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Rebalancing my US Stock portfolio just 14 days into 2024

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Rebalancing my US Stock portfolio just 14 days into 2024


We’re just 2 weeks into 2024 and the market has been on a rollercoaster ride. In my opinion, so much has happened and while the world is still unraveling it all, I’ve rebalanced some stocks in my growth portfolio to better position it for the year ahead.

Before diving into my specific buys and sells, I think it’s important to take a step back and analyze what has transpired thus far. The events that have unfolded in these past weeks have had a significant impact on my decision-making process. By sharing these insights, I hope to shed light on the rationale behind my trades and at the same time, provide readers with not only a round-up of the latest events but also valuable information for navigating through the volatility.

Read till the end for a *Bonus Segment* on my Crypto Allocations!


5 Key Market Events in the past 2 Weeks

1. Bitcoin ETF

I believe this topic needs no further explanation. What’s important for us to note is the idea that markets don’t usually have a significant rally on the day of news release. Instead, positive catalyst are often ‘baked-in’ to the price over time. Note how BTC retreated by almost 8% (Yellow Circle) on the very same day that the various ETF’s started trading. Bearing in mind that inflows of almost $655 Million entered the market, we still saw some profit-taking by traders who are quick to “sell on news”.

My thoughts on the BTC ETFs,

  1. Interesting to see how ETH did not retreat as much as BTC on Friday. I speculate that we might see ETH ETFs in the future as well, hence prices did not fall as much as “buyers bought on rumors.”
  2. Some food for thought: Bitcoin is meant to be a means of decentralized finance. In simple terms, it allows people to transact without a middleman. Now that it’s an ETF, the fund flow is now mediated by a middleman. While the underlying asset class remains by and large decentralised, it does warrant some thought as to how much centralization we need to allow to make Bitcoin accessible to the masses.
  3. Overall, the listing of such ETFs to me is bullish for the markets.

2. Inflation

To build on Point No.1 where the market likes to price in events in advance, we are now at a point where markets are pricing interest rate cuts. Unfortunately, we might have to wait awhile longer as the Federal Reserve is unlikely to impose any further rate hikes(explained later) or rate cuts.

Referring to the diagram below, we see the Consumer Price Index (which measures inflation of items) increase by 0.3% in December 2023 for all items, as compared to the target of 0.2%. While overall inflation remains in a downward trend, inflation is ultimately not falling as much as anticipated.

3. Sector Rotation (Mag 7 to Industrials & Other Sectors)

The much-awaited “broadening” of the bull market appears to have taken its first step as we saw rotation away from the Magnificent 7 Stocks into other sectors. Within the first trading week of 2024, the Magnificent 7 stocks (represented by the MAGS ETF, equal weight on all 7 stocks) retreated by almost 10%. While they have recovered since, I speculate that moving forward, these large-cap tech stocks will still be seen as “flight-to-safety” plays. In the meantime, investors have likely trimmed some of their positions in these stocks and rotated them to other sectors which may yield higher returns.

4. Red Sea Attacks

There are now attacks happening in the Red Sea on commercial vessels.

Recent attacks on commercial vessels by Houthi militia in the Red Sea have put the vital shipping region in the spotlight. The Yemen-based rebels claim to be targeting Israeli-linked vessels, in protest at Israel’s war against Hamas in Gaza.

Red Sea crisis: expert unpacks Houthi attacks and other security threats

Unfortunately, the ‘first’ stock (most likely) to have its market cap hit by this is Tesla, as their supply chain has been disrupted. Note that the Red Sea is one of the world’s most important routes for energy and consumer cargoes hence it is unknown if current events would lead to more delays.

5. Retrenchments & Unemployment

While this is an extremely sensitive topic, from an economist’s perspective, retrenchments are a leading indicator of lowered inflation rates. When people lose their jobs, their spending power tends to lower. On this note, it is unfortunate that we’ve seen a little more retrenchment than observers predicted, as even here in Singapore we witness the recent Lazada Saga unfold. To add to Lazada, other notable companies have also been laying off staff. Familiar names include,

  • Audible – Is laying off 5% of its workforce, citing an “increasingly challenging landscape,” according to a leaked memo obtained by Business Insider.
  • Discord – Is laying off 17% of its staff, impacting 170 people. In an internal memo obtained by the Verge, Discord CEO Jason Citron blamed the cuts on the company growing too quickly.
  • Disney – TechCrunch reported earlier that Pixar was set to undergo layoffs as high as 20% this year, with the studio’s team of 1,300 people reduced to under 1,000 over the coming months.
  • Google – Laid off hundreds of employees across its Google Assistant division and the team that manages Pixel, Nest and Fitbit hardware. The company confirmed to TechCrunch that Fitbit co-founders James Park and Eric Friedman are also exiting.
  • Amazon – Is laying off “several hundreds” of employees at Prime Video and MGM Studios, according to a memo obtained by TechCrunch. The cuts come days after the 500 layoffs at Amazon’s Twitch.
  • Twitch – Is reportedly laying off 500 employees, 35% of its current staff, amid a continued struggle to achieve profitability in the face of rising costs and community backlash. The pending layoffs come after hundreds more employees were laid off in 2023.
  • & more from Tech Crunch

What has changed in my 2024 Outlook?

With the events that unfolded above, here are some of my thoughts moving in to 2024.

  • For now, it would seem that crypto has finally found some ‘legs’ in the world of traditional finance.
  • In terms of interest rates, it is likely we won’t see any cuts too soon as inflation is not yet where it needs to be. Likewise, we shouldn’t see any further hikes as job losses are already increasing as it is.
  • Volatility continues as wars are still raging globally. Shipping lanes connect the world and any vulnerabilities in them may have unforeseen spillover effects.
  • I continue to hold magnificent stocks but have trimmed some to redirect into other undervalued companies. More as follows,

My first 2 buys in 2024

1. Walt Disney Co (NYSE: DIS)

Having bought Disney previously at $100 last year, I’ve been looking for more opportunities to average down on my position. Just last week, I identified a Golden Cross (Where the 50-Day Moving Average crosses the 200-Day Moving Average) forming on the price action of Disney which typically indicates a reversal in the trend of the stock.

I do not dispute that Disney is still very much frowned upon by observers due to the lack of any positive catalyst in the near term but I believe that their economic moat remains strong despite current headwinds.

2. Sea Ltd (NYSE: SE)

The competition for market dominance rages on, and with present-day context, it would seem apparent that Shopee is better positioned to take on the market this year than its rivals from Lazada. I believe this to be so not just in Singapore but in the region as well. Consumer confidence in Lazada has no doubt been shaken with their recent retrenchment exercise and I speculate that it is likely that Shopee is actually winning at present.

In terms of technicals, there appears to be no major catalyst for the stock but I continue to nibble at $35 given that support appears to be strong at this level. Momentum is also building at this range as indicated on the RSI suggesting that this may potentially be where the selling stops.

1. Unity Software Inc (NYSE: U)

I went into 2024 bullish on Unity but what troubles me the most now is its divergence in the stock market. Unfortunately, as markets move higher, the stock continues to not just lag behind but, in this case, is trading in the opposite direction. While their retrenchment exercises come as no surprise, what is unusual is how the founders of IronSource (a company they merged with back in late 2022) have left as well. When founders leave, this to me indicates that there is more going on than what we see on the surface.

Given that a the technicals suggest the formation of a descending triangle, I would revisit this stock again should it retrace back to $25.

2. Magnificent 7 Stocks

I continue to hold the Magnificent 7 stocks, mainly Amazon, Google and Microsoft. However, these stocks have had a brilliant 2023 and I can’t help but feel that the upside to these stocks is limited in 2024. Given that all 3 stocks above have given me close to 40% returns since I bought them in 2Q 2023, I’ve decided to take some profits off the table to actualize them as most are trading not far off from their 2022 all-time highs.

While my conviction in these stocks remain, there is no loss in actualising profits as prices move higher.

*Bonus Segment* on Crypto Allocations

I continue to be bullish on Crypto, and with current market conditions, I find myself opening my crypto brokerage apps much more than equity apps (please let me know if you are doing the same in the comments). Despite the recent positive catalyst,I continue to be a NET SELLER of my crypto holdings just 14 days into 2024.

Based on my analysis of Bitcoin, while the bull rally is intact, momentum seems to be fading, suggesting that we may see some sort of retracement in the near-term. Hence I’ve been selling some of my alt-coins and holding those gains in USDT until such a time comes when I can re-enter such positions when they are oversold.

Overall, what emotion is driving the market now?

As we look towards the future, and specifically into 2024, it is important for us to note that greed is still driving the market. While I personally remain invested in the markets, I have adopted a strategy of periodically taking profits and redirecting them to my war chest. This approach allows me to move into 2024 and beyond with a higher sense of preparedness. How are you preparing your portfolio for 2024? Share your thoughts in the comments below!



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