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December 2023 was one other month for the ages. After beginning off my inaugural portfolio replace publish final month for November 2023, December was merely a continuation of the unstoppable market run of 2023. In case you haven’t already learn my posts earlier than, I achieved Monetary independence again in late 2020 early 2021 with a portfolio of roughly $1.3m invested in primarily ETFs. This ballooned to $1.7m in the course of the peak of the markets in early 2022 earlier than coming again all the way down to Earth later in 2022.
This publish shall be a part of a month-to-month collection of portfolio updates that summarizes how my portfolio carried out, what trades I executed, what my month-to-month bills had been, and my basic outlook on the economic system/markets. That is on no account monetary recommendation so don’t look have a look at me for sage recommendation. I make silly trades and make even worse losses fairly regularly.
That is merely the efficiency of my portfolio and the way it has carried out on a month to month foundation.
Month-to-month Highlights – December 2023
Web value is close to $1.75m m as of December 2023 Month finish+$50k for the monthWent again to Cape City for the primary time in years which was all the time an incredible time.
What’s in my portfolio?
My portfolio is sort of easy and straight ahead. I’ve my holdings primarily unfold out between a number of ETFs, fastened earnings, and numerous single identify shares.
Fastened Earnings
Because of rising charges, I’ve additionally allotted a small a part of my portfolio (<5%) to fastened earnings merchandise. I’ve been buying 5.5% yielding treasury payments with a 3-6 month expiry. I presently have about ~$60k invested in a 3-mo T-Invoice that may expire in Dec ME. I plan to purchase one other 3 month T-Invoice upon maturity.
That is assured cash with zero danger which I made a decision to make the most of whereas ready for higher entry factors. Nonetheless, it looks as if this cash most likely would have been higher used simply shopping for the market however that is alternative price I’m prepared to sacrifice.
I additionally bought I-Bonds in 2022 on the top of inflation peak when I-Bonds had been paying 9.5%. The charges have come down considerably since then as inflation itself has come down. The optimum time for me to promote these bonds had been on Dec 1, 2023 as that will have been the final month I used to be eligible for the upper price of 6.4% (nonetheless greater than what treasuries paid). As you will need to forfeit three months of curiosity upon withdrawal earlier than 5 years, in whole my blended price of return was round 8% for 15 months which is certainly one thing I can reside with.
ETFs
Once more, my main holdings are in a number of ETFs. My main holdings are in VTI, VGT, and VCR. I’ve all the time been an enormous proponent of huge tech and have been closely invested within the Nasdaq for over a decade. This has paid off very effectively for me given the huge bull market of the 2010s.
I used to carry extra dividend producing shares as I used to be actually into such a investing at a time period. I presently wouldn’t have many dividend particular ETFs as I favor progress greater than earnings. This type of goes in opposition to the ethos of monetary independence however I find the money for coming in from different sources that I don’t have to focus a lot on earnings.
I added to my ETF positions in December however not a lot as I usually don’t like shopping for extra shares in any respect time highs. Typically instances this isn’t good market recommendation because the prevailing sentiment has all the time been “time within the markets trumps timing the markets”. However, I wish to suppose I do know a factor or two extra.
Single identify shares
A few of the single identify shares I personal are the next
These single identify shares make up lower than 10% of my whole portfolio. I are likely to not purchase a lot single identify shares anymore as there’s no level to tackle pointless dangers after I’m already so diversified with my ETFs.
Actual Property
I presently personal no actual property. I used to personal property within the US however have offered it in 2022 earlier than charges began rising. I’m not an enormous fan of actual property. Whereas it undoubtedly generally is a good funding, I don’t suppose it beats investing within the markets. As well as, actual property is extremely illiquid with excessive transaction prices that few folks take into account.
Lastly, as somebody that travels all over the world and doesn’t wish to be tied down to at least one location, actual property doesn’t make sense as managing it from afar creates a bunch of complications. I a lot favor to have my cash liquid and within the inventory market.
December 2023 was a month for the ages. The November inflation report was delicate and the FED signaled that it could begin slicing charges in 2024. Markets rejoiced on the considered inflation ending and the huge bull run of November continued into December with one other rally for the ages.
Markets rallied to all time highs within the DOW, S&P, and the Nasdaq to ranges final seen in late 2021/early 2022. The Nasdaq 100 index rebounded 54% this 12 months alone which is loopy, and was the most important rally since 1999.
My important ETF holding of VGT already hit all time highs in November 2023, and it continued to rally to new ranges in December. It appeared nothing might have an effect on the markets and all information was excellent news. The VIX additionally traded at multi-year lows round 12 which meant that every one worry was kind of out of the market.
I hoped for a number of market pull backs however this by no means actually materialized so I continued to purchase shares at/close to all time highs. I think 2024 will proceed the market pattern of 2023 barring a resurgence of inflation.
Market Worth of Portfolio
Here’s a historical past of my portfolio worth. As you possibly can see, it’s moved in step with the markets as must be the case since most of my holdings are in ETFs that observe the S&P 500 and the Nasdaq.
In whole, my portfolio is sitting someplace round $1.75m however this most likely would have been nearer to $1.8m if it weren’t for my lined name MTM losses.
Here’s a abstract of my inventory holdings as of December ME. As you possibly can see, most of my holdings have ventured deeply into tech which has been the principle driver of my returns this 12 months.
Trades executed for the month
December was a little bit of a catastrophe for my buying and selling regime. I offered lined calls on my holdings of VGT, VCR, and VTI in early November because the rally was getting heated. I had no concept that rally would basically rocket to the moon and eclipse not solely 2023 highs however all time highs as effectively. I offered calls that shortly went into the cash.
These calls had a Dec 15 expiry and by the point it got here near expiry, I needed to roll out the contracts 2-3 months so as to not lose any cash. The underlying was already about 5% within the cash which suggests delta actually messes you up. I used to be not even in a position to roll the strikes as much as the present underlying worth except I wished to roll the contracts out 5 months!
I don’t like my theta to be that lengthy dated as you simply by no means know what can occur in a half 12 months. I think we are going to see pullbacks as a result of markets by no means go up in a straight line (and it already has been so for two months). With the rolling of all my contracts, I made no cash this month on my choices promoting and have basically restricted my passive earnings for the subsequent three months since I rolled out my contracts for that lengthy. That is the most important danger of promoting lined calls is that your contracts go so deep within the cash that it’s important to roll it many months out and limiting your potential positive aspects.
I additionally bought extra inventory in my present holdings (VGT, VTI, VCR, VDC, VHT). I additionally rolled out my one t-bill of $60,000 for one more 3 months because the yield of 5.5% was simply too tempting. I’ll proceed to purchase dips in 2024 like I did all all through 2023 as I imagine the speed minimize euphoria will proceed into the brand new 12 months and past.
Abstract of my choice trades for the month
Abstract of inventory and ETF purchases
Portfolio withdrawals and bills
Withdrawals from my portfolio is a crucial a part of the monetary independence ethos. The 4% withdrawal price rule is likely one of the important ideas of the FIRE motion which I attempt to adhere to. Usually, I favor to promote from my portfolio when markets are close to or in any respect time highs to seize, and solely after I really need the money.
For the month of December 2023, I traveled to Cape City, South Africa which in case you don’t already know, is one in all my favourite locations on this planet.
I made no withdrawals from the portfolio as I had sufficient money coming in from my weblog in addition to leftover money from different sources. My weblog generates cash each month to the tune of ~$3k and I cowl precisely how I earn cash from running a blog in different posts.
Dividend Earnings
For December, I collected a complete of $3.2k in dividends. I usually reinvest my dividends which has served me effectively in the course of the market downturn of the final 12 months or two. I feel I’ll most likely cease reinvesting dividends within the close to time period as I wish to maintain a money pile whereas shares are in any respect time highs to reinvest when markets ultimately dip.
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