Doogles' Q4 2024 Portfolio Update [aka Peering Over the Edge]

The content of this post, or any post on Skippy and Doogles Talk Investing, is for informational purposes only and does not represent investment advice. You should do your own research before using any of the information that we share, and especially before investing.

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Are we there yet?

2024 was a boring year, until it wasn’t. Overall it reminded me a lot of 2021, and we are again flirting with the idea of the market turning toward the bad place…

…but for now, glory! In aggregate, the market is looking up and to the right. Analysts are predicting the S&P 500 to go to the moon, DOGE is going to clean up the government’s balance sheet, the economy is booming, etc, etc.

What narrative you believe, the good news is that the market is still looking for reasons to go up. It’s still optimistic, desperately searching for positivity. And since short-term market performance is driven by narrative, this might just bode well for us in the near term.

However, many signs are pointing toward a plateau, if not getting closer to the next peak. Doesn’t seem like we’re there yet, but we’re getting closer.

None of what I’m about to say is predictive, but it’s worth a little mental bandwidth to understand where we sit compared to history. A few things I’m considering:

• Warren Buffett is hoarding A LOT of cash. The last couple times he had this high a percentage of Berkshire’s assets in cash he was roughly 12-18 months ahead of the next market fall. Here’s a graph from the Wall Street Journal.

• My personal froth algorithm is saying that if we continue at the current market pace, we’re not to far away from a peak — looking similar to the markets of 1972, 1986, 1998/99, and 2007.

• The economy in aggregate is looking strong(ish), but it’s showing some real weak signs when you break it down into component parts. The chart below from Bloomberg showing where consumer spending is coming from is pretty fascinating — a higher and higher percentage of the “strong retail spending” that we’re seeing are coming from higher income individuals.

• And take a read through this Politico piece for an interesting take on the current state of unemployment.

There’s more, but that’s a flavor. Again, nothing here is predictive, but use it as mental fodder if you so please. I remain invested, and concentrated, so quite risk-on. But always good to watch the signs. All we can do is wait! 🤷🏽‍♂️

The usual context setting

My portfolio is primarily based on a Long Trend Momentum model that I created called Farfin. You can learn more about Farfin here. In addition, I will usually also have a relatively small investment in broad market ETFs, concentrated mostly in the Vanguard Total Stock Market Index ETF (VTI)¹.

The combination of these typically results in my investments based on Farfin being 90%+ of my portfolio. However, I will opportunistically pick up other stocks when the market calls for it. As of the end of Q4 2024, my portfolio was roughly an 85%/15% split between Farfin and non-Farfin, respectively.

Most of this post will look at the combined portfolio, but I do highlight Farfin performance specifically in the “High level quarter summary” section.

High level quarter summary

• Results²: The overall portfolio was up +24.3% for the quarter and +31.9% for the year. Told you that we’re a fourth quarter team!

• Market Results: As a reference point, the market (VTI) was up +2.7% for the quarter and up +23.8% for the year. Nice try, Mr. Market. Maybe next year.

• Buys: I picked up one stock in Q4 — XP, Inc., a Brazilian financial services company.

• Sells: I got out of SolarEdge and Dollar General. I have a feeling that I may be back in Dollar General at some point, but now isn’t the time. Both of these sells were pretty painful, but I shall persevere!

  • SolarEdge (SEDG): -82.4% total return

  • Dollar General (DG): -57.4% total return

• Top Holdings: Broadcom remains DOMINANT. It’s wild to watch this stock continue to fly. Here’s the full top 5 at the end of the quarter:

  • Broadcom (AVGO): 59.6%

  • DexCom (DXCM): 14.4%

  • Hubspot (HUBS): 6.9%

  • Twilio (TWLO): 3.3%

  • EPAM Systems (EPAM): 2.2%

  • Top 10 holdings cumulatively: 94.1%

Below is a pie chart of my top 10 holdings for those that enjoy visuals

Farfin-specific summary

Since it’s the end of the year, I’m going to take a little space to give a summary of Farfin’s performance specifically (reminder that Farfin is the model that dictates the bulk of my portfolio investments).

Below is a quick look at Farfin’s 1 year, 3 year, 5 year and 10 year performance (CAGR) vs. the market

I expect Farfin to outperform the market roughly 60-70% of the time, and it did just that in 2024. Below is the year-by-year breakdown of Farfin vs. Market over the last decade (blue is Farfin, red is the Market)

Lowlights and Highlights

Lowlights

I wish it weren’t so, but apparently everything can’t always go up and up and up. Here are the stocks (by sector) that made me the most grumpy last quarter.

Let’s cover the Brazilian stocks first 🇧🇷

• StoneCo Ltd. (STNE): -29.2%
  Ouch. Again, StoneCo?? Really?!?! StoneCo has been a common staple on the lowlight list…getting absolutely wrecked this quarter, dropping nearly -30%. The Brazilian fintech firm had a brutal year, with a -55.8% YTD return. But I’m holding, still bullish on this stock, and Brazil overall.

• XP Inc. (XP): -12.77%
  Another Brazilian fintech stock in the red. This was a new pickup for the quarter…I thought that StoneCo could use a little company. Welcome to the party! 🫡

Next up, energy-related investments ⚡

• Carrier Global Corp. (CARR): -14.7%
  HVAC giant Carrier cooled off (pun intended…I will never cease with the HVAC puns, and they will never get old) with a -14.7% drop. This stock had been heating up (yep, again!) earlier in the year, so a little breather is ok I guess.

• NextEra Energy Inc. (NEE): -14.6%
  Down nearly -15% for the quarter, but still up 20.7% YTD. Investors are contemplating the future of long-term green energy investments and taking caution. But in the long run, I still think NextEra should be a solid bet.

Here are the 5 bottom feeders for the quarter (full year returns in parentheses):

• StoneCo Ltd. (STNE): -29.2% (-55.8%)

• Carrier Global Corp. (CARR): -14.7% (+19.5%)

• NextEra Energy Inc. (NEE): -14.6% (+20.7%)

• United Rentals, Inc. (URI): -12.8% (+24.0%)

• XP Inc. (XP): -12.8% (-12.8%)

Highlights

Now onto the good stuff!

I just gotta start by talking about Broadcom. If ever you want to see what a late stage surge looks like for a stock, Broadcom’s December 2024 performance should be your guide.

Broadcom was up nearly +110% last year, making the S&P 500 look sluggish. I don’t know how much more juice there is left to squeeze, but hopefully it’s at least a little bit 🍋

Twilio also had an absolutely stellar quarter, rocketing up nearly +66%. Seems like investors are finally giving it the love it deserves. It's a huge comeback from its rougher patches earlier in the year. Keep on keeping on, Twilio!

Here’s the full top 5 quarterly best performer list (full year returns in parentheses):

• Twilio Inc. (TWLO): +65.7% (+42.5%)

• Broadcom Inc. (AVGO): +34.4% (+109.9%)

• HubSpot Inc. (HUBS): +31.1% (+20.0%)

• EPAM Systems Inc. (EPAM): +17.5% (-21.4%)

• Dexcom Inc. (DXCM): +16.0% (-37.3%)

Looking to the future

• Overall: The market is still in a bullish stance and so there I stand. But I think we’re getting a lot closer to turning the other way. Can’t predict these things, but it sure is feeling that way.

• To sell: I’m still bullish on NextEra Energy, but I’m watching the Trump administration’s position on energy closely, so this one’s on the radar. I’m also keeping an eye on Twilio — likely still a hold, but if it continues to rise at this rate I’ll at least consider trimming.

• To buy: I’m watching Brazil like a hawk. This might include increasing my stake in StoneCo and XP, but it at least means buying the market overall (e.g., a Brazilian market ETF).

Oh, and if interested, you can see my whole end of Q4 portfolio here — these are all my holdings, along with performance for the quarter. Enjoy!

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The content of this post, or any post on Skippy and Doogles Talk Investing, is for informational purposes only and does not represent investment advice. You should do your own research before using any of the information that we share, and especially before investing.

1. Throughout this and other posts, when I refer to a stock’s performance relative to “the market”, I’m using the Vanguard Total Stock Market Index ETF (VTI) as the proxy for “the market.”

2. All of my returns are calculated using time-weighted returns.