Q4/2023 & FY2023 Results and FY2024 Strategy

Another year has passed and it was yet another with multiple global issues: Russia’s war in Ukraine, tensions with China, tensions in middle east, inflation and energy crisis just to name few. Considering all this markets have been surprisingly strong and in a way western economies have shown even some strength while dealing with these issues. There has been plenty of weakness but for example adaptation to energy crisis was way better than I personally expected. Sadly majority of these issues are likely main topics for 2024, perhaps even for 2025.

Q4 was pretty OK as main dividend account grew 5,67% and whole portfolio produced 2045,84 EUR pre-tax income during the quarter when converted to Euros at the time of writing (of which 181,91 EUR was interest paid for cash reserves, not much but significant indication of the impact from inflation and change in interest rates). Year over year changes were OK for FY2023. Very conservative allocation aimed for controlled dividend income resulted portfolio value increase of 1.78% and produced 10312,73 EUR pre-tax income when converted to Euros at the time of writing. This is minor drop in dividends compared to previous year, mainly a result of dividend cuts (some due to listed global issues, some just because of extra high payments during previous year) and due to exiting certain positions and therefore missing some payments completely (reinvested money will convert to dividends next year).

For FY2024 I have very mixed feelings. Aftermath of said global issues will likely take significant time and especially Finish economy is in very bad shape with the insanely high debt load and increased interest rates. Therefore my plan for 2024 is quite conservative: I’ll try to buy something every month but mainly with smaller maintenance purchases and dividend reinvestments. For now I have my my eye mainly on following companies: Fortum, Kesko and Bristol Myers Squibb. Perhaps also something in the REIT space depending on how the US interest state cycle evolves.

Q3/2023 Results

Third quarter is over and this time it involves slightly unique situation: Sampo is spinning off Mandatum and this process is impacting both portfolios. In practice this means that reliable data is not available at the time of writing as portfolio values and performance metrics are temporarily skewed. Main focus however is in tracking dividends – as valuations tend to go up and down – and in that front performance was somewhat in-line with expectations: dividend income during quarter in Euros (pre-tax) was 1702,80 EUR.

Not much has changed since previous quarter. Geopolitical situation is more or less same and interest rates are probably at least close to peaking on both sides of the Atlantic ocean. Neighbouring Sweden has hit the wall with crime and immigration issues, southern Europe is showing similar signs and Finland is likely being pulled into the same mess. Public economic debate has for a while shown signs of distress: housing prices have declined, construction companies are already failing and employment level is likely going down as multiple industries and sectors will be hit. Winter truly is coming. Multiple markets are having fundamental problems in the underlying economy. This includes US (despite being incredibly robust when compared to Europe) and Europe in general. There are multiple elections coming up and truly addressing any of these problems will be incredibly difficult. Russia’s war in Ukraine naturally being one of the most difficult ones. There aren’t many countries I would consider truly viable in economic sense. Perhaps Norway being a rare exception. Having said all that, I’ll probably steadily buy stocks while allowing cash position to slowly increase during Q4. Likely additions will be for Realty Income REIT, Kesko and Fortum positions. If Mandatum will be initially dropping for technical reasons (all recipients not interested or even allowed to hold it), I might make mid sized addition on the position.

Q2/2023 Results

Second quarter is over without much drama. Same can’t be said about the (geo) political environment. Things are brewing in Russia and war in Ukraine is hopefully moving into the final chapter. Summer and fall will be interesting in that sense and hopefully Russia is finally served a can of whoop-ass. Not much was happening in portfolio. Total dividends received during Q2 were 4007,09 EUR before taxes (using conversion rate at the time of writing).

Plan for H2 is quite simple. Primary focus will be on reinvesting dividends with small amount of fresh capital. These will probably be directed mainly on healthcare/big pharma and small maintenance purchases increasing positions in Fortum and Nordea Bank. Otherwise I’ll let cash accumulate to compensate recent withdrawals and prepare for certain real life investments.

Q1/2023 Results

First quarter of the year is over. In many ways it was as turbulent and those before it. War in Ukraine is still going but US threw minor banking crisis in the mix to spice things up. This didn’t hit my portfolios too badly. Main portfolio dropped -3,54% during first quarter and dividend income during quarter was solid 2486,69 EUR before taxes (converted to EUR on April 1st). This included part of the dividends paid out by Nordea which were already registered on one account during March even though actual pay date is on April. Then again BHP dividends were not registered in time.

Rest of the year appears to be quite foggy. This banking crisis is looming but to me it doesn’t appear likely be a huge hit, at least if moral impact is not considered. War in Ukraine is likely to go on for a long time but Ukraine seems well positioned and I don’t see how Russia could walk out of this with anything that could be counted as victory even by Russian standards. Finland is having elections tomorrow and chances are that we will get new government to clear up the economical mess left behind. If everything goes well, Finland might also be a NATO member as early as next week. These two have potential to enable positive loop for us but start might be painful. It remains to be seen if this would lead into more sensible taxation environment. For now I’ll probably continue adding on stocks with moderate pace. In other words I’ll not maximise purchase but will let cash to gradually build up until better opportunities come up.

Q4/2022 & FY2022 Results and FY2023 Plans

Most people are probably glad that 2022 is now over and done with. This year will probably be remembered as tail of COVID-19 pandemic and from Russia’s brutal war in Ukraine. Perhaps it will eventually be remembered as the year when Ukraine forged itself into proud western democracy that will build itself back and prosper. Russia will be remembered the way it always has been remembered: failed 3rd world country. Next years hopefully will bring end to the war with clear victory for Ukraine, and hopefully well executed build back better financed by Russian money and with western backing.

In general this was very bad year for the markets. Therefore it’s a bit surprising that my portfolios performed well. Main portfolio gained 8,56% during the year while overall markets declined significantly. Dividend income for the whole year was 10821,77 EUR before taxes. At the time of writing this, last dividend from Lockheed Martin has not yet been registered but that does not have huge impact on the bigger picture. Based on preliminary analysis this dividend income covered 130,6% of base consumption after taxes (exact effective tax rate will be resolved later). This indicates that current portfolio fulfils requirements for lean FIRE. Therefore project appears to be on schedule and on track.

Plan for FY2023 is quite simple. I’ll try to eliminate last debt I have but that depends on market moves. I’ve been net debt free for quite some time already but main portfolio still contains small amount of investment debt which I’ll try to eliminate during first half of the year. In addition I’ll re-invest dividends and all other extra cash that remains after handling the debt. Should the market drop significantly, I might postpone the debt payment and buy stock instead.

Q3/2022 Results & Q4/2022 Strategy

Third quarter is over and we are getting to bearish enough sentiment. Russia’s invasion in Ukraine has escalated but Ukraine has put on a brave fight and seem destined to eventually win this war. Price they have and will pay is enormous but mandatory. Hopefully western nations will only scale up the military support and financial support afterwards. Russia appears to be escalating in Nordic neighbourhood with the explosions in the Nord Stream pipelines and probably more will follow. Then there’s the central bank activities with steep rate increases, inflation being somewhat out of hands and overall very pessimistic investor sentiment. Taking all this into account third quarter was somewhat OK as YTD in main dividend portfolio is still positive but performance during third quarter was -3,47%. Dividends before taxes were 1834,10 EUR (169,54 EUR, 190 SEK and 1 633,59 USD).

Assuming that there’s no big changes in overall environment, I’ll slowly decrease my accumulated cash. Dollar investments will probably be dividend reinvestments unless I’ll start converting received dividends into euros and Swedish kronas. Euro zone stocks in focus will probably include at least Kemira and possibly Finnish heavy industry related stocks if/when those will drop enough going towards recession.

Q2/2022 Results

Another wild quarter has passed. Global economy is still facing pretty much same issues: COVID-19 tails, war in Ukraine and inflation/interest rate issues. On the positive side Finland and Sweden were finally invited to become NATO members but I’m sure Turkey will have additional tricks to use when the process moves forward. I personally don’t see huge risks in this as long as critical member states ratify the membership. This is very positive development in otherwise dire situation. Pandemic can of course take new directions and there’s also the monkeypox situation going on but probably this is something than will keep on fading into the background noise. War in Ukraine seems to be evolving in a positive way, or at least West and rest of the world has been providing enough resources for Ukraine to defend themselves. Russia is bleeding but probably this will take a long time to truly play out. Then there’s the inflation and interest rate issue where ECB seems to be late – as usual – on everything. FED seems to be doing a bit better but I guess situation is far from ideal in US as well.

On personal side this quarter was solid bounce year over year. Market overall has been taking a beating but my portfolio has performed reasonably well as main portfolio only dropped 1.45% during the quarter. Compared to to overall market this is partially explained by the fact that my portfolio bounced back from COVID-19 impact way slower in general. Bounce back was even more visible with received dividends. Q2 dividends before taxes were 5715,66 EUR compared to 2684.31 EUR year before.

What’s next then? I have allowed my cash buffer to grow lately and done some purchases, mainly as dividend re-investments and smaller maintenance purchases. This is likely to continue while waiting for for bigger opportunities. I still have pharma and medical sectors on my radar so I might still add on Abbvie and Gilead Sciences but I might also open a position in Medtronic. Let’s see how things evolve.

Q1/2022 Results

Another quarter passed and what a ride it was once again. Russian special operation – Njet problem, normal katastrof – in Ukraine kicked in and outcome was probably something most didn’t expect. Ukraine has put on a brave fight and now this one month old war (well, in reality it began years ago with the annexation of Crimea) is turning into a real shit show for Russians. Economic sanctions on Russia are something that I for one didn’t expect international community ever to pull off. Russia is like zombie with the exception of zombie having fair chance of eating before rotting away. This all hit some companies really hard but overall markets way less than I would have guessed. On personal level impact could be described as minor mainly due to having very limited Russian exposure and elevated US exposure. It’s hard to estimate how this thing will play out. Hopefully international community will not scale down the sanctions until Russia truly learns the provided free lesson. Furthermore this will hopefully result Finland joining NATO. This is something that should have been done in the 1990’s but better late than never. This would be extremely important also to mitigate country risk associated in being small open economy next door to Russia.

Main portfolio gained about 7% during the quarter. Dividend income was 1623,60 USD dollars and 120 EUR before taxes or 1566,42 EUR when using the exchange rate at the time of writing. Quite solid improvement compared to 1190,15 EUR year ago.

What next? Overall bounce back from the Russian special financial operation was maybe too quick. Inflation fears are still there and underlying problems in global economy are probable just one month older and equally bigger. Most likely I will just continue with current approach: do mainly smaller purchases and re-invest dividends. Let cash position grow a bit even though it’s quite significant already and not really ideal considering the inflation environment. Then again my personal finances are less severely hit by inflation as my consumption level is in general low and key factors like energy are either low or something that I can almost eliminate if and when needed. Let’s see. I might initiate a new position on Gilead Sciences and possibly add on existing 3M and Kemira positions while waiting for better opportunities to make bigger moves.

Q4/2021 & FY2021 Results

2021 was a continuation and tail of the globally crappy 2020. COVID pandemic was still going strong globally but it has not been impacting the markets as much as one might expect. Soon after the initial hit in 2020 I guessed that true recovery would be happening in 2022. This might actually end up being quite accurate but recovery is of course quite subjective. Stock markets recovered in my opinion way too quickly back then and haven’t showed any true weakness during the subsequent waves of variants. This despite the fact the vaccines ended up being somewhat inefficient. Not inefficient in providing protection against severe forms of disease but against spreading the virus. Then there’s the ongoing inflation surge and geopolitical tensions with Russia (continuation of the Crimean conflict) and China (power shift). I sense disturbance in market force but of course next year might end up being yet another year of the bull. National debt levels are already sky high, public spending will increase and here in European Union national debt appears to be transitioning into federal debt. Having said that, Europe as a whole remains as troubled and declining continent of has beens. I’m sad to say that but I believe that seeds for at least partial EU breakup have already been sown. Hard to say if that would manifest itself already during this decade but 2030’s might the truly dividing decade. US has a fair share of global troubles going forward but it is clearly a more dynamic and relevant market to invest in.

Looking at the results, this year was continued recovery from the drop in 2020. Year over year value shows relatively good performance when compared to overall market performance. This is mostly due to slower portfolio recovery (lower comparison point) due to REIT exposure but positive anyway. Primary dividend portfolio gained 32,47% (last trading day not included) and produced 7436 EUR as dividends before taxes (5040 EUR in FY2020). Reasonable recovery from the drop but it should also be noted that some of these dividends were delayed from 2020 and paid now due to regulation. This skews the year over year comparisons a bit. These dividends (after taxes) covered 103% of base consumption.

Plans for next year? This is a difficult one. I’ve been in holding pattern for quite some time already. Short term plan is to continue. In practice this means small stock purchases mainly as dividend reinvestments until something truly changes. I’ll allow my cash position to increase even though it’s quite significant already. I’m aiming for quite significant cash position to maximise flexibility later on when considering e.g. sabbatical, entrepreneurship or other significant life style changes. First critical FIRE step is quite close but let’s see how things evolve. This step includes following criteria: no debt, cash buffer for at least five years and dividend income covering running expenses. Let’s see how the project continues. Original target was end of 2024 but that is and always has been a moving target.

Q3/2021 Results

Another boring quarter has passed and much like previous ones, this one quite passive as well. Only minor maintenance purchases were made in Kemira Oyj and one slightly bigger one with an entry into AbbVie Inc. Decent turnaround in portfolio continued and settled into sideways movement towards the end. Dividend income before taxes was 1436.08 EUR during the quarter.

Another positive development was ECB’s approval for Nordea to pay dividends that were on hold for quite a long time. Sampo as my largest position will receive quite a respectable amount of these while it is still working on the sale of whole Nordea position. Both are also planning on purchasing their own shares. Expectation is that Sampo will distribute extra dividend in addition to those purchases. Expectations for Q4/2021 and H1/2022 are quite positive in this sense. Otherwise I’m still in waiting pattern and plan to make only moderate purchases until there’s a significant correction taking place. Increased exposure for pharmaceuticals, defence, water and chemicals are likely targets of those purchases.