Manifesto. It's our internal benchmark — we measure not just capital management results against it, but emotional management too, which means fund performance as well. All our letters and judgments rest on it: a practical decision-making technology we've spent seven years developing.
The Manifesto is built on the four fundamental Stoic virtues of the classical school — Zeno, Chrysippus, Epictetus, and others. Not easy reading for a modern audience, granted, but it's precisely this philosophy that lets you make sound decisions in a world where everything's in flux. Markets are the last thing you'd call stable.
The Four Virtues — Four Pillars of the Manifesto
Doing the right thing when circumstances are tough — which on markets is every single day. Not backing down when you're scared. Not giving up when everything's against you.
Making balanced decisions. Not opening positions you'll later have to close at a loss. Knowing when to stop at precisely the moment you really want "just a bit more."
Seeing the consequences of your decisions for others. Not pushing people in the wrong direction with careless advice or example. Often it's "just a little thing," but it builds trust.
Holding all four virtues in view simultaneously. Distinguishing one from another and plotting a course through a constantly shifting global market where there are no ready-made answers.
The Manifesto as Finished Technology
The Manifesto is now a complete five-level technology. Our job now is to check our actions against it and honestly assign ourselves the appropriate error level when they occur. And they will, of course.
Epictetus Fund is a journey, not a destination. For at least 25 years we'll be openly describing everything we encounter along this path. Epictetus once described it with a nautical metaphor:
Shipwreck doesn't happen because the fleet is perfectly prepared, but because the storm is stronger. But the helmsman is us. Our task is to prepare so thoroughly that even in a storm we don't lose the wheel. Sometimes losses are inevitable. Sometimes we lose. But each time we get up and refine the technique.
Worth noting separately: the Manifesto was formally launched on 1 January 2026. According to Manifesto Level 3, we're currently in a major correction phase that could take up to 24 months — until the structure is fully restored. The Dividend Growth block is being built slowly (detailed reasons in the Manifesto text, Level 3).
April 2026: The Month's Facts
Portfolio Structure
Target (Manifesto Level 2)
- Alpha30%
- Beta30%
- Divgrowth (ODG)40%
Actual in April 2026
- Alpha43%
- Beta25%
- ODG32%
We are currently overweight in the Alpha block and underweight in Beta and Divgrowth. Next month we'll gradually bring the structure toward the target 30/30/40: reducing Alpha by ~13 p.p., growing Beta and Divgrowth by 5 and 8 p.p. respectively.
Rebalancing
Trades
Purchases
Alpha Block- AAPL — 300
- GOOG — 100
- MSFT — 103
- VOO — 200
- BMI — 10
- BRO — 10
- ADP — 10
- DPZ — 10
- TRV — 10
- V — 3
- AVGO — 27
Sales
Alpha Block- AMD — 100
- META — 200
- MU — 100
- NVDA — 100
- UNH — position reduction
How This Looks Through the Manifesto Lens
The main idea here is bringing the portfolio to proper structure (Manifesto Level 2). What matters most: structure trumps local P&L. Always. When the Architect makes a decision, their primary task is reducing risk on an eternal portfolio (25+ years). This means structure significantly outweighs local realized P&L in importance.
Selling 200 META as an overweight position is a structurally correct decision, even if it was below the average entry price. From the Architect's perspective, this isn't an error but executing limits. Selling AMD was a Manager decision (details in the Manifesto, Level 4, "Annual Dossiers"). Selling MU and NVDA — reducing positions to accepted limits temporarily accumulated during the March drawdown. Reducing UNH in the Divgrowth block — bringing the position to limits within the dividend block.
From the perspective of upper Manifesto levels (Levels 1–2), the Architect performed correctly: structural limits were either held or carefully adjusted.
April's Errors Through the Manifesto Lens
In April we see two different groups of errors: behavioral and philosophical errors at Level 1 (psychology and virtues); and tactical and regime errors at Levels 3–4 (strategy and position operations).
META: Behavioral Gaps at Level 1 (Psychology and Virtues)
Loss aversion. Instead of immediately reducing risk at the start of the year and bringing the position to structural limits, for roughly four months we delayed the decision, waiting for a "more attractive exit price." This is a textbook case where a small, controlled loss isn't taken on time and turns into a large one.
Overconfidence. There was excessive confidence that META would "definitely pop" on the 29 April earnings, which led to holding an overweight position longer than was sensible and ignoring protective instruments.
From a Stoic perspective: the virtue of Temperance was violated — we didn't limit risk when it was already clear the position had exceeded Manifesto boundaries. Wisdom underperformed — the error wasn't recognized and named as such in time.
Worth recording separately: the Manager used neither stop orders nor protective option structures to limit the loss — a tactical failing at Level 4, but the root of the problem sits at Level 1, in the head, not in the instruments. A small "moose" (loss) was left to grow and turned into a proper Moose. For the Architect, selling META below average entry price still remains a structurally correct decision: the overweight position was brought to acceptable limits.
MU: Error at Levels 3–4 (Regime and Tactics)
In Micron's case, the basic philosophy and structure weren't violated: the idea and the asset's place in the portfolio remained correct. The error arose at Manifesto Levels 3–4 — in regime and tactics of working the position.
At Level 3, too many call options were sold, with some in-the-money as a hedge on downside. This partially blocked the position's upside potential and capped the portfolio top harder than the strategy required. At Level 4, the Manager was forced to roll derivatives to prevent overly harsh profit limitation — excessive hedging through calls led to reduced potential return on MU.
The only mitigation: macro context. We still expect at least two significant market drawdowns or corrections in 2026 (Fed chair change, elections at year-end), and the attempt to protect through aggressive hedging was a reaction to this backdrop. However, precise timing of such events belongs to the realm of things not under our control, and the Manifesto warns directly: tactics mustn't turn into attempts to guess the timing of the inevitable.
In this form the hierarchy of levels becomes transparent: META — Level 1 error (behavioral gaps and virtues) with an operational tail; MU — Levels 3–4 error (hedging regime and specific tactics working derivatives); while the Architect at Level 2 maintained focus on structure and correctly brought the portfolio to limits, placing structure above local P&L.
Month's Results and TWR
TWR for April 2026 came in at +13.05%. April turned out strong — mostly from the market bounce. Our result substantially beat most April 2026 benchmarks. We'll accept congratulations, but we're not relaxing. What matters more to us: at the structural level (Level 2), the Architect held to the Manifesto plan; at Levels 3–4, the Manager logged two clearly recorded errors (META and MU); at Level 5, the Steward correctly documented violations that will be dissected in detail in Postmortems.
In future letters we'll continue in the same vein: numbers, real decisions, specific errors, and those "super-nudge" moments where Stoic discipline stopped us doing something daft.
See you in June when we'll be unpacking May.