December 2023 FIRE Portfolio Replace: All Time Highs Reached

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. 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 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 have been, and my basic outlook on the financial system/markets. That is by no means monetary recommendation so don’t look have a look at me for sage recommendation. I make silly trades and make even worse losses fairly continuously.

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

• Internet value is close to $1.75m m as of December 2023 Month finish
• +$50k for the month
• Went 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 a couple of ETFs, mounted earnings, and numerous single title shares.

Mounted Revenue

Because 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 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 as if this cash most likely would have been higher used simply shopping for the market however that is alternative value I’m keen to sacrifice.

I additionally bought I-Bonds in 2022 on the top 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 increased 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 unquestionably one thing I can stay with.

ETFs

Once more, my main holdings are in a couple of ETFs. My main holdings are in VTI, VGT, and VCR. I’ve all the time been a giant 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 large bull market of the 2010s.

I used to carry extra dividend producing shares as I used to be actually into this kind of investing at a time period. I at the moment should not have many dividend particular ETFs as I choose progress greater than earnings. This sort of goes in opposition to 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 December however not a lot as I sometimes 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 prefer to assume I do know a factor or two extra.

Single title shares

Among the single title shares I personal are the next

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 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 assume it beats investing within the markets. As well as, actual property is very illiquid with excessive transaction prices that few individuals take into account.

Lastly, as somebody that travels world wide and doesn’t prefer 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 choose to have my cash liquid and within the inventory market.

December 2023 was a month for the ages. The November inflation report was gentle and the FED signaled that it might begin chopping charges in 2024. Markets rejoiced on the considered inflation ending and the large 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 yr alone which is loopy, and was the most important rally since 1999.

My foremost 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 concern was kind of out of the market.

I hoped for a couple 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 may see, it’s moved according to the markets as needs 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 $1.75m however this most likely would have been nearer to $1.8m if it weren’t for my coated name MTM losses.

Here’s a abstract of my inventory holdings as of December ME. As you may 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

December was a little bit of a catastrophe for my buying and selling regime. I offered coated 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 primarily rocket to the moon and eclipse not solely 2023 highs however all time highs as effectively. I offered calls that rapidly 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 with the intention to not lose any cash. The underlying was already about 5% within the cash which implies delta actually messes you up. I used to be not even in a position to roll the strikes as much as the present underlying value 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 yr. 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 primarily restricted my passive earnings for the following 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 positive factors.

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 consider the speed minimize euphoria will proceed into the brand new yr 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 fee rule is likely one of the foremost 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 December 2023, I traveled to Cape City, South Africa which for those who 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 Revenue

For December, I collected a complete of $3.2k in dividends. I sometimes 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 prefer to maintain a money pile whereas shares are in any respect time highs to reinvest when markets ultimately dip.

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