You are currently viewing Portfolio Update – December 2023

Portfolio Update – December 2023

Too long has passed since the last update was posted of my All Seasons Portfolio. This is mostly attributable to personal reasons, amplified by that Google Sheets suddenly stopped working for a significant number of ETFs in my portfolio, meaning that I would have needed to update daily prices manually – a cumbersome task. For instance, for this December 2023 update, I decided to make an effort an make a lot of manual data insertion, with it being a good time to summarize the year.

To remedy Google’s malfunction and get back up and running with the blog, I have been working on a migration to Excel 365, with support for automatic stock prices with the new STOCKHISTORY functionality. However, as many formulas in Google Sheets are not directly transferable, this has been a daunting challenge, but I have the last few weeks been able to make some progress.

Once completed, I will make the workbook available for downloading here on the blog, so that more can enjoy the fruits of it.

What else has kept me so busy? Two main things really. Firstly, I started a new job last summer, and as the new role differs from my previous one, the learning curve has required more time and energy and kept me from writing. Secondly, my long-term ambition is still to take part in structured learning to the advantage of both my professional role and as an investor, I enrolled in a couple of university courses in national economics this last fall. While this has been greatly rewarding, it too has necessitated its fair share of my time and energy, which I deem will translate into more valuable content here on the blog in the long run.

Well, that’s enough of personal news for now. The topic of this site is all-weather investing in general, not my personal outlet, but I trust the science in that sharing a few bits about myself forms a connection with you as a reader, hopefully further helping me sending across the message of the importance of risk parity investing and prudent risk management. And please do take comfort in knowing that I remain committed to the All Seasons Portfolio strategy, despite my radio silence.


Trade stocks, crypto and ETFs listed on 14 exchanges on eToro. You can copy my portfolio by searching for user Allseasonsport

But before we jump into looking at the portfolio performance, I just came across an article in Financial Times about “Chinese retail investors hit by big losses in ‘snowball’ derivatives” that I want to highlight from a financial literacy and risk taking standpoint. In short, a “snowball derivative” is a structured product, which promises high returns of around 15% over 2 years, IF a stock index (the Chinese CSI 500 in this case) remains in a set bound at the end of this period (between +3% and -20% in this particular case). In other words, it is a bet on low volatility (or “going short volatility”). As Chinese stocks have tumbled this past year on ever falling market confidence, many such derivatives are now facing large losses.

While such products have been around for a long time, and have faced criticism for almost as long, what struck me was the comment of one of the retail investors: “It’s not the right question to ask why we bought snowballs, but why the index is performing like this.”

This is where the article tangents an All Seasons Portfolio approach to investing. Namely, retail investors need to be aware that indexes (especially stock indexes) are not sources of certain return. There are numerous reasons why a stock index can fall by more than 20%, and most of them are not even logical. In the Chinese case, political risk, demographic risk, and structural risk from a failing property development sector are all valid causes for the index to decline. However, most large moves come from risks that are difficult to foresee, why portfolio concentration and dependence on one asset or asset class risks put the investor in a very difficult situation.

Hence, diversification and bet-sizing are all important factors in building resilient portfolios that help you avoid standard of living risk (that you need to worsen your standard of living as a consequence of financial losses). This is where the All Seasons Portfolio comes in handy, with risk parity allocation to all major macro environments.

We will begin the portfolio review with a table showing my monthly returns of my All Seasons Portfolios which I manage on three different platforms. As a reminder, you can copy my eToro portfolio by creating an account and searching for my user name “AllSeasonsPort”, and my KiwiTrader portfolio if you are trading from Sweden by creating an account.

To summarize the year, we end up in positive territory, with most of that owing to a great recovery in the last months, mainly driven by the market expecting rates to come down both by more and sooner than previously expected. For example, the US 10-year yield came down from a top of 4.98% in October to 3.86% by end of year. This has the greatest impact on treasury bonds and stocks, which both saw the greatest positive moves on this, driving the portfolios’ returns.

On the KiwiTrader portfolio, as this is traded in Swedish Krona, the last months saw weaker SEK returns, as the lower US interest rate expectations also weakened the US Dollar against other currencies, why the Krona appreciation offset the growth in the portfolio assets. Over the year, though, the currency impact was negligible, as the returns were similar when measuring in EUR or SEK.

While the core principles between all my portfolios are similar, as they are traded with difference brokers with different opportunities (available ETFs, fractional trading, leverage, etc.), the portfolios may differ slightly in allocations. You find all three depicted in the circle diagrams here below, and I am sure you recognize the theme of 30% stocks, 45-55% bonds, 15-20% commodities and gold, as suggested by Ray Dalio / Bridgewater Associates. All portfolios have, however, some additional allocation to alternative investments (volatility, real estate, insurance, carbon credits, cryptocurrencies, etc.).

And here below, you find the current allocations as at end of December 2023. All portfolios are, at the time being, rather close to their aimed weights. Note that in my eToro portfolio, I have removed my long-dollar allocation during the autumn ahead of the expected rate cutting cycle.

With that general part of this post behind us, let us now take a closer look at the June performance in isolation.

Here follows two charts of return contribution from each asset class for my portfolios traded on eToro (USD) and KiwiTrader (EUR). The main difference from these portfolios is described by currency effects this month, as EUR has gained versus USD, while also the asset exposures are slightly different (for example, floating rate notes are only available in the KiwiTrader portfolio, and are absent in the eToro portfolio). Additionally, the leverage component in my eToro portfolio amplifies the moves.

For December, Long-Term government bonds were the brightest shining star, as also long rates came down in the month on the falling rate expectations. On the down-side, commodities contributed with a bit of a drag on the back of an expectation of a slow-down, especially in China, where the property development sector has been a big purchaser of commodities in the past.

Equities too saw a decent month, also aided by the declines in interest rates (the discount rates). Momentum and Growth factors were among the best performers in December.

For this update, I replace the 1-month summaries of all three portfolios with just one chart for the full-year performance of my eToro portfolio. One key reason for this is the aforementioned breakdown of Google Sheets, making it too cumbersome to produce this for the two European portfolios, as it is mostly UCITS ETFs that have gone missing.

There have also been issues on the American ETF side, albeit it a lesser extent, but with the result that the below chart shall not be construed as an absolute truth, but rather an approximate illustration of the performance. For example, while the portfolio return (black line) appears to be negative for the year, actual returns amounted to +6.3%. I look forward to completing the transition to MS Excel which I deem more reliable.

However, the main trends shown in the chart can still be illustrated by the chart. VIX has been performing badly this year with few events triggering larger spikes (VIX currently printing around 13), so this insurance has not paid off this year. That’s no problem, as the event the insurance is bought against (losses in stocks) have not materialized, and instead, stocks have seen a very good year (albeit 50% indicated by the chart might be somewhat of an exaggeration).

Cryptocurrencies (2-3% of the portfolio) saw a good end of the year ahead of the SEC approval of Bitcoin ETFs in the US. This seems so far to have been a “buy the rumour, sell the news) event, as prices on Bitcoin and Ethereum have come down since in the past few weeks. I managed to time in a rebalancing from Ethereum around the high. It is worth noting I am not a crypto enthusiast per se, but an agnostic at most, and recognizing that the volatility and low correlation to other asset classes can earn a decent rebalancing premium at a low exposure.

Treasury bonds too had a difficult year, continuing the trend from 2022 where rate hikes put a damper on performance. Toward the end of the year, the rate hiking cycle had stopped and the market instead saw rate cuts on the horizon, giving this asset class some well needed respite. Now when we have reached a plateau in terms of interest rates, I expect this government bond sleeve of the portfolio can act as a diversifier rather than a ballast into 2024.

While it may not have been shouted from the rooftops, gold has seen a rather decent year, currently trading around all-time highs in terms of US dollars/oz. Perhaps it is still some remaining inflation fears aiding here, but mostly I find central bank reserves and geopolitical risk as the main drivers.

We already touched upon commodities, and the same trend I mentioned for December holds true also for the whole year. A weakening economy drives down the demand for commodities, especially energies (oil products), which make up around 30-35% of the Bloomberg Commodities Index tracked in this eToro portfolio. It remains to be seen if the Red Sea worries develop into a larger crisis, in which case a commodity exposure might come in handy in an investment portfolio.

Turning to the topic of dividends, we received a pay-out at the end of December from DTLE (iShares 20+ year Treasury Bonds ETF – EUR Hedged). The portfolio’s rolling 12-month dividend yield now stands at 1.82%. Over the year, dividends received increased by 13.5%.

Market outlook and what to expect in 2024?

As for looking forward of what may be expected, most forecasters tend to extrapolate current trends and make guesses based on that. In reality, though, such expectations are almost always fully priced in, and what really moves the needle are the unexpected changes.

I recently came across an interesting illustration of this, which was borrower from George Friedman’s book “The Next 100 Years”. Namely, it summarized the main events of each 20-year period in the 20th century and how much the world had changed between each of them. I paraphrase it here below for reference.

  • 1900: The European superpowers dominate. Trade is blooming and countries are dependent on each other Peace prevails.
  • 1920: Europe is in ruins. Four empires have fallen. USA and Japan have emerged as new superpowers. Germany is crushed and the treaty of Versailles is meant to block Germany from regaining its strength. Trade barriers re-emerge.
  • 1940: Germany dominates Europe.
  • 1960: Germany is divided, and Europe is dominated by the US and the USSR. Decolonization.
  • 1980: USA has been defeated in Vietnam. The US and China are allies against the Soviet Union.
  • 2000: The Soviet Union has collapsed. The Chinese economy is growing thanks to market reforms. The US dominates.
  • 2020: The last twenty years have been dominated by the cold war against terrorism. Covid-19 pandemic closes the world. Russia invades neighbours. China growths rapidly but hits road blocks.
  • 2040…?

What is my point? It is easy to be blinded by the big shifts that could happen and likely will transpire, when you are focusing on just one year at the time. It is rarely so that these grand events unfold from one year to the next, but rather they happen gradually and then all at once.

Hence, my standpoint remains that it is useless to make any long-term predictions, as you will probably be getting them wrong anyway. However, your pension and future wealth will be dependent on not getting it wrong when you build your portfolio.

Therefore, I continue to iterate the mantra from Howard Marks’ memos: you cannot predict, but you can prepare.

My best guess for 2024 is just an extrapolation of current events:

  • Trouble in the Red Sea area drives up freight costs and inflation. Could escalate in the region as the Egypt economy is dependent on Suez Canal fees.
  • Growth shock in China and its problems in the property development sector puts a wet rug on commodities
  • Interest rate cutting cycle is delayed due to aforementioned problems getting inflation down; increased geopolitical risk from the new axis of evil (Russia, Iran and maybe China)
  • Argentina reforms its economy and could partake in a continued boom in Emerging Markets
  • US presidential elections with protectionist Trump a strong candidate could harm US equity markets
  • European energy market in jeopardy following loss of nuclear capacity, loss of Russian gas, UAE LNG not reaching Europe through the Suez Canal, and Biden blocking expansion of gas exports

But to what extent these (or any other) events transpire, and what impact they have on financial markets, it is better to be prepared with a diversified portfolio that could at least offset losses in any asset class due to the uncertainty.

In other words, I stick with my All Seasons Portfolio for yet another year.

If you are looking for getting started with your own All Seasons Portfolio and need some inspiration, check out my post on How to get started with the All Seasons Portfolio strategy. While stocks have been a great investment the last decade, there are no guarantees that this trend will last, as their continued success depends on several factors. Instead, consider diversifying your portfolio to include other asset classes, and benefit from the rebalancing period over the long-term, as described in this article.

Thank you for your attention and especially for for following my blog about risk parity investing and the All Seasons Portfolio. I hope you don’t mind too terribly if my frustration with Google Sheets seeped through a bit in this post. Rest assured that on the backside, my portfolio management continues despite the absence of updates these past few months.

I welcome any feedback you may be willing to share on these monthly posts’ form and structure. You can do so by dropping a comment in the comment section below or via email to The greatest value I have received from upkeeping this blog is the conversations that arise with great people, such as yourselves, about ideas on investing and strategies.

If you have any particular topic around risk parity investing or the All Seasons Portfolio strategy that you would wish for me to cover, make sure to drop me a line by email or in the comment section below, and I’d be happy to add it to the line-up of topics.

We’ll catch up soon for the next update!
Nicholas Ahonen

Want to show your support and help financing the maintenance of the blog through a one-time donation? Leave a sum of your choice, like $5, to the tip jar via Paypal (common credit cards supported). Any contributions are highly appreciated and greatly help me maintaining this blog!

Leave a Reply