Year-End 2021 Core Portfolio Investment Update: Slow Moving Market Storm

The investment landscape in the second half of 2021 delivered a mix of expected moves and some real surprises. My investment update reflects this mix of opportunities and the continued market schizophrenia, ebbing liquidity and intermittent asset price gyrations.

The same can be said of the whole global economy, with its sickly internals. Between inflation, supply chain issues and continued pandemic factors, it’s been a convulsive mess; unraveling before our eyes. Like a slow moving, market storm. And if the first days of January are any indication, the new year may be more like an economic super typhoon.

Year-End 2021 Core Portfolio Investment Update - J Paul Hendricks - Slow Moving Market Storm

Performance Summary

I manage my portfolio as a collection of sub-strategies or themes, including both U.S. and some international holdings, each with their own risk profile, return expectation, time frames, etc. And these also have benchmark trackers that are convenient barometers to measure against.

You are reading my latest investment update. After reading below you can also review my prior investment report.

But ultimately my goal (and probably yours too) is to grow my overall net worth. So, since overall U.S. market performance is the global high bar and where I have most of my money, the broad market index is also how I gauge my own investment performance and progress.

Here are some summary notes on my year-end investment performance.

Capital Markets Investment Performance

By most measures, my overall equities and derivatives investment performance for 2021 was pretty solid. I just about beat the returns of the overall market by 2x. Given how diversified my investments are across many smaller positions, I’m pleased with the outcome.

2021 Realized Rtn 2021 Unrealized Rtn S&P 500 (VOO) U.S. Total Market (VTI)
41.0% 50.5% 28.66% 25.72%

NOTE: I seek exposure to global markets (international stocks) but focus on North America, and hold fairly diffuse (not concentrated) positions. As such, I use the CRSP U.S. Total Market Index (~4,000 large, small and micro cap U.S. equities) as benchmark, and also show S&P 500 for reference.

I have ended the year with significant cash (46.5%) in reserve. This seemingly excessive amount is the result of numerous exited positions taken off in the last ~2 months, and some will be redeployed soon. Also, I had plenty of stumbles and fumbles this year, so I share lots of gory details below.

Investing Self-Improvement

My objectives for the coming year reflect the improvements I seek to make as an investor (read: the mistakes I’ve made). Some of these are…

  • Take profits more aggressively (cash out more and do it sooner)
  • Have more consistent stop loss discipline (especially for speculative plays)
  • Consolidate more capital into fewer investments
  • Generate more income from parked (idle) capital
  • Reallocate proceeds from public markets to private and business ventures

Top 10 Holdings

These top 10 (+1) holdings constitute ~46% of total invested capital as of YE 2021. This list at the lower end has changed repeatedly throughout the year, and I pared back and took profits on a number of these late in the year.

Stock Company Position Chg Notes
TSLA Tesla, Inc. 474.1% Innovative Tech; EV/Green Tech
GS The Goldman Sachs Group, Inc. 256.1% Finance; Banking & Brokerage
ED Consolidated Edison, Inc. 6.0% Income; Defensive
SCHW The Charles Schwab Corporation 99.1% Finance; Banking & Brokerage
SQ Block, Inc. 202.4% Innovative Tech; Payment Network
HIPS GraniteShares HIPS US High Income ETF 0.9% Income; Pass-Through
IIPR Innovative Industrial Properties, Inc. 310.5% Income; Cannabis
MAXR Maxar Technologies Inc. 170.7% Innovative Tech; Space Infra
INDA iShares MSCI India ETF 92.9% Emerging Markets; Ex-China
DTSRF Ether Capital Corporation 189.7% Counter-Trend Hedge; Crypto
PHYS Sprott Physical Gold Trust -3.6% Counter-Trend Hedge; Defensive

Some of these are discussed further on in this article. Here are a few quick notes on others.

As noted above, I’ll likely add to the income-generating holdings. In particular, GraniteShares HIPS US High Income ETF ($HIPS) was a high yield experiment. As the market went through major rotations over the last 12+ months, I expected boosted performance. I also liked that it included business development companies (BDCs) in its holdings. It definitely has yield, but the effective expenses are too high, and I plan to move these funds elsewhere (see Other Investment Strategies below).

My gold exposure continues to languish, but there are strong signs of life in this corner, and I remain comfortable with my Sprott Physical Gold Trust ($PHYS) position.

…with real inflation a real thing, it’s important to mobilize capital, as opportunities abound and idle money will lose value over time.

Maxar Technologies ($MAXR) has been the anchor position in my space infrastructure folio. I have taken chips off the table but will re-add if it falls far enough (it hasn’t yet). It’s my other holdings in this segment that have fallen hard (and that I had larger positions in). See A Bountiful Loss Harvest below.

Also, I am over-exposed to the finance space. While banking and brokerage tend to be good all-weather holdings, and these will do well in the higher interest environment, I plan to move capital into more defensive names as the year progresses, hence my profit-taking in $GS (discussed below).

Following I cover some positions in depth and briefs, losers and losses taken, shifting strategies and investment focus, and general outlook on market opportunities.

Public Market Investments

The overall theme over the last two quarters was profit-taking and cash raising, alongside selective position adds. Most broad market dips have been fairly shallow but in many sectors there have been dramatic draw-downs.

Deteriorating market internals have led to numerous losses (mostly on smaller, speculative positions). But with volatility also comes opportunity.

Some Position Updates

Here are some deep-dives on a few positions.

Over-Weight Banks & Brokerage (Selling Goldman Sachs)

I have held an outsized position in Goldman Sachs ($GS) for a long time, which I amassed during my ~10 years at the bank. Despite my personal feelings about the industry and the tainted role that centralized, big finance plays in the world, Goldman is undoubtedly best in class for what they do.

This, and a very low cost basis, has kept me over-weighted in GS (and finance/banking in general). But a redeployment of some of this capital into other sectors and opportunities was overdue.

In early September I decided to trim 25% of these shares, and exited at 416.70, just shy of the (then) all time highs. I set my limit price based on the previous high and some retracement guesstimates. And the stock slowly fell and languished under 410. Then on 9/14, prior to market open, GS announced that they were replacing their CFO and this had a bizarre impact on the stock.

The previous close was 409.26 and in the first 20 minutes it hit 417, only to fall back to 410 just 10 minutes later and was trading around 403 by mid-afternoon. On the 15 minute chart (below) it’s easy to see what a big intraday move this was for this stock. I’ll take credit for my limit price placement, set near clear resistance, but I got lucky with this sudden price move.

GS 15M 2021 Core Portfolio Investment Update

In the days following this trade the stock fell and it would be natural to feel pretty good about my decision. But then GS totally crushed its Q3 earnings, announced in October. Despite the broader market weakness, the banks remained strong (mostly on inflation fears) and GS is usually at the front of the pack.

So I was not surprised to see them continue to outperform. And, come November, the stock crawled back again and hung around my previous sell price (see the daily chart below). GS then broke out again, blasting through my level and breaching 426, before finally falling back. In the chart below I also show the first few days of January, with a hard bond-market based upward spike followed by a Fed-driven failure (Nasdaq fell 3.34% on Jan 5th).

GS 1D 2021 Core Portfolio Investment Update

All the same, I’d been over-allocated to the sector and this stock for too long. I chose to cash in some chips and did so near the highs. Moral of the story: Keep your eyes on the road (ahead). Try to make good choices, well executed and then move on.

Taking Profit on Tesla, Relief or Regret?

Tesla ($TSLA) had been in a narrow range since late May. It was in a shallow uptrend throughout the year but as it approached previous all time highs, I decided to take some profits. I put a sell order well above the market (at the time), to lighten my position by about 10%.

There was lots of buzz going into Q3 earnings which finally put the stock in the zone. But, as with some other stocks, Tesla has a habit of selling off after earnings announcements, whether the news is good or bad.

A few days before earnings my limit was hit at $841.50, and the stock closed at $843.03, near the highs of the day. As seen in the chart below, it gapped up the next day, and on October 20 $TSLA crushed earnings targets and blew past $900.

TSLA 2021 Core Portfolio Investment Update

But the stock really took off two days later with the Hertz announcement of a 100,000 car order from Tesla. The massive gap that resulted has been filled, but $TSLA remains decisively over $1000. And all this happened while Elon was on his selling spree (liquidating stock for an imminent tax bill).

I have taken profits and re-added to this position multiple times over the years, and will likely continue doing so. I’m not planning to cash out more shares in the near to mid-term, unless the stock breaks out into a much higher range.

Am I sorry I took my profits in the mid-800s? Not as much as I am happy for how well the rest of my position has done. It’s exciting and validating, and reconfirms my long term commitment to the company and the sector.

Cannabis Folio Update

Canna has had a wild ride over the last year with AdvisorShares Pure US Cannabis ETF ($MSOS) as a proxy losing ~54% off its highs (and an ~85% retracement of the full move). And much of that loss was in Q3. But the underlying fundamentals are still strong for long term investors (which I am).

As of year-end 2021, my cannabis niche segment is overall still well in the green (pun intended).

Symbol Company Name Total Chg % Alloc %
IIPR Innovative Industrial Properties, Inc. 310.54% 38.0%
YOLO AdvisorShares Pure Cannabis ETF -14.59% 26.1%
GTBIF Green Thumb Industries Inc. 218.39% 14.2%
TCNNF Trulieve Cannabis Corp. 28.44% 6.3%
CRLBF Cresco Labs Inc. 12.67% 5.4%
GRWG GrowGeneration Corp. -4.40% 5.2%
NWVCF EnWave Corporation -1.28% 3.1%
SNDL Sundial Growers Inc. -47.45% 0.9%
CWBHF Charlotte’s Web Holdings, Inc. -73.16% 0.8%

The aforementioned $MSOS (the obvious benchmark in this space) ended the year down, -29.89%. While this folio outperformed, it was also lower for full year 2021 (off the sector’s strong Q1 performance). But I’ve been holding most of these for much longer; overall it ended up, +48.54%.

Of the 9 holdings in this strategy 5 are in the red. Yet the worst performers are also my smallest positions. In contrast, two of my three largest holdings are the best performers by a long way. Innovative Industrial Properties ($IIPR) was best; up over 310% at year-end. I have taken profit on this position multiple times, even as this Cannabis REIT continues to generate significant income. The other is Green Thumb Industries ($GTBIF), ending up over 218%. This is like Home Depot for the cannabis industry.

The weak link at the top is AdvisorShares Cannabis ETF ($YOLO), which ended the year at $13.00, down nearly 59% off its highs. I am obviously feeling some of that pain. In mid-November I put an order in to exit some of the position but the stock never reached my price. Hmm (see “stop loss” above). And in the first days of January this sector took a major hit, along with the rest of the market, so I am keeping an eye on the whole lot. Updates to follow.

Holdings Highlights/Lowlights

Here are a few position quick takes that might be of interest.

Oddballs & Stand-Outs

I was a longtime (and happy) user of Slack ($WORK) and held the stock since shortly after the IPO. I had high hopes for the company. But it seems that fear of MS Teams scared them into an acquisition (suddenly bought by Salesforce). I was already a holder of $CRM but the result was the underwhelming end of a too short journey.

Asana ($ASAN) is another similar business delivering very different results. This has been an unexpected out performer. Perhaps “absolute rocket ship” is a better description. I use (and love) the product so it was a natural addition to my Work Redefined thematic portfolio.

In mid-November, while many other growth stocks were falling, Asana went through the roof, topped out at $174.79 (I am in at $25.13). The stock ended the year at $74.55; frankly the $65-$75 zone would be a healthy consolidation level. We’ll see.

Digital publishing and ad tech is a high conviction segment of my portfolio. There are a few large companies in the space but many interesting small and medium-sized players. One of those was Leaf Group Ltd. ($LEAF), which managed various lifestyle and wellness-oriented web properties (Livestrong.com, etc). I put on in late October 2020 and on June 14 it was acquired in an all-cash deal for $8.50 (a ~60% return in less than 8 months).

The acquirer, Graham Holdings Company ($GHC), owns some interesting assets but it’s such a mixed bag of businesses that it wouldn’t work as part of this portfolio. Thanks for the cash, though!

When she says “we are not in a bubble” it’s important to remember that Cathie Wood’s investment horizon is probably longer than yours.

Regulations Happen: SEC Rule 15c2-11 Securities Restrictions

Podcasting is an interesting space. It’s unquestionably early days and growing fast. And RSS was a form of decentralization long before crypto. Also, there are many tech deficiencies which, together with the rest, means it’s ripe for innovation (and investing).

Liberated Syndication ($LSYN) hits all the right notes. It also put itself in the penalty box. On 09/18/21 I got an ominous message from Schwab saying that an open order had been canceled (but it didn’t say which one). It was $LSYN; I had a resting buy order below the market (adding to my position). Turns out, this stock was one of ~2000 other names that was effectively suspended from regular trading.

SEC Rule 15c2-11 went into effect on 09/28/21 and forces market makers to stop quoting any OTC names that are not in good standing wrt their regulatory filings. As such, all brokers stopped allowing buy orders (sell closing only), because no market makers means no liquidity. And you can see how the chart changed after that date.

LSYN 2021 Core Portfolio Investment Update

Following this, I contacted the Liberated Syndication investor relations team (and received no response). Then on October 4th the company announced that they have a new CFO (likely not a coincidence). So, I gave them some time and more recently noted that they engaged an outside investor relations team (maybe not a bad idea). I did get a reply from them in early Jan, and they (at least) acknowledged that the company is working on a resolution, but no ETA.

Why would I keep holding? I really like the company and the overall business outlook. But I have my limits. I will follow up in my next update.

Late last year I took advantage of the dips and year-end crush in some sectors to start adding back shares that I had taken profits on higher up. In some cases I added to existing positions despite the broader market weakness.

My Ride on the ARK

I am far from a Cathie Wood fanatic. I think that the Ark Funds ‘all in’ approach faces serious challenges in a market with increased interest rates and risk-off volatility. When she says we are not in a bubble it’s important to remember that Cathie Wood’s investment horizon is probably longer than yours. But I’m a fan of her extreme transparency and share her general positive outlook for innovation stocks in the long term.

While most of the ARK funds are not a fit for me, I have been in the Autonomous Technology & Robotics ETF ($ARKQ) since early March, 2020. I initiated a few days before the bottom and added as the markets continued recovering. As previously noted, I have also taken profits on this position quite a bit higher up. Robotics and automation is a thematic segment I have done work on and $ARKQ offered good exposure across this niche. And it did so with almost no Chinese holdings. China and Chinese companies are a no-go in my equities portfolio and investments generally.

So I have been pleased with $ARKQ, and it’s outperformed all the other ARK funds to boot.

ARKQ 2021 Core Portfolio Investment Update

But there’s a high probability that I will exit my remaining position. The holdings of $ARKQ are most likely going lower for longer before turning higher again. And I doubt they will go back higher in the next ~30 days so I can always get back in. See more on this in the loss harvesting note below.

Re-Entry on the Dip & a Black Friday Sale

Late last year I took advantage of the dips and year-end crush in some sectors to start adding back shares that I had taken profits on higher up. In some cases I added to existing positions despite the broader market weakness. In retrospect, I could have skipped the November sale and bought lower in December but it’s OK as I usually scale in (and out). Here is a sampling of such positions.

I lightened up on Pinterest ($PINS) earlier in the year at $84.50 and started getting back in, repurchasing the shares at $50.25 on October 4. Then on October 20 news hit the market that Paypal was exploring an acquisition at a $70 share price. The story passed quickly (when Pinterest passed on the offer, apparently) and the price dropped back in the days after. And then continued to fall, accelerating along with other growth stocks. It ended December at $36.35 (but still up 30%+ vs basis). I’ll continue rebuilding the position at lower levels, but the $33 zone is the last decent support before $25, so I reserve the right to change my mind (as everyone should).

There’s a lot that can be written about (SPACs) and my views have evolved a lot over the last 2 years. But, basically, they are like potluck…or scratch-offs. Sometimes you win, or not.

I am a big fan of Shift Technologies ($SFT) in both the near and long term. I added 25% to my position at $6.30. In retrospect I acted too soon. With inflation fears and the very real supply chain issues going hard on the auto market and pushing up used car prices, I would expect it to at least outperform its counterparts in the space. But the stock can’t catch a break (or a bid), and ended the year at $3.41, leaving me down ~57%. It remains a relatively small position overall and if it gets to $2.50 it would scream ‘deep value’ (and I would have to add more).

Jumia ($JMIA) is another that I rode all the way up, and have taken profits on, most recently at $49.85. The long term African growth and ecom play will surely see more ups and down in the future. In mid-November it dipped on higher Q3 losses (despite higher active user count). The broader market rotation didn’t help either. I bought back those shares (and then some) at $15.90 and it ended the year at $11.40, leaving me in the red by ~28%. Watch and wait.

Stumbles, Fumbles & Fails

Much of what I’ve written above might seem like losses or fails, but I haven’t actually gotten into the bad stuff yet. 🙂 The common thread through most of my losers is: SPAC. When I put on positions in pre-merger SPACs they are mini sized, and generally an effort to invest alongside the management company. There’s a lot that can be written about this and my views have evolved a lot over the last 2 years. But, basically, they are like potluck…or scratch-offs. Sometimes you win, or not.

2021 Investment Update - All My Losses
Funny But True… from r/WallStBets

Some of my biggest winners this year were SPACs, but I should have had the discipline to cut the losers sooner. In aggregate, I saw a strong, positive return from this particular casino game. But the simple lesson, painfully learned here is: always have resting stop loss orders in on low conviction, speculative plays (which all SPACs start as).

Laggers & Losers

Follow up on Clover Health ($CLOV)… If you read my last update you will recall that I took a wild ride with those precocious primates of Wall Street Bets, via a small position I’d been lugging around in $CLOV. Well, I got my money back plus some, but in the dog days of July the stock actually dropped back down even further than before the pump, into the low 10s and has been in a death spiral ever since, ending the year at $3.72. My prediction for a second spike in the relative near term was proved wrong. Lesson: don’t laugh away the gift horse; when someone offers gold prices for lead, take it.

I must be more disciplined about taking out the trash (trades) and, as the saying goes, ‘killing my darlings’.

Momentus Inc. ($MNTS) is, ostensibly, a “last mile” space logistics company. Think about the last steps of deploying satellites after they have reached orbit. I bought into the position after the target was announced but before the de-spacing (and enough due diligence of my own).

There were  issues with both the CEO and product (reportedly). The CEO should have never been at the helm of a public company (Google it) and the product was apparently more under-cooked than suggested. And the SPAC management team had apparently targeted a cannabis investment originally. And they were desperate to close a deal before the time-down (and cut corners). AND I invested.

Heading into Q3 the CEO was replaced and the company de-SPACed and things stabilized. But the CEO change doesn’t fix the product issues, and I was doing Evergrande-inspired house cleaning, so I exited at $11.35 (vs $10.05 basis) for a ~14% gain. Lesson: buy smarter and when you don’t, exit faster.

At the time it would have seemed absurd to think anyone could compete with Peloton. Oh, how things can turn. Unfortunately, the lock-down boost to business is waning and the acquisition costs weighed heavily on Q3 earnings.

Another potluck SPAC surprise was Beachbody $BODY. It’s not a perfect fit into any one theme but I really like this company. It had a long and solid track record before going public, and has fairly diversified revenue streams primarily focused on consumer nutrition products. Around the SPAC merger it also made an acquisition of a Peloton competitor, putting the historically IRL-based product company in the digital content and subscription business. There’s more to the story but I like the diversification and management team.

At the time it would have seemed absurd to think anyone could compete with Peloton. Oh, how things can turn. Unfortunately, the lock-down boost to business is waning and the acquisition costs weighed heavily on Q3 earnings.

I was in at a cost basis of $11.49 but heading into late November the stock dropped hard. Despite my strong interest in the company, I should have taken the L and then gotten in lower down. But I didn’t. Instead, I added more at $2.75. $BODY ended the year at $2.37. Lesson: kill your darlings (when you have to).

Biggest Loser

This was actually only the third biggest loser in percent terms (yes, more loss porn below). Yet another potluck SPAC was a mini position in Chamath Palihapitiya’s vehicle that ended up as per-mile insurance provider Metromile ($MILE). As I have written previously, I generally steer clear of insurance plays. While the tech is interesting the company has barely any live operations (and therefore revenue). As such, the stock price has gone only one direction, down.

Enter Lemonade ($LMND), another insurance company that has its own challenges. In early November they announced an agreement to acquire $MILE in an all-stock deal amounting to ~$200M or 1 share of Lemonade for every 19 shares of Metromile. This is a fire sale price that the investors behind $MILE must view as a terrible outcome. With the deal expected to close in Q1 of 2022 the $MILE price will remain in a death lock with Lemonade’s stock price, which sits near 52-week lows. Since I have no interest in owning $LMND I exited my position, at a 78% loss. Thank you very much.

I wouldn’t normally just barf up everything in a list like this, but for my own accountability and (hopefully) your information, I’m sharing it all with you.

A Bountiful Loss Harvest

You might want to get a coffee. I wouldn’t normally just barf up everything in a list like this, but for my own accountability and (hopefully) your information, I’m sharing it all with you. This was my tax loss harvest, and I closed out these positions in the last few days of December.

Most of these were starter-sized, half-sized or sample sized quantities. And all but one were SPACs. : ) I got into a bunch of these willingly, post-target announcement (the lidar/vision tech names, and space infra stocks), but a few were potluck. Additional notes follow the table.

Sym Name Loss % Notes
SPIR Spire Global, Inc. -63.41% Space tech & infrastructure
CPSH CPS Technologies Corporation -59.60% Space tech & infrastructure
ASTR Astra Space, Inc. -43.38% Space tech & infrastructure
OUST Ouster, Inc. -54.27% Lidar/vision tech play
INVZ Innoviz Technologies Ltd. -50.00% Lidar/vision tech, solid-state
LIDR AEye, Inc. -49.82% Lidar/vision tech play
AEVA Aeva Technologies, Inc. -43.85% Lidar/vision tech, solid-state
TLMD SOC Telemed, Inc. -87.09% Telemed
TMC TMC the metals company Inc. -81.46% Battery-grade metals exploration rights
ML MoneyLion Inc. -61.33% Consumer fintech
MKFG Markforged Holding Corporation -55.87% 3D printing
SDGR Schrödinger, Inc. -51.73% Biopharma software (picks/shovels)
ME 23andMe Holding Co. -39.55% DNA-tech
IPOD Social Capital Hedosophia IV -32.00% Chamath SPAC (search in prog)
IPOF Social Capital Hedosophia VI -28.69% Chamath SPAC (search in prog)
MIR Mirion Technologies, Inc. -27.02% ex-GS SPAC
CCV Churchill Capital Corp V -12.32% Churchill SPAC (search in prog)
PSTH Pershing Square Tontine Holdings -11.22% Bill Ackman’s silly SPAC
BTWN Bridgetown Holdings Limited -7.19% rumored Tokopedia tgt (Theil’s SPAC)

OK… I remain very interested in the lidar and vision tech area, and still hold anchor positions. Each of the 4 above were relatively small and are interesting in their own right. But they were all vulnerable for various reasons. So, I watch and selectively get back in later, as appropriate. Likewise, the space infrastructure names were hit hard, and these were larger positions (so they hurt the most). And, again, they are not going anywhere, and I plan to get back in to some of these at lower prices in time.

Clearly, I must be more disciplined about taking out the trash (trades) and, as the saying goes, ‘killing my darlings’.

Unlike most of these, I picked up Bridgetown Holdings ($BTWN) relatively late in the year, on news that Indonesian ecom giant Tokopedia was a potential target. When talks broke down I dumped my shares. When the trade isn’t working, get out.

Pershing Square ($PSTH) is Bill Ackman’s jumbo-sized wacky SPAC, which has struggled to find a friend, and has pushed the regulatory envelope to boot. I held it, hopefully, but out with the trash! Finally, props to telemed stinker SOC Telemed ($TLMD) for being the true biggest loser. Most of the rest were pre-deal or potluck SPACs that I held into and after deal announcement.

CLEARLY, I must be more disciplined about taking out the trash (trades) and, as the saying goes, ‘killing my darlings’. I use stop loss and trailing stop orders in certain cases. But these small story stock positions feel lower risk. Yet, as aggregate positions slowly decay, it’s death by a thousand cuts.

Defensive, Portfolio Hedging & Counter-Trend Trading

Stocks don’t always go up. Also, bad things happen. If you didn’t know, now you do. Here are some of the things I am doing to maintain a strong defense.

Infections, Supply Chains, Inflation, Oh My

With real inflation appearing in key areas of the economy and various macro factors in play the commodity supercycle seems to be shifting into a new phase. I have maintained my silver and gold position, eg Sprott Physical Gold Trust ($PHYS), even as they have gone against me the last few months. Heading into the new year they are coming back.

It’s not sexy but my third biggest holding, Consolidated Edison ($ED), is the defensive back of the team…

In concert, precious metals producers closed out the year strong. I have a standard size portion of Newmont Mining ($NEM); up 7% at year-end. I also have a smaller stake in Hecla Mining ($HL) that’s underperformed, ending down 32%.

MP Materials ($MP) is both a commodity/materials and a growth/tech play, and an important play in my book. It represents the American re-onshoring of a strategically critical resource (rare earths), and is a long term investment in both green tech and EVs. It’s a chunky portion of my portfolio and ended the year at $45.16 (vs my basis at $16.62), up ~170%.

It’s not sexy but my third biggest holding, Consolidated Edison ($ED), is the defensive back of the team, ending the year up 6%, but yielding 3.7% along the way.

Other Investment Strategies (Income, Vol Harvest, etc)

I did a bit of options writing (puts) on companies I like. If I want the stock at a lower level and I’m willing to keep the cash in wait, why not generate some extra yield while effectively having that buy limit below the market? But with volatility muted throughout the second half, juicy premiums were hard to find.

As noted previously, I plan to move out of GraniteShares HIPS US High Income ETF ($HIPS), which delivered a headline 8.20% yield last year, but at a hefty management price. I would move into a more predictable but still stable income ETF. The current front-runner is Amplify CWP Enhanced Dividend Income ETF ($DIVO) but TBD. The other income fund I have been in is WisdomTree U.S. Quality Dividend Growth Fund ($DGRW), which has generated a 1.78% yield, but also ended the year up 33.5% at $65.86 versus my basis of $49.30.

With real inflation a real thing, there is real risk of significant downside corrections over the coming months. But that also means it’s important to mobilize capital, as opportunities abound and idle money will lose value over time.

On a completely different note, I’ve been exploring the Paxos PAX Gold (PAXG) crypto asset. These physical gold-backed tokens are well-correlated to gold (see PAXG in yellow compared to $PHYS below).

But my interest is also in the staking opportunities, currently generating 4-8% interest. This might explain it’s slight premium over the gold trust. I go into all my crypto positions and alternative investments and more in the second part of my year-end 2021 investment update, Private & Alternatives Investment Update – Year-End 2021: Move Fast and Fractionalize.

PAXG_PHYS 2021 Core Portfolio Investment Update

OK, that’s it! I know, this was a really long update. And this was just some of the core portfolio, public markets investments! Starting with this update I’m breaking things out into two distinct articles (see my alternatives and private investment update in part 2). I will continue experimenting with formats and topics. And I’m open to suggestions so share them if you’ve got them. Until then!

 

Overall, I remain alert to sudden volatility and potentially severe downdrafts, and it’s essential that we continue monitoring for and taking action on opportunities.

With real inflation a real thing, there is real risk of significant downside corrections over the coming months. But that also means it’s important to mobilize capital, as opportunities abound and idle money will lose value over time.

Stay safe out there, but stay out there. And always try to stay on the right side of probabilities.