Plotting the Course for 2024

[rhythmmethod]

Hi, everyone. I wish you all the best for 2024. It will likely not be boring.

It's always interesting to look back to see how our investments did. I am interested in looking forward to the next 12 months and beyond. While I am interested in uncleharley and his methods, I expect to play in something other than that sandbox myself. Bach and Charlie Parker all used the same 12 notes as everyone else. Why don't we sound like them?
My plan is basically to stay the course and alter around the edges as events unfold. That means I expect (hope).

1. FI will return. I am implementing that in my largest holding PIMIX and a smattering of PDI, PDO, PFN, PAXS, and a healthy bit of VWIAX.
2. I have a large holding in VWENX, which I expect to increase as it earns a solid B+ over most periods and is a good benchmark for measuring other successes and failures.
3.  have trimmed individual holdings in AAPL, AMZN, MSFT, and VUG. I will use some of that to fund this 2024 IRA, which holds PRWAX, my managed large (multi-ish) cap proxy.
4. I am overweighting RE, HC, and utilities. My plays there are O, RNP, BME, and UTG. I use some leverage there to tie up less $ and increase income.
5. Over the past ten months, I have added to SCHD, PEY, and recently AVUV, as a return to the mean may be coming.
6. Even though I am still earning, I am increasing my income for the day I decide only to irritate my neighbors with noise. If I have more income than I need, it's a first-world problem. I am at about 5% yield with basically a 60/40 portfolio.
7. My only international is a healthy position in SCHY and whatever small bits are in my managed OEFs.
8. I am keeping 5-6% cash in the event that there is a left hook as we are defending the jab. As of now, there are no short bonds.
9.Also for other income plays I'm holding a bit of JEPI, a small but building position in ARCC to widen the tent.

I look forward to hearing about other's plans in the future.


Stay well, and congratulations on making this a cordial (for the most part) and informative place to share information.

Bravo, chang ,

-RM

[steadyeddy]

rhythmmethod , thanks for starting this thread with a thoughtful view of your 2024 investment plan.

Here is my plan:

1. VWENX is a large holding for me as well and it is sort of an anchor. I used to hold Wellesley but sold it off in the last 10 days primarily because I think we will be in higher interest rate regime (even if rate cuts occur in 2024) for a long long time.
2. I sold my entire PIMIX/PONAX position in all accounts, and I have started growing the newly initiated VPLS (Vanguard core plus) etf in all my accounts. I do expect VPLS to be much tamer/milder in performance than PIMIX and perhaps more volatile too since it doesn't appear to be using derivatives for duration/risk control. 
3. I chose FFNOX (Fidelity Muli Asset Index fund) as my staple balanced index fund going forward; it is an 85/15 AA fund with a sprinkle of LT bonds in it - and I get global equity covered at the proportion of the market. Majority of my accounts are at Fido so this makes FFNOX a good choice for me.
4. I do intend to maintain higher level of cash across all my accounts (due to perceived risks) and collect 5% + on MM funds fully knowing the yield would drop when rates are cut.

I do have Muni CEFs (with paper loss for future TLH) but they are small in terms of PV. I intend to keep clipping the coupons on them tax free --- either they recover or I do TLH at some point.

[uncleharley]

I too, shall stay the course. Of course that will be my course, not yours. Viva la Difference. Without it there would be no market.

[catdog]

I have a lot of moves to make to rebalance my portfolio. Soon I would like to increase my holding in FBND. Also I would like to establish 10% holdings in IVV, SCHD and VIG. About two years ago I realized we don't need additional money to live well and for some reason it has made me a cautious investor.

catdog

[Capital]

I have no reason to change course from that which is working. I plan to continue to build a bond position from dividends and new money.
Although my bond holdings have continued to increase, I have not been able to surpass the 15% allocation due to the recent growth in equities.
This is a problem that I do not mind having. I'm concerned about all the land mines that await us in 2024. The first being if this Congress can pass a funding bill.

[archer]

I have kept about 1/2 of my PF in allocation funds and the other 1/2 in explore. A couple weeks ago I altered my this plan a little for 2024 by replacing my 1/2 of my allocation funds to my own 50/50 stock/bond funds. I likely will not change the bond portion of this, but wanted more flexibility for the equity side than I have holding an allocation fund.

[rhythmmethod]

steadyeddy, it sounds like we are similar, with me taking more risk/income in the FI area. I forgot to mention I hold a decent position in FMSDX ~70/30 hybrid. I'm giving VWIAX another year or so and may decide to reallocate that myself. I'll be watching VPLS. Capital, We can be sure that there will be drama to come in Congress. Whether it changes the medium term landscape - ? -. The biggest change for me I've been building within 12 months is RE, HC and Utes using the vehicles I mentioned earlier. We'll see. @ archer, - Makes sense to me. Thanks for chiming in!

[archer]

rhythmmethod, FMSDX is ~30/70 according to Morning* in case it matters. I think its allocation is much more flexible than most. I remember it being 30/70 when I bought it some years ago, then it was 70/30 for awhile and then back to 30/70 based on discussions on different boards. I don't know of a way to see it's past allocation history for proof.

[rhythmmethod]

Dec 31, 2023 18:39:51 GMT archer said:

rhythmmethod , FMSDX is ~30/70 according to Morning* in case it matters. I think its allocation is much more flexible than most. I remember it being 30/70 when I bought it some years ago, then it was 70/30 for awhile and then back to 30/70 based on discussions on different boards. I don't know of a way to see it's past allocation history for proof.

I'll split the difference and call it about 50/50 😆 because of preferreds and other FI risk. I do think it changes allocation frequently. I'm okay with it.

[keppelbay]

As I wrote recently in another thread, my plan focuses on growing the income stream.
As of now the overall portfolio is ~80% fixed income, of which 45% is in OEF and 35% in FI CEF (PIMCO features prominently in this mix). The remainder is 5% cash, 5% alternative & 10% equity. I view the FI CEF as bearing equity like risk, so my 'risk apetite' is close to 50:50. I don't view this as a fixed target, just where I happen to be at the moment.
Income in excess of needs is rolled over into new income producing assets, sometimes into income-producing equity. Steady growth of the income stream should accomplish the same thing as growth of equity value to cover future spending needs and acount for inflation. This has worked so far.
Plan for 2024 is basically more of the same, perhaps with a tilt toward less volatile assets. I've recently started buying some Agency bonds and individual investment grade corporate bonds, but is still only a tiny fraction of the total.
I acknowledge that my approach is not tax efficient, but I don't mind paying some tax - it keeps the wheels on for everyone.

[rhythmmethod]

Dec 31, 2023 19:15:18 GMT keppelbay said:

As I wrote recently in another thread, my plan focuses on growing the income stream.
As of now the overall portfolio is ~80% fixed income, of which 45% is in OEF and 35% in FI CEF (PIMCO features prominently in this mix). The remainder is 5% cash, 5% alternative & 10% equity. I view the FI CEF as bearing equity like risk, so my 'risk apetite' is close to 50:50. I don't view this as a fixed target, just where I happen to be at the moment.
Income in excess of needs is rolled over into new income producing assets, sometimes into income-producing equity. Steady growth of the income stream should accomplish the same thing as growth of equity value to cover future spending needs and acount for inflation. This has worked so far.
Plan for 2024 is basically more of the same, perhaps with a tilt toward less volatile assets. I've recently started buying some Agency bonds and individual investment grade corporate bonds, but is still only a tiny fraction of the total.
I acknowledge that my approach is not tax efficient, but I don't mind paying some tax - it keeps the wheels on for everyone.

I am like a miniture version of what you are doing. I will be very interested to follow your progress. I agree with your view on taxes as well. Thanks for weighing in!

[richardsok]

It's a quiet afternoon and I thought to do a look-back for a TWO YEAR buy-and-hold (Jan 2022 to Dec 2023) for some selected ETFs on Portfolio Visualizer. I wanted to include a bear market n the mix b/c I suspect we're apt to forget the ugly past when we've spent a couple of months in the candy store. Assume you bought just one fund in 1/22 and held until today, re-investing divs but making no withdrawals or additions.

Winners are XLE and JEPQ  (not sure if the latter has existed for the full two years).  

I conclude the future may be nothing at all like the past and (2) if you're not a skilled stock or fund picker, then market timing is critical. Some of the drawdowns reported are scary.  Most buy-and-hold investors would have been quite disappointed over the past two years. If you held during bear markets you did poorly, but if you could avoid eroding prices, even partially, you did better than the TRs shown.   Seen at a distance, in intervals of weeks (instead of days) trend & momentum changes are unmistakable.

Attachments:

2023 Dec total Return chart.odt (14.55 KB)

[racqueteer]

"Plotting a course" for 2024 seems a pretty ambitious undertaking.  The market has been confounding me fundamentally for a while now, and I expect more of the same.  It seems that the worst has passed, but perhaps too have the huge (and to me, unexpected) gains of 2023.  I figure I'm going to have to remain nimble on my feet (with perhaps better success), and have positioned myself by leaning toward rotation and wide-moat holdings; many of which remain tech-y.  I fully expect a pullback, but I think we're at more or less 'normal' behavior (which, to me, has not been the case this year).  Good fortune to all.

[rhythmmethod]

racqueteer, of course, arbitrarily picking a new calendar year is not actionable. I've been restructuring for several months. But since there are threads looking backward, I like one looking forward. My history is that I frequently am early to change direction for the positive (growth to value, for example), but I rebalance too early and miss more of the upside. That is why I have been devoting more energy to increasing yield. richardsok and I couldn't be more different in our approach, yet I greatly respect his diligence with technical analysis. For me, a core (hold) and exploration tilted towards income keep my sleep regular, cash flow in excess of needs, and the renewed dry powder to take advantage of what market gyrations occur. I enjoy reading people's take on the future. Thanks! Good luck, all!

[anitya]

My plans never materialized and so I stopped making plans.

I have a wish though. It would be nice to be able to buy closer to the bottoms and sell closer to the top than what I did in 2023 and in the past.

You may not believe but I had once bought META (FB) at $19+ and sold at $24. In 2023, I sold DELL 20% lower than where it is and sold UBER 25% lower than where it is. It is difficult to get winning horses and so would like the wisdom to ride them a bit longer.

I wish the following lesson from the Old Dog sinks in my being -

"I strongly believe that the "fear" of loss is a much stronger motivator than the opportunity for "gain". Consequently, I have spent much time working on controlling my fears and inhibitions."

[mozart522]

I have begun in the last 1 1/2 months to exit my huge position in cash with an eye to slowly and eventually get to about 50/50. I will continue to hold a good amount of cash until it is clear that rates are going to drop significantly. For now, I have reasonable positions in SCHD, SCHY, COWZ, QQQ, VWEHX, PYLD, FALN, a big chunk in VCIT, and NEAR, and VCSH and a small amount in PSLDX. I will likely be adding some REITS, probably VNQ, some utilities and a dedicated AI play, IGPT. Hope we all have an Uncleharley kind of year.

[steadyeddy]

I think threads like this make all of us think about a plan - even if it is only for the next 12 months. I am truly enjoying the discussion viewpoints here.

Thanks for participating and sharing.

[steelpony10]

      I have little to add, I’m finished. All excess to needs cash now stays as cash or is DCAed into VTI/VTSAX. Time is running short and I’m so glad I get to dump one more chore.

       rhythmmethod , Either political outcome could unfold as a lame duck situation without regards for the future the same as me.

        Happy new year to all! 🎉🎉🎉🎉🎉

[acksurf]

As I made a shift to a more income oriented portfolio - mostly in my self employed 401K account - I significantly underperformed in the 401K account. In 2024 I hope to improve returns - or at least not lag so much - in that account. I won't plan on any significant income oriented investments in my retirement accounts (Roth, Rollover, Self Employed 401K) in 2024.

I have a lot of cash/equivalents in taxable that I will likely allocate to RHPHIX and perhaps Fidelity Total Bond Fund or something similar. My cash/equivalent earned over 5.2% last year which brought in a lot of unexpected income. As mentioned in the past, I rent but may look to buy something so I try to keep a higher amount in cash/equivalent in case I make that move. I live in Florida and the real estate market is a bit of dumpster fire at the moment!

My "core" funds are: JQUA, IVV, SCHD, VUG. In late 2022 and early 2023 it was way too oriented to value which was good in 2022 but not 2023.

[oldskeet]

Hi guys. For 2024 not much of a change for me as I plan to continue with my All Weather Asset Allocation of 20% cash, 40% bonds and 40% stocks. I plan to continue to build my two equity income sleeves, both domestic and global, and add to my small/mid cap sleeve with new money. I am happy with my 2023 results as my distributions were heavy at about three times what they normally are and I was able to grow principal by 2.6%. For the full year of 2023 my total return was 12.02%. Being 76 years in age I am a conservative investor and use special investment positions (spiffs) from time to time to enhance my returns. The Growth Area of my portfolio beat the returns of the S&P500 Index by a couple percentage points as spiffs are a part of this sleeve. I have the Index with a numeric return of 24.2% and my growth area with a return of 27.6%. Thus, I plan to keep on keeping on with what I am presently doing.

[fred495]

As a conservative and retired investor, preserving capital is more important to me than seeking significant returns on capital, especially in the current overvalued market environment. At my age, I prefer to err on the side of caution since I don't need a lot more money.

After a market pullback, I plan to allocate about 50% of my portfolio to FMSDX, JHQAX, PRCFX and PVCMX. The other 50% will go to CBLDX, RCTIX and TFLO (as long as the SEC yield of the fund remains above 4%). Otherwise, I will use ICMUX instead of TFLO.

Fred

[mnfish]

Interesting article from John Rekenthaler at Morningstar. "Why Stocks Have Astounded"

- "While stocks are worth 208 times their original investment, real corporate earnings have increased only 11-fold."
- "The after-inflation math has been: 3% real earnings growth plus 3.5% dividends plus 0.5% higher price/earnings ratios."
- "Finally, the current stock market P/E ratio seems about right. Yes, it is higher than that of 1946, but equities have become more of a mainstream investment since that time. Consequently, the price that investors will pay for their earnings has          increased. Barring a resurgence of inflation, a P/E ratio of 24 seems viable."

He may be right. Y charts shows that in the last 20 years the SP500 PE was less than 20 from 04/04 - 09/07 and again from 01/10 - 10/14. It's essentially been above 20 since 11/2014.

[rhythmmethod]

Jan 1, 2024 20:55:14 GMT fred495 said:

As a conservative and retired investor, preserving capital is more important to me than seeking significant returns on capital, especially in the current overvalued market environment. At my age, I prefer to err on the side of caution since I don't need a lot more money.

After a market pullback, I plan to allocate about 50% of my portfolio to FMSDX, JHQAX, PRCFX and PVCMX. The other 50% will go to CBLDX, RCTIX and TFLO (as long as the SEC yield of the fund remains above 4%). Otherwise, I will use ICMUX instead of TFLO.

Fred

fred495, what amount of drop would inspire you to purchase the funds you entered? Whenever I do this there never seems to be a perfect time .I purchase some (which guarantees a drop) and then buy more as the individual funds reveal. Not advice, just my experience. Good luck. 

[rhythmmethod]

Jan 1, 2024 12:55:18 GMT acksurf said:

As I made a shift to a more income oriented portfolio - mostly in my self employed 401K account - I significantly underperformed in the 401K account. In 2024 I hope to improve returns - or at least not lag so much - in that account. I won't plan on any significant income oriented investments in my retirement accounts (Roth, Rollover, Self Employed 401K) in 2024.

I have a lot of cash/equivalents in taxable that I will likely allocate to RHPHIX and perhaps Fidelity Total Bond Fund or something similar. My cash/equivalent earned over 5.2% last year which brought in a lot of unexpected income. As mentioned in the past, I rent but may look to buy something so I try to keep a higher amount in cash/equivalent in case I make that move. I live in Florida and the real estate market is a bit of dumpster fire at the moment!

My "core" funds are: JQUA, IVV, SCHD, VUG. In late 2022 and early 2023 it was way too oriented to value which was good in 2022 but not 2023.

But value may be better in 2024. That is how I am positioning anyway.

[fred495]

Jan 4, 2024 15:43:12 GMT rhythmmethod said:

Jan 1, 2024 20:55:14 GMT fred495 said:

As a conservative and retired investor, preserving capital is more important to me than seeking significant returns on capital, especially in the current overvalued market environment. At my age, I prefer to err on the side of caution since I don't need a lot more money.

After a market pullback, I plan to allocate about 50% of my portfolio to FMSDX, JHQAX, PRCFX and PVCMX. The other 50% will go to CBLDX, RCTIX and TFLO (as long as the SEC yield of the fund remains above 4%). Otherwise, I will use ICMUX instead of TFLO.

Fred

fred495 , what amount of drop would inspire you to purchase the funds you entered? Whenever I do this there never seems to be a perfect time .I purchase some (which guarantees a drop) and then buy more as the individual funds reveal. Not advice, just my experience. Good luck. 

Sorry, but I don't use a fixed amount. I also look at market conditions and the political environment. For example, I will definitely wait until Congress has passed a federal budget and the threat of a prolonged government shutdown has been averted. 

As I said, at my age, I prefer to err on the side of caution.

Good luck,

Fred

[Chahta]

I plan to not do much this year. I bought my allocation of bonds last year and had a pretty decent year holding them. Next year will be my first RMD based on the year end total for 2024. The only thing I could conceive of changing would be to go heavier into equities if they should tank in 2024. As usual I have a healthy cash position that I spend monthly from. I will watch and as soon as MM funds drop too much I will go into RPHIX most likely.

[win1177]

Coming into 2024, I am going to slowly build up our fixed income, which is currently ~5% of the portfolio, to around 10%. Most of that will be a mixture of different muni funds, as our taxable accounts are much larger than our tax free/ deferred accounts. Even though I retired, our income throws us into higher tax brackets, hence munis. May also add some individual muni bonds, if I see any.

Also probably going to add a little to international, but it has been a chronic underperformer for years. Also, add more to index funds, as I have realized it is pretty damn hard to beat the indexes with “stock picking”. Even though I’m retired, our income exceeds our outflow, so investing the “excess”. If we have a market downturn, will just ride it out!

Win

[acksurf]

Jan 4, 2024 15:45:16 GMT rhythmmethod said:

Jan 1, 2024 12:55:18 GMT acksurf said:

As I made a shift to a more income oriented portfolio - mostly in my self employed 401K account - I significantly underperformed in the 401K account. In 2024 I hope to improve returns - or at least not lag so much - in that account. I won't plan on any significant income oriented investments in my retirement accounts (Roth, Rollover, Self Employed 401K) in 2024.

I have a lot of cash/equivalents in taxable that I will likely allocate to RHPHIX and perhaps Fidelity Total Bond Fund or something similar. My cash/equivalent earned over 5.2% last year which brought in a lot of unexpected income. As mentioned in the past, I rent but may look to buy something so I try to keep a higher amount in cash/equivalent in case I make that move. I live in Florida and the real estate market is a bit of dumpster fire at the moment!

My "core" funds are: JQUA, IVV, SCHD, VUG. In late 2022 and early 2023 it was way too oriented to value which was good in 2022 but not 2023.

But value may be better in 2024. That is how I am positioning anyway.

I hope so.  My portfolio is still heavily tilted toward value - not necessarily reflected in my core funds - includes VYM, DGRO and a few other smaller positions.

[rhythmmethod]

acksurf, Good for you! I hope it works for us both!

[saratoga]

I have finished re-balancing for now. Mainly, I have reduced equity allocation from 88% to 81% and made the portfolio less tech-heavy.
I have sold about 40% of VGT and QQQM. Also sold high percentages of PNAIX and VIIIX. Nothing against these names, though.
I have added cash, TRAIX, MOAT, AVUS, AVUV, SCHD.
My portfolio still looks growth-tilt even against SP500 but less so than before.

I have a moderately optimistic outlook for 2024 market and hope to break my 2021 record balance in real terms this year.

I try to limit my normal expenses within my pension, SS and RMD income.