Portfolio Update: December 2024

It's the end of the year already, somehow. And with the end of the year, it is time to move some positions around for tax purposes.

Since my last update in October, I withdrew $12,000 from my taxable accounts to move the money to my Schwab i401(k) retirement account. This will make my cumulative withdrawals from my Merrill taxable accounts to $16,000.

The intention in these moves is to reduce my taxable income from my regular work as a YouTuber. By putting money into a Traditional i401(k), I reduce my taxable income by that amount. Although this money is sourced from my brokerage, the impact of moving the money is the same, as long as my self-employment income exceeds the deposited amount.

Let's now look at my portfolio, and we can observe how PFE did some real damage.

Buy-and-Hold positions

The backbone of my portfolio is positions in QQQ/M and AAPL. Together, they are the majority of my unrealized gains.

 There is little point in trying to outperform the Nasdaq in a bull run. We have been on a bull run since 2010. I see no point in fighting this trend, and prefer to just ride the wave.

Although I am overweight in AAPL, I'd have to pay tens of thousands in taxes if I sell the position. I don't think rebalancing away from AAPL is worth tens of thousands in taxes, so I will hold it.

I'd prefer to go from QQQ to QQQM, but again, I'd have to pay taxes. Instead, I will just hold both positions.

Moves over the next month: I am likely to do a partial ACAT of my QQQ position to US Bank so that I can get 4% cash back on my new Smartly credit card. I share more information about this card on my Discord guide. The offer is here.

Dividend Positions

I usually wouldn't recommend dividend positions to someone my age (34), but I like having the consistent income of about $9,000/year and slightly less volatility. My dividend ETFs are still largely growth-oriented by being in blue chip sectors, rather than gimmicks like covered call ETFs. This has allowed those positions to stay close to market performance.

VIG and SCHD are the obvious leaders, together being more than $200k worth of value. Both are dividend ETFs, but their yields are low, with VIG being barely higher than SPY.

The reason I hold these ETFs instead of something with higher yield is that I am still primarily interested in growth, and I do not want to pay heavy taxes on my dividend income. However, I don't want to completely abandon the lower volatility that dividend positions bring.

I used to hold ETFs like QYLD and other covered call ETFs when I first quit my job. These positions brought more income, but they failed to deliver better returns than the market after considering the tax impact. Further, the covered call model means they lack the ability to recover after sharp dips. I recommend avoiding covered call ETFs.

My dividend income is approximately $8,900/year. But this income is sporadic, with VIG, QQQM, and SCHD comprising the majority. These positions pay quarterly. December is a big month with $1,970 of dividend income.

Moves over the next month: I will withdraw my dividends and move them to retirement accounts to offset the taxes I'd owe on YouTuber income.

Speculative Positions

Sometimes, you need to shoot your shot. Although I trade short strangles when the market experiences elevated volatility (VIX 20+), the market is in low volatility right now.

The only speculative positions I have open are in shares. I will close both of these positions, likely before the next portfolio update.

 GME was a failure. I FOMOd in and have been selling covered calls to no avail. This position will certainly be a loss when I tax loss harvest over the next few weeks, barring something spectacular happening.

RCL was provided via Alpha Picks, which was a sponsor associated with Seeking Alpha. I was skeptical about their resources, so I did not share them. However, some of their picks really did do well, and RCL more than doubled the market's annual performance.

Although RCL was a good pick, my position size is inconsequential, so I'll take gains and reinvest the cash into a retirement account to offset taxes.

Moves over the next month: I will close these positions and likely reinvest the money into a retirement account.

My Shame

In the beginning of the year, I expected PFE to have a strong 2024. The company had purchased several companies and appeared poised to recover from the constant decline since the Covid bubble popped.

I went in with LEAPS and shares, selling short calls along the way to collect premium.

It was not successful. With healthcare stocks taking a hit after the RFK nomination, it didn't look like PFE had any life left in it. The total loss on these positions is just under $10,000. The covered calls along the way soothed some of the pain, but it's still ugly, at a deadweight loss of about $6,000. 

Unfortunately, this loss balances with my gains from short strangles. Of all the short strangles I profited off of this year, one bad move on PFE killed the gains.

This represents a lesson learned: don't trade like shit.