After a strong run into the final month of 2024, the stock market retreated some in December. It would have been very difficult to wipe out all the gains the market has posted this year. So, despite some losses in December, overall it was quite the positive year.
I’m certain that my Portfolio did not keep pace with the S&P 500 in 2024. With my underweighting in the Information Technology sector, my Portfolio just couldn’t keep up. The Magnificent 7 stocks were the place to be in 2024. While I do own one of them, Microsoft (MSFT), my position in it just isn’t big enough to drive my Portfolio performance on its own.
Still, it was a good year for my Portfolio. I suspect it will finish with a total return in the mid-to-upper teens. The S&P 500 looks to finish the year with a return north of 25%, including reinvested dividends.
The best-performing S&P 500 sectors in 2024 have been Communication Services, Information Technology and Consumer Discretionary. Each should finish with gains over 30%.
Most sectors posted gains over 10%. However, Real Estate, Energy and Healthcare were barely positive for 2024, and Materials will be the only sector to finish in the red (-2%).
Sadly, I didn’t get all my Portfolio holdings to the 0.5% target weighting I was hoping for by year’s end. I had 4 stocks that failed to exceed that level. Their negative performance in December didn’t help either. Ultimately, I’m working to get all holdings to a minimum 1% weighting, but that will take some serious time, as there are currently 25 stocks in my Portfolio that are under that 1% weighting.
In my Portfolio Thoughts post I’ll be discussing the following standard items…
- Price Movement – I’ll look at my top advancers and decliners in my Portfolio during the past month.
- Top 10 Review – I’ll update my Top 10 Portfolios stocks and how they changed rank this past month.
- Weightings – I’ll examine the sector weightings within my Portfolio and let you know where I’ve made progress with regard to getting into my preferred weighting ranges.
- Watch List – I’ll share which stocks I’m looking at as I prepare to invest my capital in the coming months.
Here are my Portfolio Thoughts for December 2024…
Price Movement
Note – my price changes cover closing prices from 11/25/24 to 12/27/24.
The ratio of my stock gains to stock declines was decidedly less than 1:1 in December. The ratio was worse than 1:6… just an ugly month all around. On top of that, most of the negative performers in December fell quite hard, leaving me with a pile a negative stocks with strong declines.
Of my 58 holdings, a mere 8 gained in price, while 50 declined. One of the 8 gainers was amazing, but otherwise there was too much red to overcome in December, and my Portfolio value reflected the poor performance.
Here were the stocks with the biggest moves to the upside and downside…
Of my 8 stocks that rose in price in December, one stock was clearly above all the rest. Its gain topped 46%! After that the gains were pretty unremarkable. No other stocks had a 10% upside move (the usual threshold I monitor for). I only had one other stock gain at least 5%. Gains were definitely hard to come by in the final month of 2024.
My top gainers for December were:
- Broadcom (AVGO), exploding 46.68%
- Main Street Capital (MAIN), rising 6.22%
- Microsoft (MSFT), advancing 2.80%
- Skyworks Solutions (SWKS), growing 2.52%
- Visa (V), climbing 1.75%
For the 2nd month in a row, there were no carryover stocks from the previous month. A totally new set of stocks graced the top gainers list this month.
I had 3 Information Technology stocks show up in my top gainers list (AVGO, MSFT, SWKS), with the other 2 being Financial stocks (MAIN, V).
AVGO just blew the roof off my gainers list with nearly a 50% gain. With the release of its earnings around the middle of the month, the AVGO CEO mentioned its AI chip opportunity is massive. Considering that AVGO was already my largest holding prior to December, you can only imagine the weighting it has in my Portfolio after December’s gains. More on this to come.
MAIN performed well this month, too. The stock traded sideways for more than the first half of December, but has been climbing since. MAIN has risen in price in each of the past 4 months.
After performing well in the first half of the month, MSFT has drifted lower since. However, it has managed to still remain positive for the month. For the year, MSFT has essentially been trading in the $400-$450 range.
SWKS hasn’t had the greatest year (posting a loss while plenty of other stocks posted gains), but December was kind to the stock. The gain this month broke a 4-month losing streak. SWKS was on my worst decliners list last month, so its turnaround this month was welcomed.
Lastly, there’s V. Another gain in December, albeit a small gain, has V rising in price for 5 consecutive months now.
Of my 50 stocks that fell in price, one posted a loss of more than 20%. Another dozen stocks retreated over 10%. Yet another 23 stocks declined by at least 5%. I have been seeing red everywhere in my Portfolio this month. Let’s hope this doesn’t carry over to 2025.
My worst decliners in December were…
- CVS Health (CVS), plummeting 25.95%
- Omnicom Group (OMC), tanking 17.31%
- UnitedHealth Group (UNH), sinking 15.82%
- Eastman Chemical (EMN), sliding 13.32%
- Fastenal (FAST), dropping 12.82%
As was the case with the gainers list, there were no carryover stocks from last month in the decliners list either.
Two stocks from the Healthcare sector made my top decliners list – CVS & UNH. Both are in the managed care space, where regulatory risks still exist even after the U.S. presidential election.
CVS got punished the most in December, sinking nearly 26%. The price decline for the year has eclipsed more than 43%! Ouch.
Early this month, OMC announced a stock-for-stock acquisition of Interpublic Group (IPG). When the acquisition closes in the 2nd half of 2025, OMC will be the largest advertising agency in the world. Unfortunately, investors didn’t like the news much, as shares of OMC dropped about 10% on the news and has drifted almost another 8% lower in the days that have followed.
Materials was the worst-performing S&P 500 sector in December, and my holdings reflect that. My three Materials stocks each declined by at least 11%, and EMN led them to the downside. EMN has given up almost all the gains it had managed in 2024.
Finally, there’s Industrials stock FAST. After rising about 25% from late June to late November, FAST gave up half those gain in a single month. Plenty of Industrials stocks got hammered in December in my Portfolio, but FAST was the worst of the bunch.
Note – a whopping 8 sectors in my Portfolio had all their holdings in the red this month. Here’s the laundry list: Industrials (9), Communication Services (5), Consumer Staples (5), Real Estate (4), Utilities (4), Consumer Discretionary (3), Materials (3) and Energy (2). A small gain from AbbVie (ABBV) helped my Healthcare sector avoid making this list, too.
Top 10 Review
Make it 3 consecutive months that all 10 stocks in my Top 10 have remained the same. It seems like this may be the case for a while given the current gap between my #10 and #11 stocks.
Even though the stocks in the Top 10 didn’t change, there was some shuffling of positions that took place. Six of the Top 10 changed places in the rankings. The biggest riser climbed a couple of spots while the biggest decliner moved a couple of spots in the opposite direction.
The top 2 stocks, Broadcom (AVGO) and Aflac (AFL), once again held their positions relative to last month.
AVGO seems to now have a lock on the #1 spot after the monster gain it posted in December. AVGO is now almost 10% of my Portfolio. I try to keep each stock below a 5% weighting, but I’ve let AVGO run, and run it has. AVGO is also more than twice the position size of AFL.
Despite losing close to 8.67% in December, AFL managed to hold on to the #2 spot in my rankings.
This brings me to the #3 and #4 spots, where RPM International (RPM) and Qualcomm (QCOM) switched places relative to last month. QCOM moved up to #3 even though it lost nearly 1% this past month. That’s because RPM lost more, about 11.5%, allowing QCOM to easily pass it by.
Holding steady in the #5 and #6 spots are a pair of my Financials, Visa (V) and BlackRock (BLK). Both managed small gains in December, which is more than I can say about the majority of my Portfolio.
Rising two spots to lay claim to #7 was ABBV. ABBV was my lone Healthcare stock in the green this month. It was only a gain of roughly 0.5%, but when everything else is moving down, the small gain looks more impressive.
Slipping a spot to #8 was Lowe’s Companies (LOW). LOW lost nearly 10% for the month. No wonder it dropped in my rankings.
PG dropped about 4.4% in price in December. However, that was enough to actually climb a spot in the rankings to #9.
Given that FAST fell over 12.8% this month, its fall of two spots in the rankings to #10 makes sense. FAST has a decent weighting cushion before it would be at risk of exiting the Top 10.
Sitting outside the Top 10, and with a good move up required to make it in, are JPMorgan Chase & Co. (JPM) and Union Pacific (UNP).
From the table above, my Top 10 holdings now comprise 42.66% of my Portfolio value. This is a huge increase of 2.38 percentage points compared to last month. The big gain from AVGO was the primary cause. Four of my Top 10 stocks finished with gains in December. Considering I only had 8 Portfolio stocks in the green this month, it’s surprising that half of them existed in my Top 10.
As for the dividend weighting of my Top 10, it finished the month at 29.36%. This is an increase of 0.29 percentage points compared to last month. The increase was due to the dividend raises from AFL and AVGO earlier this month. The dividend weighting of the other 8 stocks dropped marginally as other raises, and my new capital investment dollars, showed up outside the Top 10.
Weightings
In general, for the Sector Diversification, I target being within +/-3 percentage points of the sector weightings of the S&P 500. For the SuperSector Diversification, I target being within +/-5 percentage points.
The “Weight Diff.” column shows which sectors sit outside my preferred weighting ranges. If I’m overweight a sector, it’s shaded green. If I’m underweight a sector, it’s shaded red. If I’m within my target weighting range, then no shading exists.
Unfortunately, I’ve added another underweight sector since last month. It’s Communication Services. Each of my five holdings in that sector had negative returns in December, even though the corresponding S&P 500 sector was in the green.
The same thing happened in my Consumer Discretionary sector, and so now a sector in which I was slightly underweight has been pushed further out of range.
On a brighter note, my most severely underweight sector, Information Technology, had success in reducing its weighting difference. The big gain from AVGO in December helped me here.
As for my overweight sectors, I’ve transitioned from 4 overweight sectors to 3… just barely. My Healthcare sector just sneaked into my preferred weighting range. Sadly, that happened as a result of poor performance of my holdings relative to the S&P 500 sector (not the way I want to get it done). My weighting differences in Industrials and Materials got better for the same reason.
I had some stocks that posted gains in the Financials sector in December, but this only increased my weighting difference in that sector, making my position more overweight.
With the big gains from AVGO in December, Information Technology is once again my largest Portfolio sector (nearly 21%), with Financials slipping to 2nd biggest (almost 18%).
Healthcare remained my sector with the largest dividend weighting (just over 16.5%), but Financials aren’t too far behind (at about 15.7%).
As always, I’ll keep all my sector weightings in mind as I continue to adjust my Portfolio, and my watchlist.
Watch List
I didn’t make any purchases from my watchlist in December. I had plenty of stocks to choose from, and with stock prices declining you’d think something would have been bought. Well, something did get bought, but it just wasn’t on my radar leading into the month.
Let’s see what’s on my radar this month, as January may be the month I return to shopping from my watchlist.
Within my Portfolio, here are a few stocks that I’m watching for possible additions. I’ll be focusing mostly on my smaller positions that I’d like to see grow.
Hershey Co. (HSY) has crossed below the $172 level I was targeting last month and currently trades just below $170. Thus, a small additional buy isn’t out of the question.
McCormick & Co. (MKC) is currently my smallest holding. The stock didn’t drop too much in December. It’s trading around $76. I’m going to lower my target to $72 and see if the stock reaches that level.
After a price drop in December, Chevron (CVX) has nearly returned to the level at which I initiated my position. I’d like to add more at or below that $141 level.
My NNN REIT (NNN) position is my 3rd smallest and needs to get bigger as well. I’m still looking to buy 10 shares at a price below $41.38. This would lower my cost basis while bringing my share total above 100 shares. It would also get me to that minimum 0.5% Portfolio weighting I’m looking for. The stock currently trades below $41.
Medtronic (MDT) has fallen below my $85 target by quite a bit (trading under $80). I would like to find a way to add more of this stock which is currently my 12th smallest holding. I might consider trimming some of the CVS position and moving the sale proceeds into MDT.
With regard to some not-so-small positions of mine…
Nike (NKE) is still on my radar. NKE was last trading just below $76, but I’m still holding out for a price below $73.
Pepsico (PEP) has dropped to a P/E level (~18.5) where I was willing to make my last PEP purchase (May 2018). The stock is nearly at that ratio at $152, but I’ll see if I can get a price south of $150.
As for non-Portfolio stocks that I’m watching…
Elevance Health (ELV) is looking more interesting after dropping further in price in December. I was looking at a target price below $400 last month and it’s currently trading at $369. The managed care stocks were beaten down in December, including my UNH and CVS holdings. I might consider swapping a portion my CVS investment for one in ELV.
Zoetis (ZTS) is back on my radar after dropping in price over the past quarter. I’m targeting a price below $160 with the stock currently trading below $163.
In Communication Services, I was looking at Alphabet (GOOGL) and Meta Platforms (META) as possible replacements (in part or in full) for Omnicom Group (OMC). Unfortunately, OMC tanked a bit in December after agreeing to acquire IPG, while GOOGL and META performed better. Still, I’m keeping my eye on these two Mag Seven stocks for a possible entry point. I’ll continue to target GOOGL below $170 and META below $525.
Thoughts?
Are you looking for further stock market declines as we enter the new year? Or will the December pullback be short-lived? Please share your thoughts!