April 2024 was finally the break in the bull trend that had started way back in November 2023. While markets only really pulled back about 5% month on month which barely even qualifies as a pullback, at least now it’s finally clear that the bull market is not invincible. Sticky inflation and a FED that doesn’t want to move on rates drove the market downturn this month.
If you haven’t already read my posts before, I achieved Financial independence back in late 2020 early 2021 with a portfolio of roughly $1.3m invested in mainly ETFs. This ballooned to $1.7m during the peak of the markets in early 2022 before coming back down to Earth later in 2022.
This post will be part of a monthly series of portfolio updates that summarizes how my portfolio performed, what trades I executed, what my monthly expenses were, and my general outlook on the economy/markets. This is by no means financial advice so do not look look at me for sage advice. I make stupid trades and make even worse losses quite frequently.
This is simply the performance of my portfolio and how it has performed on a month to month basis.
Monthly Highlights – April 2024
Net worth is near $1.76m as of April 2023 Month end-$90k for the monthWent to Seoul and Tokyo for the month, and back in Lombok, Indonesia for some good times.
Market Moves
What is in my portfolio?
My portfolio is quite simple and straight forward. I have my holdings primarily spread out between a few ETFs, fixed income, and various single name stocks.
Fixed Income
Due to rising rates, I’ve also allocated a small part of my portfolio (<5%) to fixed income products. I’ve been purchasing 5.5% yielding treasury bills with a 3-6 month expiry. I currently have about ~$60k invested in a 3-mo T-Bill that will expire in June 2024.
I will probably roll this contract and buy another 3mo t-bill when it expires in June 2024 as the 5.5% yield is hard to pass up.
This is guaranteed money with zero risk which I decided to take advantage of while waiting for better entry points. However, it seems like this money probably would have been better used just buying the market but this is opportunity cost I’m willing to sacrifice.
I also purchased I-Bonds in 2022 at the height of inflation peak when I-Bonds were paying 9.5%. The rates have come down significantly since then as inflation itself has come down. The optimal time for me to sell these bonds were on Dec 1, 2023 as that would have been the last month I was eligible for the higher rate of 6.4% (still higher than what treasuries paid). As you must forfeit three months of interest upon withdrawal before 5 years, in total my blended rate of return was around 8% for 15 months which is definitely something I can live with.
ETFs
Again, my primary holdings are in a few ETFs. My primary holdings are in VTI, VGT, and VCR. I’ve always been a big proponent of big tech and have been heavily invested in the Nasdaq for over a decade. This has paid off very well for me given the massive bull market of the 2010s and is essentially what allowed me to FIRE so quickly.
I used to hold more dividend generating stocks as I was really into this type of investing at a period of time. I currently do not have many dividend specific ETFs as I prefer growth more than income. This kind of goes against the ethos of financial independence but I have enough money coming in from other sources that I don’t need to focus so much on income.
I added to my ETF positions in April 2024 when the Nasdaq dipped about 6%. I like to add positions on dips and the pullback was enough of one for me to start adding to my position.
Single name stocks
Some of the single name stocks I own are the following
TeslaBRK.BNetflixRITMASMLANET
These single name stocks make up less than 10% of my total portfolio. I tend to not buy much single name stocks anymore as there’s no point to take on unnecessary risks when I’m already so diversified with my ETFs.
Real Estate
I currently own no real estate. I used to own property in the US but have sold it in 2022 before rates started rising. I am not a big fan of real estate. While it definitely can be a good investment, I don’t think it beats investing in the markets. In addition, real estate is highly illiquid with high transaction costs that few people consider.
Finally, as someone that travels around the world and does not like to be tied down to one location, real estate doesn’t make sense as managing it from afar creates a bunch of headaches. I much prefer to have my money liquid and in the stock market.
April 2024 finally saw the markets come back down to Earth. The bull trend that started in November 2023 which showed no signs of stopping finally saw a bit of reality as inflation remained sticky and the FED announced they would be much more reserved on the prospect of rate cuts. At the beginning of the year, there were predictions of up to 2% in rate cuts by the end of the year! Now, that has been tempered way down and there’s only one rate cut forecasted (0.25%) for the entire year.
As you can see from the below screenshot which I always monitor using the CME Fed Fund Futures website, the expected rate in Dec 2024 is at 5.25% (just 0.25% below where we are today) which means just one rate cut. I could see this changing to no rate cuts very soon if inflation still remains sticky.
As you can see from the chart below, the Nasdaq has been in this perfect upward channel since the Oct 2023 lows with even the slightest dip being met with buyers. That all changed in Apr 2024 as it finally broke out of this channel and is now consolidating before what I think will be some big moves in May 2024.
In April, markets dipped by a max of 7% on the Nasdaq and about 5% on the S&P 500. This is a healthy pullback in my opinion as the market digests inflation and earnings news. Earnings have largely been pretty good with the major companies matching their expectations. This market has largely been propped up by the Mag 7 stocks which are still doing well with the exception of Tesla which has been lagging.
I suspect volatility in May will increase. Generally, May has been a weak month; the mantra of “sell in may and go away” is a thing for a reason. I would not be surprised to see markets consolidate further and even dip before a rebound near the end of the month. I will continue to buy any dips.
Market Value of Portfolio
Here is a history of my portfolio value. As you can see, it’s moved in line with the markets as should be the case since most of my holdings are in ETFs that track the S&P 500 and the Nasdaq.
In total, my portfolio is sitting somewhere around $1.86m which also includes cash and fixed income positions. This probably be over $1.9m if it weren’t for my covered call MTM losses.
Trades executed for the month of April 2024
April was an active month for my trading regime. I sold a cash secured put on IGM because I want more exposure to different tech stocks. While most of my portfolio is in VGT, this is mainly exposed to Apple, Microsoft, and NVDA. These are great names of course but I want more exposure to Google, Amazon, and Meta. I could just buy the stocks outright but I still try to minimize my holdings to single name stocks.
My previous VGT calls had a strike of $480 which I rolled to $510 with a maturity in Aug 2024 last month. The underlying price of VGT has moved below my new strikes so I kind of wish I didn’t roll my previous contracts to such far off date.
During the month of April 2024, I also bought more VGT and VTI.
Summary of stock and ETF purchases
Portfolio withdrawals and expenses
Withdrawals from my portfolio is an important part of the financial independence ethos. The 4% withdrawal rate rule is one of the main concepts of the FIRE movement which I try to adhere to. Generally, I prefer to sell from my portfolio when markets are near or at all time highs to capture, and only when I actually need the cash.
For the month of April 2023, I traveled to Seoul, Korea which marked country #94 for me. I also spent some time in Japan which was amazing given how much the Yen has depreciated. It really felt cheap especially compared to my last visit back in 2015 when the USDJPY was around 110.
I made no withdrawals from the portfolio as I had enough cash coming in from my blog as well as leftover cash from other sources. My blog generates money every month to the tune of $3-4k and I cover exactly how I earn money from blogging in other posts.
Dividend Income
For April, I collected a total of $800 in dividends. I typically reinvest my dividends which has served me well during the market downturn of the last year or two. I think I will probably stop reinvesting dividends in the near term as I like to keep a cash pile while stocks are at all time highs to reinvest when markets eventually dip.
