Sunday, June 04, 2023

May 2023 Performance

Midway through the year and the market is holding up well considering the rise in interest rates and the geo-political issues. There were no changes made to the portfolio with the top three holdings making up ~ 80% of the portfolio (Apple = 42%, Visa = 21% and Constellation Brands = 20%). I’m still comfortable with this concentration but may gradually transition to an S&P 500 index approach.

I’m still selling out of the money options to generate some income. I’ve taken a more conservative approach by going further out of the money than I usually do. With interest rates this attractive, there no need to take additional risk.

I’ve stayed away from merger arb plays this year as the regulatory risk is way too high. This used to be my primary source of generating income, but just have to adapt to changing conditions.

2023 Performance = +17.60% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%


At June 05, 2023, Anonymous Anonymous said...

Hi Money Turtle,
Interested in your thoughts of moving to an S&P500 Index Approach -> meaning you want to add e.g. VOO into your portfolio to change the weighting for less concentration risk and/or potentially rebalancing to track more closely to the SP500 with potential to exceed with a few core assets that are growing more than SP500? or add further beta to your portfolio e.g. SPXL if/when market dips? or adding VOO + SPXL?

Given market analysts are predicting a market top and high short sale positions in place with non-retail are you considering writing calls on your positions at this time? Although market climbs a wall of worry, and short positions are sizable expecting a fall...wonder if it will happen? Market typically goes the opposite way when the herd is in one direction? The Treasury issuing sizable debt and M2 money supply drop hitting levels falling near the great depression implies a recession thus stock drop...will this time be different or are we in unchartered water post pandemic? Thoughts? I have not written calls yet but like you have been writing puts ~5-10% under current market/strike price or further out. I have seen a few writing calls get their shares taken before they could reverse an option trade. (FYI: To share some interesting facts on shorts - for the first time in my market experience I had recent dividends listed as substitution payments vs dividend payment - broker explained that they classify this way when your stock is sold short and short had to pay the dividend. Many of my stalwarts that just paid dividends over last month are 100% borrowed). Should be interesting to where we go next. Any thoughts on where we are headed?

P.S. Nice going on your yearly returns....

At June 05, 2023, Anonymous Anonymous said...

Why are you considering weighting toward S&P500 Index? Is there a specific driver?

At June 05, 2023, Anonymous Anonymous said...

Any thoughts on AI/ChatGPT Stocks and riding that next wave which is likely to run for the next decade with cloud? Not all uses even envisioned yet and the chips for this are $$$$! NVDA (although very expensive, when has it been cheap, and likely will go higher in time) or buying a basket of Google & Mr Softie while they are duking it out?

At June 05, 2023, Anonymous Anonymous said...

Hey Money Turtle - thanks for keeping us posted on your positions, success and misses...always a great read. I like you am concentrated and running three portfolios all following a similar approach: 80% concentration in 8 stocks. The other 20pc make up 12 stocks. Thus a total portfolio of 20 equities - yes harder to manage but I have found some diversification in my 12 and are more dividend grower focused, thus less growth, and less investment oversight needed as they are not as speculative. My 12 are a balance of Preferred stocks paying ~9.5-10%, UTG, KO, EPD, KMI, SBUX, NKE, DVN, BRK.B,and I have carved/reserved 2-5% for speculation plays e.g. currently long TQQQ and FTNT. Cash from div's always 1-5% so I can dip and buy on declines.

Nonetheless, I like your concentration of APPL, Mastercard, and STZ! Great picks which leads to a lower tax consequence/ better portfolio tax efficiency. I am a sucker for the constant payout so I can pick up a bargin?

What is your approach to tax efficiency (is that a consideration) and cash generation (how do you accumulate cash to invest more)?

At June 05, 2023, Blogger Money Turtle said...

Thanks for reading my post... I really would like to generate post with more content, but there's not much time these days.

Right now, I'm just looking to diversify my risk a bit and the S&P 500 index would be ideal. I just don't have any good new ideas to put new money into. There's so much bearish sentiment out there, just makes you wonder if the market is setting up for a big rally. I haven't sold any covered calls, but it is a nice income generating strategy especially if you think we're heading into a market correction. I've never experienced having dividends being paid out as a substitute due to the shares being short. Takes a lot of conviction to short a dividend paying stock. I've never shorted and most likely never will.

NVDA - I think it's too expensive and would look into Microsoft. Hoping to pick up some Microsoft on a good correction. On the other hand every time I look at NVDA, it looks too expensive and continues to rally. If NVDA is able to deliver on their earnings, which it will over the short term - it's going to continue to rally. Longer term, other chip players aren't going to sit around and let NVDA have the entire market.

A big benefit with managing a concentrated portfolio is cost and tax efficiency. Management fees (mutual funds) and portfolio turnover will kill one's return over time. My primary strategy for cash generation has been selling options and occasional merger arb plays. I reinvest all proceeds from dividends with additional share purchases. Tax efficiency = never sell a great company! That has been my biggest mistake over time.


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