Strategy

Seconds quarter and first half of 2024 is over. Once again it was filled with many sources of déjà vu as many of the critical contributors for world economy are the same old ones. War in Ukraine is still there, US elections with geriatric battle between Biden and Trump, tensions with China and Israel’s situation in general. Perhaps it’s a positive thing that the market has provided only similar déjà vu feelings since the alternative probably wouldn’t be a good one. Main dividend portfolio value increased by 2,80% during the quarter and 2,95% during first half. Dividend income for the first half was 7591,73 EUR and 6072,43 EUR for the second quarter (before taxes when converted to Euros at the time of writing). Nothing special there.

Second half might be interesting as said tensions have potential to escalate. Especially US elections will be interesting since they don’t exactly have two good candidates and tide is about to shift with democrats and Biden. Apparently first public debate was a disaster for Biden – I haven’t watched the whole things, only parts – and even the tone of mainstream media has shifted quickly. Trump winning seems quite likely but let’s see how things unfold. Personally I think that Trump’s second term would be something we as a whole could get through. Get through without significant pain and adaptation? Maybe not but likely with only reasonable bruising. I don’t see a need for any huge changes in my current approach for remaining two quarters. I’ll most likely focus on re-investing dividends with perhaps some limited injections of new cash. I’ll let cash reserves to increase since those will depleted by investments on physical assets (read: renovations).

First quarter is over and not much has changed in grand scheme of things. Same geopolitical tensions are still in play, US market has been extremely resilient and our Finnish economy has been even less resilient than I initially feared. Major global tensions with Russia and China are not likely to be resolved anytime soon. Hopefully same time frame does not apply to our local tensions with union strikes which are pretty much putting last nails – at least on short term – on the coffin for Finnish economy. First quarter results were in line with my expectations. Dividend income was 1504,89 EUR before taxes which consisted mainly of USD dividends (1573,31 USD) with minor EUR additions (49,60 EUR). This was to be expected as dividend income for second quarter is significantly higher than for any of the other quarters. Furthermore projected annual dividends indicate that portfolio provides so called lean FIRE level income (basic necessities) with minor margin for safety.

For the second quarter – and for remaining three quarters – I will probably increase my positions in Fortum, Kesko and Nordea Bank and probably in existing US healthcare/medical/pharma positions like Bristol-Myers Squibb, Pfizer and Medtronic. I might also initiate new position in Valmet but that remains to be seen. Next few months I’ll probably focus mainly in dividend reinvestment but all that naturally depends on market moves and valuations.

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 rate cycle evolves.

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.

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.

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.

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.

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.