Poor Man's Investment Journal

0.67%	2.78%	5.47%	0% *
June	YTD	1 Year	Fund Flow

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* Fund flow is for the full month of June

Overview

EOM June 2024

From this month onward I will also be adding a bit more detailed portfolio analysis at the end of these posts to provide insights into individual positions, why they were added/removed or how they have performed throughout the month, don’t forget to check it out.

To give a quick summary for the month of June:

1. The portfolio health overall remains stable and strong, allocation target away from Treasuries for fixed income section for this whole year has been achieved as of today. Equities section built up will be done at a slower pace and will see higher pace from September onwards.
2. From now on position buildup in fixed income will only be done with new fund flow adjusting it for % allocation.
3. The portfolio experienced total of 3 down days this month.
4. No new money was added to the portfolio as the plan till September is to manage and re-balance existing capital around/away from treasuries.
5. The portfolio diversified away from Treasuries to fixed income with long term aspects of capital appreciation in mind.
6. My personal outlook for this year has a mild correction compared to May 2024 outlook i.e. rate cuts to arrive in Q4 2024 – Q1 2025, current mild recession is worsening as the economic indicators across the board are showcasing.

Graph of the month:

Source: Leading Economic Indicator (LEI) index compared to GDP

This was the end of the month view of the economy in May which has worsened further in the month of June, the indicator would have dipped further if not for the back to back inflated Government generated employment numbers, once that shenanigan stops (which I highly doubt would happen this year) Fed may be forced to re-classify the current era as a “mild” or “artificial” recession in retrospect, maybe few years down the line or may be never, one can only wish.

I think the worse is yet to come for the economy, unraveling of commercial property loans has already began across the country which may pick up pace in coming months putting more stress on the financial institutions, so will be manufacturing which will eventually force Fed to fast track the rate-cuts.

Allocation Target

EOM June 2024

No change has been done in the allocation targets since May.

No change has been done in the leverage/hedging rules since May.

This month showed a consistent price improvement in fixed income as well as equities section of the portfolio. The highest performance improvement throughout this month has been dominated by Muni Bond ETFs.

The performance has been consistent throughout this month with very less volatility, most of the volatility has been dampened by the T-Bills and muni bond ETFs. The portfolio encountered 3 down day since end of May, compared to S&P which had 9 down days. Overall appreciation in S&P has been 3.5% since June 1st while the portfolio trails at 0.68%.

1 Yr Return Since Inception

Portfolio vs SPBDUB3T

Portfolio vs CPI

I have changed my charting over to OSXs Numbers app to capture more beautiful images then what can be offered by Google Sheets.

Additions/Enhancements

The largest addition and enhancements this month were all done in fixed income section, some of them are added with long term horizon while others are for short term enhancement of portfolio yield.

Addition of Intermediate Government bond ETFs and enhancement of Muni Bond ETF position is done with the expectation of incoming rate cuts in next year and appreciation of NAVs for them. Other notable enhancements are done in HYGH, FCT and SEIX as they offer better Sharpe ratio and lower standard deviations of returns. FCT though is turning into a more and more volatile investment throughout this month and I might revisit my decision of holding it for a longer period.

While addition of Pimco Dynamic Income (PDI) is done to achieve a short term yield enhancement for the portfolio, the reason being UNII report of this fund. The fund is distributing more capital than the income being generated by the fund and may not be healthy for a long term prospects, however we will see how it pans out over this year before taking a call for its exclusion.

Individual Performance

This month I also kept track of individual positions and their performance throughout the month to capture their performance and to also gain insights into individual sectors for example DNP is currently a very good signal provider to me about the macro economic trends as showcased in its performance throughout the month as back to back economic data got released. While the opposite was true for Muni Bonds which started their rally after a small dip in the last week of May.

The median appreciation for all the positions in the portfolio stands at 0.3%, below graph shows the aggregate of all the positions held in the portfolio and their price performance throughout the month on actual cost basis (cost-basis adjusted for dividend reinvestment).

The current yearly dividend yield of the non-treasury portfolio stands at 7% in which 30% of the yield is Federal and State tax exempted Muni bond ETF income.

That’s it for this month, we will meet now at the end of July with possibly more re-adjustment and portfolio balancing. I will start adding some more income-buffer series First Trust Series to get more exposure to SPY, I will also continue to build up my JP Morgan Hedged Equity position to also gain equity exposure, both of them though will be done at a slower pace as my own current expectation for equities in coming months is bleak, if I am proven wrong the addition will be done at a higher pace 🙂