This article is meant for entertainment purposes only, and is not financial advice.
The 2023 Portfolio Overview
My portfolio finishes 2023 with a measly gain of 1.3%. Since January 1, 2022, my portfolio is up 11.35%, while the S&P 500 is roughly flat over the same time period. So while I did underperform significantly in 2023, I was able to find success in 2022.
Dividends played a significant role in my portfolio this year, as without dividends, I would have been down roughly 2.5%. My trade into TLT and Uber, which I will discuss later, were also important moves that helped my portfolio this year.
Moving forward, I plan to “fine-tune” my strategy, but I am not upending it. Even though the market blew me out of the water this year, I am still confident that over time my strategy can beat the market, just as it has on a 2-year basis.
In today’s article, I’ll go through the moves I made in the quarter and my plan moving forward, including some moves I plan on making. Let’s get started.
Stocks No Longer With Us
Kenvue
Not long after my quarter-end portfolio update at the end of Q3, I sold out of Kenvue. In that report, I shared how I had sold some shares of Kenvue, but during this quarter I decided to cut the position entirely. I took a 20% loss on those shares, putting it in the “Hall of Disappointment” along with Disney. As I shared after Kenvue’s earnings report, management lost my trust. Whether it was an execution problem or a forecasting problem, they had a horrendous quarter, and I felt as if they had no plan other than to blame anyone but themselves. The final nail in the coffin was after Procter & Gamble reported strong growth in their cold and flu remedies, while Kenvue reported a weak cold and flu season as a significant headwind. Kenvue has performed well as of late, but I need to see several quarters of much better performance before I believe any upward move is justified.
Coca-Cola
A few months ago I discussed why I believed General Mills and Coca-Cola were being severely undervalued, mostly due to the weight loss drug mania. Shares of KO have been ones I traded in and out of this year, and after a healthy run up in the quarter I sold off my shares. I got to a point where I believed General Mills offered a more compelling opportunity than Coca-Cola, so I sold KO and added to GIS. If I didn’t prefer a simplified and concentrated stock portfolio, KO would be a permanent holding for me, but it has done me well as a trade this year.
Home Depot
Home Depot was a position I opened in Q4 that I was excited to build into a larger position in my portfolio. I got to roughly 40% of the total position I wanted, but the price inched higher past a point I felt okay buying at. A 25% gain later and I sold out of my HD entirely. This stock frankly went up way too fast for me to feel comfortable adding to and waiting out, so I took my gains and walked away. I won’t rule out owning this stock in the future, as it is a great company and a great stock.
New Additions to the Portfolio
TLT
I wrote about adding TLT to my portfolio in early November, and I did NOT expect this explosive of a rally in bonds. Not to brag (okay maybe a little), but my average cost for my TLT position is $84.35, and has only moved higher because I have added to it. For reference, the bottom for TLT was around $82.75, so I nearly timed this perfectly. I explained my bullishness in the article below, and my rationale has played out perfectly. Despite my 17% gain in nearly 2 months, I am still holding onto this position, as I do believe there is still room to run for the long bonds. You can read more about this move below:
I’m Adding
Uber
I am currently in the process of writing a massive article laying out why I believe Uber will be the next tech company to 10x in size, so I will keep this brief. I am planning on at least doubling my position in Uber, and it may one day be the largest position in my portfolio. Uber is a mobility platform, and despite its dominance in ride share, only accounts for roughly 30% of the ride share market ex-China. I believe the growth potential for this company is unlimited, and I also believe Uber will expand into new businesses as it grows larger.
Cisco Systems
Cisco will be completing its acquisition of the cybersecurity firm Splunk some time in 2024, and this deal excites me. After reporting earnings in November the stock got crushed, falling over 13%, but has been crawling back ever since. While the guidance they offered for the year ahead disappointed, I believe they will be critical in AI implementation at all levels of business. This, partnered with what will be new and impressive cybersecurity capabilities, leads me to believe Cisco’s true value is being overlooked. More M&A is surely in the cards for Cisco in 2024, and I’ll be a buyer along the way.
I’m Subtracting
JP Morgan Chase
The fundamental reason to own JPM is because it is undoubtedly the best bank in the United States. Jamie Dimon is a brilliant CEO, which has led JP Morgan Chase to be the most profitable of the big 4 banks by far. That said, JPM shares have had a great year while its competitors have lagged. JPM now trades at 1.7x book value, which is much higher than its competitors. I have had a great gain on this position in 2023, but as we roll into 2024 I’ll be looking to sell shares of JPM, likely to buy more Berkshire Hathaway, or maybe even the Vanguard Financials ETF.
A Decision to Make in 2024
Procter & Gamble
Procter & Gamble is by far my absolute favorite company in the world. That said, it making up 40%+ of my portfolio is not sustainable. I believe over the next 10 years a stock like Uber will outperform P&G, so I want to allocate more capital to that stock. My current plan is to cut my P&G position by roughly 30%, making it roughly 29% of my portfolio. I hope to get it down to 25% by the end of 2024 by putting more weight on my other stocks when I execute buys. The majority of my P&G shares qualify for long term capital gains, which is nice for tax purposes. I still might not pull the trigger on these sells, but I will share if I do.
Allocation Targets for 2024
Determining target allocation percentages for my portfolio moving forward will be challenging. I have extra cash because of my recent sale of HD, I plan on selling TLT in 2024 for a sizeable gain, and I will likely be selling some shares of P&G to bring that allocation down and build cash. I know I plan on making Uber a larger position in my portfolio, but balancing this along with allocating cash to other positions to create a balance of risk/return will be difficult. I also want to buy more index funds in 2024, mainly VTI (Vanguard Total Stock Market Index) and VYM (Vanguard High Dividend Yield). Making those a meaningful portion of my portfolio while also keeping a focus on the individual stocks I want to own will be a delicate balancing act moving forward.
Lots to Learn From 2023
I completely missed out on one of the most historic years in the market. The worst part is I nailed 2022, one of the worst years, but completely got it wrong this year. Reality is, I didn’t flip as quickly as I should have when the trend started to change. I still believe the companies I own are excellent, top of the class, best in business companies. My mistake was owning absolutely zero tech companies until I started buying Uber in July/August.
The gift from this mistake is a new look at the market. I made the mistake of looking at the stock market though an economic lens (don’t blame me, I have taken a lot of economics classes). To be a successful investor, you have to be blind to threats at a broad market level and have a firm belief that stocks will only go higher. There are times where this isn’t true, but on meaningful time frames stocks only go higher. Not every stock, of course, but the market as a whole trends higher.
I am going to be a better investor in 2024 and beyond, I have no doubt, and it is largely part to the mistakes I made this past year. Here’s to a great 2024, and I am excited to see what the year throws at us.