The 2024 Game Plan*

Happy New Year to everyone! Hope you enjoyed a well deserved holiday break with family and friends. 

As is customary, over the past couple of weeks I have been working on the Game Plan for the Stock Talk portfolio of 2024. As I look at the plan, a couple of themes have surfaced: 1) Simplification, 2) Rebalancing, 3) New Learning, 4) Continuity.

So, let’s dive in:

1. Simplification: Fewer stocks and larger Index ETF positions.

After reviewing the portfolio, I identified a few individual stocks to be replaced with larger positions in corresponding Index ETFs. The stocks are:

• Manulife (MFC): It ended the year at the highest price of the last 15 years delivering an annual return of 21.2%. Although Manulife offers a solid yield: 4.9%; it is not clear how it can sustain this growth in 2024. Therefore, it feels like the right time to take some profits here and replace MFC with an additional investment in XIC (the ETF that tracks the TSX). 

• Citigroup (C): It was a choppy year for the stock price; however, the recovery of the last 2 months helped C deliver 12.4% growth for 2023. Looking forward to the unpredictable outlook of interest rates and their impact on the bank industry in 2024, C will be replaced with an investment in DIA (the ETF that tracks the Dow). 

• Norwegian Cruise Line (NCLH): After an incredible recovery in 2023 delivering a 69% return, their thin margins and high level of debt raises some concerns about owning this stock. Therefore, NCLH will be replaced with an increased investment in SPY (the ETF that tracks the S&P)

• Salesforce (CRM): Another stock that ended the year on a high note: +95%. Although their products are relevant for many companies, it might face increased competition in 2024 and beyond. As a result, CRM is being replaced with additional QQQ (the ETF that tracks the Nasdaq)

After the above changes, here is the list of stocks that will remain in the portfolio in 2024:

2. Rebalancing: To keep the portfolio balanced and diversified, some of the stocks that spiked disproportionately in 2023 have been trimmed. Specifically, Apple (AAPL) +51%, Amazon (AMZN) +73%, Facebook (FB) +177%, Netflix (NFLX) +61% and BOTZ (Artificial Intelligence ETF) +35%. The plan is to reinvest a portion of the profit in the Index ETFs throughout the year (more on this below)

As Jim Cramer (the host of Mad Money) says: "...even if you think you have the hottest hand in the world, when you are up big, you’ve gotta take some profits while you still have them, it’s the responsible thing to do.” 

3. New Learning: Bonds and monthly investment.

After selling and rebalancing is done, the portfolio will start the year with the following split:

Stocks/ETFs: 48%; GIC’s: 23%; Cash: 29%.

The goal will be to finish 2024 with a split of around:

Stocks/ETFs: 60%; GIC’s: 24%; Cash: 10%; Bonds: 6%

To achieve this split, two new strategies will be adopted:

1. Using a “dollar-cost averaging” approach, invest half of the available cash across the 4  index ETF’s: XIC, DIA, SPY and QQQ. This will be done on a monthly basis, so the same amount of cash will be put to work behind these 4 ETF’s every month. The reason to use dollar-cost averaging is to prevent a poorly timed lump sum investment at a potentially higher price if all was purchased at the same time.

2. Diversify fixed income assets by adding corporate bonds. Bonds not only provide predictable income but can also be a hedge in preparation for a decline in interest rates. High-quality bond funds have tended to offer better diversification against stock volatility and higher yield potential than cash. I plan to cover the topic of bonds and my experience buying them in a future Stock Talk.

4. Continuity: ETF’s, GIC’s, and Cash.

The Stock Talk portfolio will maintain its investments in the ‘learning’ ETF’s identified in my prior years' Game Plan posts. I will also add DIA (Dow Jones ETF) and increase the investment in the other index ETF’s, as discussed in the points above. 

The portfolio will continue having a GIC ladder that was started last year and in 2024 will include 3 GIC's: 1-year at 5.15%, 4-year at 5.25%, 5-year at 5.4%.

Lastly, any available cash will continue to be invested in a money market ETF such as CASH; which currently offers a yield of 5.1%

So, that’s the game plan for the Stock Talk in 2024! Wishing all of you a solid investment year and most importantly, a year filled with health, love and many happy memories.

If 2024 is the year to make your financial goals a reality or perhaps to start managing your own investments, do not hesitate to book a Free Consultation.

Claudia Soler

January 2, 2024

Free Consultation

* Disclaimer: The information contained within this blog is for informational purposes only and it is not intended as a recommendation of the securities highlighted or any particular investment strategy; nor should it be considered a solicitation to buy or sell any security. In addition, this information is not represented or warranted to be accurate, correct, complete or timely. the securities mentioned in this blog may not be suitable for all types of investors and the information contained in this blog does not constitute advice. Before acting on any information in this blog, readers should consider whether such an investment is suitable for their particular circumstances, perform their own due diligence, and if necessary, seek professional advice.