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January 2024 continued the a part of the earlier month. After beginning off my inaugural portfolio updates in November 2023, the markets have simply been unstoppable. You could possibly no mistaken shopping for up just about something. If you happen to 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 throughout the peak of the markets in early 2022 earlier than coming again all the way down to Earth later in 2022.
This put up will probably be a part of a month-to-month sequence of portfolio updates that summarizes how my portfolio carried out, what trades I executed, what my month-to-month bills have been, and my basic outlook on the economic system/markets. That is not at all monetary recommendation so don’t look take a look at me for sage recommendation. I make silly trades and make even worse losses fairly ceaselessly.
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 – January 2024
Web price is close to $1.8m as of December 2023 Month finish+$60k for the monthWent again to Cape City for the primary time in years which was all the time a tremendous time.
What’s in my portfolio?
My portfolio is sort of easy and straight ahead. I’ve my holdings primarily unfold out between just a few ETFs, mounted earnings, and numerous single title shares.
Fastened Earnings
On account of rising charges, I’ve additionally allotted a small a part of my portfolio (<5%) to mounted 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 threat which I made a decision to reap the benefits of whereas ready for higher entry factors. Nonetheless, it looks like this cash most likely would have been higher used simply shopping for the market however that is alternative value I’m prepared to sacrifice.
I additionally bought I-Bonds in 2022 on the peak of inflation peak when I-Bonds have 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 have been on Dec 1, 2023 as that will have been the final month I used to be eligible for the upper fee of 6.4% (nonetheless larger than what treasuries paid). As you have to forfeit three months of curiosity upon withdrawal earlier than 5 years, in whole my blended fee of return was round 8% for 15 months which is certainly one thing I can stay with.
ETFs
Once more, my main holdings are in just a few ETFs. My main holdings are in VTI, VGT, and VCR. I’ve all the time been a giant proponent of massive tech and have been closely invested within the Nasdaq for over a decade. This has paid off very effectively for me given the large bull market of the 2010s and is basically what allowed me to FIRE so rapidly.
I used to carry extra dividend producing shares as I used to be actually into this kind of investing at a time period. I presently do not need many dividend particular ETFs as I choose development greater than earnings. This type of goes towards the ethos of economic independence however I come up with the money for coming in from different sources that I don’t must focus a lot on earnings.
I added to my ETF positions in January 2024 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 title shares
A number of the single title shares I personal are the next
TeslaBRK.BNetflixRITMASML
These single title shares make up lower than 10% of my whole portfolio. I are likely to not purchase a lot single title shares anymore as there’s no level to tackle pointless dangers once 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 a giant 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 individuals think about.
Lastly, as somebody that travels world wide and doesn’t wish to be tied down to 1 location, actual property doesn’t make sense as managing it from afar creates a bunch of complications. I a lot choose to have my cash liquid and within the inventory market.
January 2024 was one other month for the ages. Statistically talking, January is usually a optimistic month when the earlier yr noticed internet beneficial properties. Markets don’t actually even kick off till the 2nd week of the month given most merchants are getting back from the vacation break.
January was kind of an uneventful month. The meltup of December continued into January as the roles report and inflation report each got here again favorable for bulls.
Markets rallied to all time highs within the DOW, S&P, and the Nasdaq to ranges by no means seen earlier than with. Tech drove the rally because it has carried out so for the previous decade with my favourite ETF VGT rallying a staggering 7% in a month to over $510 earlier than coming down the previous couple of days of buying and selling because of the Fed saying it wouldn’t reduce charges in March.
Whereas new all time highs looks like a giant deal, think about that it’s been 2 years for the reason that market was final at these ranges. We’ve had report inflation throughout these two years so if we inflation modify the inventory market returns, the degrees we see at present will not be that unreasonable. That is very true in case you take a look at Ahead PEs.
VIX remained tremendous low and subdued with little to no concern out there. I believe this occasion can’t proceed like this however don’t attempt to time the market.
Market Worth of Portfolio
Here’s a historical past of my portfolio worth. As you’ll be able to see, it’s moved in step with the markets as ought to be the case since most of my holdings are in ETFs that monitor the S&P 500 and the Nasdaq.
In whole, my portfolio is sitting someplace round $1.8m however this most likely would have been nearer to $1.9m if it weren’t for my coated name MTM losses.
Here’s a abstract of my inventory holdings as of December ME. As you’ll be able to see, most of my holdings have ventured deeply into tech which has been the principle driver of my returns this yr.
Trades executed for the month of January 2024
January was a really quiet month for my buying and selling regime. I offered coated calls on my holdings of VGT, VCR, and VTI in December which was already rolling the strike of a earlier name I had offered for the reason that epic inventory market rally meant all my all calls have been within the cash. January was not good for my shares because the markets saved rallying which means my MTM beneficial properties have been capped since my coated calls are all within the cash.
I presently have offered 10 calls on VGT with a strike of $480. This implies the underlying is capped at $480 and any rally previous that time, I gained’t see the MTM beneficial properties. I offered these calls with a March 2024 expiration date and it’s doubtless I must roll that once more to June or September with a strike of $510 or one thing.
I don’t like my theta to be that lengthy dated as you simply by no means know what can occur in a half yr. I believe 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 main threat of promoting coated 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 beneficial properties.
I purchased little or no inventory this cash which turned out to be a mistake because the markets saved rallying to new highs however I most likely ought to have anticipated that higher. Usually when markets rally again to all time highs after such a protracted hiatus (2 years), the markets will proceed that momentum and rally to larger highs.
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 fee rule is likely one of the principal ideas of the FIRE motion which I attempt to adhere to. Usually, I choose to promote from my portfolio when markets are close to or in any respect time highs to seize, and solely once I really want the money.
For the month of January 2023, I traveled to Cape City, South Africa which in case you don’t already know, is one in every of my favourite locations on the 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 January, I collected a complete of $1k in dividends. I usually reinvest my dividends which has served me effectively throughout the market downturn of the final yr or two. I feel I’ll most likely cease reinvesting dividends within the close to time period as I wish to preserve a money pile whereas shares are in any respect time highs to reinvest when markets ultimately dip.
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