January 2024 FIRE Portfolio Replace: Extra All Time Highs!

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 may no fallacious shopping for up just about something. For those who 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 publish might 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 normal outlook on the economic system/markets. That is by no means monetary recommendation so don’t look take a look at me for sage recommendation. I make silly trades and make even worse losses fairly steadily.

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 month
• Went 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 varied single title shares.

Fastened Revenue

Resulting from 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 at the moment have about ~$60k invested in a 3-mo T-Invoice that can 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 make the most 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 charge of 6.4% (nonetheless greater than what treasuries paid). As you have to forfeit three months of curiosity upon withdrawal earlier than 5 years, in complete my blended charge of return was round 8% for 15 months which is unquestionably one thing I can dwell with.

ETFs

Once more, my major holdings are in a number of ETFs. My major 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 huge bull market of the 2010s and is actually what allowed me to FIRE so rapidly.

I used to carry extra dividend producing shares as I used to be actually into one of these investing at a time frame. I at the moment don’t have many dividend particular ETFs as I want development greater than earnings. This sort of goes towards the ethos of monetary independence however I come up with 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 January 2024 however not a lot as I sometimes don’t like shopping for extra shares in any respect time highs. Typically occasions this isn’t good market recommendation because the prevailing sentiment has all the time been “time within the markets trumps timing the markets”. Nonetheless, 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

• Tesla
• BRK.B
• Netflix
• RITM
• ASML

These single title shares make up lower than 10% of my complete portfolio. I are likely to not purchase a lot single title shares anymore as there’s no level to tackle pointless dangers after I’m already so diversified with my ETFs.

Actual Property

I at the moment 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 positively is usually a good funding, I don’t suppose it beats investing within the markets. As well as, actual property is very illiquid with excessive transaction prices that few folks contemplate.

Lastly, as somebody that travels around the globe 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 want to have my cash liquid and within the inventory market.

January 2024 was one other month for the ages. Statistically talking, January is often a optimistic month when the earlier 12 months noticed internet features. 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 roughly 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 minimize charges in March.

Whereas new all time highs looks like a giant deal, contemplate that it’s been 2 years for the reason that market was final at these ranges. We’ve had file inflation throughout these two years so if we inflation regulate the inventory market returns, the degrees we see in the present day aren’t that unreasonable. That is very true should you take a look at Ahead PEs.

VIX remained tremendous low and subdued with little to no concern out there. I believe this get together can not 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 possibly can see, it’s moved in step with the markets as needs to be the case since most of my holdings are in ETFs that observe the S&P 500 and the Nasdaq.

In complete, 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 possibly can see, most of my holdings have ventured deeply into tech which has been the primary driver of my returns this 12 months.

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 stored rallying that means my MTM features have been capped since my coated calls are all within the cash.

I at the moment 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 received’t see the MTM features. 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 12 months. 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 foremost threat of promoting coated calls is that your contracts go so deep within the cash that you must roll it many months out and limiting your potential features.

I purchased little or no inventory this cash which turned out to be a mistake because the markets stored 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 greater 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 charge rule is among the predominant ideas of the FIRE motion which I attempt to adhere to. Usually, I want 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 January 2023, I traveled to Cape City, South Africa which should you don’t already know, is certainly one of 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 Revenue

For January, I collected a complete of $1k in dividends. I sometimes reinvest my dividends which has served me effectively throughout 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.