This article is the update of my personal portfolio for the most recent quarter and for the year-ended December 31, 2024. To provide context, you can look at returns across asset classes in an article on my website here.
As a preview, I believe my returns were slightly subpar given my overall portfolio mix at the end of the year, broken down as follows:
77% equities (24 single names, three geographic EFTs and four sector ETFs)
12% fixed income skewed towards corporates (rather than government bonds)
5% cash / cash equivalents
6% alternative assets, of which gold was roughly half.
Of the 77% equity component of my portfolio (including ETFs in their country of focus), my country of headquarters was circa 84% USA and 16% foreign, including investments in Europe, Canada, China and Japan.
This risk profile is greater than most wealth advisors would suggest for someone of my age, but I am a firm believer that if you hold sufficient liquidity and can emotionally weather some down periods in stocks and bonds, the best way to achieve portfolio growth over many years is to accept more risk. I have had a similar risk profile now for decades. I am also not a strong advocate of “lifestyle portfolio management”, meaning the older you get, the more you skew your portfolio towards “safer” fixed income investments. I can accept volatility in my portfolio. In addition, the inverse relationship between bonds and stocks has broken down since central banks started using unconventional monetary policy, making the historical reduction in volatility and smoother investment returns of 60/40 portfolios largely moot.
My overall portfolio return for the full year was 11.7% (including interest and dividends), which I consider sub-par for the general risk I am taking at a headline level. The current return on the portfolio was 2.3%, included in the 11.7% total return. When looking deeper at my portfolio of stocks, I have a number of positions that are not “go-go” names (i.e. not “Mag 7” stocks) as I have consciously tried to skew my portfolio more away from these expensive stocks as their prices have risen. Nonetheless, I believe the total return generated by my portfolio in 2024 is around 200bps-300bps lower than it could have been had I simply invested in a select number of passive index ETFs. I consider the subpar returns to be a combination of a less risky, less-tech oriented portfolio (at least vis-à-vis the S&P 500, which more concentrated in “Mag 7” names), several poorly-performing positions that I held too long, international diversification to mitigate risk, running S&P 500 puts as insurance / hedges, and simply trying to be too clever too often, which is not the way to invest.
As usual, the stupid moves haunt me the most, and I had no shortage of these in 2024, although to be fair I suppose time will be the ultimate judge. My equity philosophy is to identify strong macro-trends and invest in companies operating in these sectors. For example, two macrotrends I identified a year or two ago were continued growth / rollout of AI (better late than never!) and the growth of weight-loss drugs. Therefore, I built positions mid-year in both ASML and NVO (having exited LLY in mid-2023, one of my dumbest moves ever, before re-entering with a small position this past year), legging into both ASML and NVO in the 2Q and 3Q but at a significantly higher average prices than the stocks closed the year. Both positions hurt my returns in 2024. However, I have not lost faith, and the macrotrends that drove my investments in both stocks are a long game.
In summary for 2024, I continued to enjoy nice returns on short-term cash, “played” the two major trends I mentioned above, improved my portfolio diversification, and continued to ever-so-slowly shift to a more defensive and higher yielding stock portfolio. I also carry S&P 500 puts, which I consider insurance for staying very long equities at all times, although these cut into returns.
My portfolio attributes
Asset class mix
The table below shows the breakdown of my portfolio at the end of 2024 and the direction of change over the last year (i.e. compared to 12/31/2023).
The equity percentage of my portfolio increased slightly in 2024 even though I cut many of my largest positions into strength and invested in a few new names, some of which have underperformed. My equity portfolio is reasonably balanced, skewed more in the aggregate towards defensive names / sectors, compared to the S&P 500 index. I also continued to roll out-of-the-money puts on the S&P 500, and the value of these is included in the “Total Equities” line.
Top 10 equity holdings
The table below shows my top 10 equity holdings at the end of 2024. These are ranked by valuation. The direction of change represents the change since the end of 2023, noting as you will read later that I actually reduced the holdings in a fair number of these names during 2024.
My top 10 equity positions accounted for 45.4% of my total portfolio at the end of the quarter, more than at the end 2023. The change in equities overall, as well as changes in portfolio concentration, were primarily influenced by changes in stock prices (generally prices were higher) rather than trades.
At the end of the year I held positions in 24 individual stocks, which in total represented 69.7% of my total portfolio. In addition to individual stocks, my other equity exposure (7.9% of total portfolio) was through stock ETFs: four sector-focused ETFs including energy (XLE), infrastructure, and gold (two), and three country-focused ETFs where I want exposure through indices, including Japan (Nikkei 225), China (Shanghai Composite) and Europe (STOXX 600).
Major 2024 equity trades
The table in the preceding section ranks my top 10 positions by value, but does not provide changes in my portfolio by number of shares. You might find it interesting to learn that I actually reduced my holdings in four of my top six names in 2024, even though the percentages of my portfolio of these stocks did not change very much because the stocks rose sharply in price in 2024. Below I describe the changes in shares of my major portfolio positions in 2024.
New positions: I added NVO, ASML, LDOS (defence electronics), and small positions in NVDA and LLY.
Exits: I exited MKC, ABNB, DIS, DGE and VWAG
Reductions: I reduced positions in AAPL (-38%, into strength/growth concerns), AMZN (-20%, into strength), BRK.B (-20%, into strength and to reduce concentration), SBUX (-31%, performance concerns), LULU (-20%, performance concerns/consumer demand), Japan ETF (-16%, into strength)
Adds to existing positions: MSFT (+6%, core), SO (+9%, defensive), CSCO (+12%, defensive), JNJ (+23%, defensive), P&G (+44%, defensive), V (+110%, core), CRWD (+71%, core), Infrastructure ETF (+36%, defensive/core)
Equity sector breakdown
The table below contains a stratification of my equity portfolio by sector, including all 24 individual stocks and four sector-specific ETFs. The two gold ETFs I own are included in the “Materials” sector.
I reduced significantly my exposure to consumer discretionary stocks during the year, mainly by trimming existing positions. Most other changes were driven by changes in underlying stock prices, with of course gold (materials sector) continuing to push higher and energy stocks declining. Both of these sectors have somewhat idiosyncratic risks that drive their prices.
Macro hedges / “insurance”
As of year-end, I held S&P 500 out-of-the-money puts expiring in March and April covering approximately 31% of my portfolio. I have since added more S&P 500 puts expiring in May, and my portfolio is now around 47% hedged. This insurance costs money, and I might at some point let them run-off if I get comfortable with the outlook under the new Administration. I am aiming to get through January and then decide.
Fixed income holdings (and cash)
My fixed income holdings including cash at the end of the year are summarised in the table below:
Returns
I have looked at my returns for my combined stock, bond and cash portfolio only (i.e. ignoring alternative investments). On this basis, my $ portfolios (US accounts only) had a total return (price change + dividend/interest income) of 13.3% for the full year, versus FY2023 return of 17.1%. My £ portfolio had a total return (£) of 1.9% for the full year, versus 3.1% for FY2023. It is my UK SIPP that has dragged down my return, a vehicle that holds mainly non-US stocks and ETFs.
What’s ahead
As the new year kicks off, sell side analysts are predicting another 10%+ gain in the S&P 500 in 2025 following two years of 20%+ gains. I love to read this, but I know two things. Firstly, sell-side analysts are rarely right. And secondly, I have some doubts that US stocks can chalk up another year of such outstanding returns.
The reason I am doubtful about US equity returns in 2025 is that US stocks are expensive. This will not cause me to cut my positions, because I am willing to accept lower returns (knowing how exceptional the last two years have been) and play for the long-term. But I will be more conscience of diversification and will certainly keep my hedges in place until the economic policies of the Trump Administration and their effect on risk markets are more evident.
American exceptionalism is real for now, and this clearly attracts investors. The US remains at the forefront of technology development and evolution, creating excitement around emerging technologies. At the same time, I consider the largest tech stocks expensive but defensive. The hardest thing to swallow would be earnings growth coupled with declining stock prices, but at these levels, this is a definite possibility.
The new Trump Administration will add volatility to US bond and stock markets. We will need to carefully watch how his myriad of economic policies (i.e. tariffs, tax cuts that increase deficits, etc) ultimately affect investor sentiment. Having said this, Mr Trump seems to measure his own performance by the performance of the US stock market, an ongoing positive for investors in stocks in the US.
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