eToro Popular Investor “IlMatematico” - Annual Report 2024
The eighth year of investing on eToro has passed. Let’s find out together how it went.
I’m IlMatematico and I’m a Popular Investor on eToro.com.
eToro.com is a broker and a social investing community where you can learn to invest by following other investors. In addition, you can activate an automation feature where you choose an investor to copy, and when they trade, so do you.
eToro offers a safe and regulated platform where you can invest, copy-trade and grow your financial culture with a community of investors.
Welcome to my Annual Report 2024, where we will review my performance in the eighth year of activity on the platform. As always, we will include performance analysis and introductory texts on many aspects of this complex but fascinating world, so this document is also meant to be a help for those who are approaching this world for the first time, and a moment of analysis and sharing to try to understand what I did right and what I did wrong in 2024.
It is my habit to publish my posts directly on eToro, but due to the size and aesthetics of the document I am presenting to you, I felt the need to provide you with a more complete document than a simple eToro post, for this reason I opted for a long-form on another more flexible platform. All links included in this article can be accessed without registering on any platform.
Disclosure for advanced investors: this document is written primarily with inexperienced investors in mind. If you are an advanced investor, I hope you will forgive me for a few too many explanations; I have nothing to teach but a lot to share, so I think you might find some useful guidance anyway. This content is not intended to be investment advice. The following is for educational purposes only.
Summary
Introduction Part #1: Flash Investment Course
✅ TIME is the key element of finance and economics.
✅ Exchanging Time for Money is what is called “work”. Generally speaking, the more skills you have, the more you can ask for money in exchange for your time. The more you are able to increase the profitability of the place where you work, the more you can ask for money in exchange for your time.
✅ Exposing your savings to risk can pay off. Depending on the risk taken and the period in which you expose your money to risk, you can ask for a higher remuneration.
✅ The main objective of those who use their money so that it can be remunerated is to maximize the remuneration by trying to take the minimum risk. Long times help reduce risk. A risk-free RATE OF RETURN is the return you assume you can get without your capital running risks and is usually considered equal to US Treasury bond rates. Any risky investment should have a return higher than this rate, as compensation for the greater risk taken, because otherwise it would be better to invest in the risk-free investment.
✅ TRADING is a zero-sum game, where you expose your capital to high risk for SHORT periods of time, in exchange for high returns. In trading, for every person who earns a dollar there is one (or more) who loses more than 1 (1 dollar earned by someone else, plus the commissions earned by the broker).
✅ INVESTING is the concession of one’s own capital to third parties for LONG periods of time, so that this capital is used to produce income and wealth, with the aim of participating in the division of the profits produced, which occurs either through the increase in the value of one’s share or through the distribution of a dividend.
✅ INVESTING is not a zero-sum game, but on average, over the VERY LONG term, it has IN THE PAST proven to offer a return of around 6–10% per year. In general, the performance of the S&P 500 index is considered as a benchmark, which is the abbreviation of Standard & Poor’s 500, a stock index that reflects the performance of the 500 largest companies listed on the stock exchange in the United States.
✅ If you do not want to invest by exposing your capital to risk, you will instead be certain that your capital will lose value at approximately the speed indicated by this graph:
What you see in the graph is the speed with which the dollar has lost value in the past. It is not certain that it will happen at the same speed in the future, but what has happened in recent months is not comforting.
✅ You can INVEST in just one company or in a limited number of companies by purchasing their shares. This is considered risky because it ties the investment performance to these companies. It could go very well, it could go very badly or it could simply go like the average of the rest of the market (in this case you are exposed to an unnecessary risk and therefore you can say that the investment was not excellent).
✅ You can reduce risk by INVESTING in the market as a whole through instruments that replicate the composition of the entire market (ETF). In this case you expect that the return on your investment will be similar to the market return.
✅ There are private investment funds that, in exchange for higher commissions than ETFs, promise to have higher performances than ETFs. Typically, this can happen for short periods of time, but is unlikely to happen over the long term.
✅ What limits the performance of investment funds in the long term is the need to do well every year (to retain inexperienced clients who would flee at the first red light) which prevents long-term planning, the size of the fund (which when it is too big, it cannot invest in small companies that are growing), and the importance of commissions that eat up a large part of the most profitable products year after year.
✅ A few sufficiently expert individual investors manage to outperform the reference indices and even beat investment funds, thanks to the fact that they do not have the limitations of large funds. These investors try to select opportunities that give a higher return than the market, trying to minimize the greater risk to which they are exposed.
Introduction: Who is << IlMatematico >> ?
🆒 ABOUT ME
I am a software engineer with over 10 years of experience in investing and trading, and I have been an active eToro investor since 2017. Originally from Italy, I am passionate about fundamental analysis. As an Information Engineer, I offer a unique perspective on analyzing tech stocks, though my expertise extends across multiple sectors.
My investment journey began in 2016, with a focus on individual stock selection, which I prefer over index investing. Through eToro’s platform and its social investing features, I transparently share my strategies, backed by a certified performance track record.
My motto? “Nothing to teach, so much to share.”
In December 2023, I achieved the certification test for CISI Level 3 International Certificate in Wealth & Investment Management and since January I have become a Popular Investor Elite on eToro.
PERFORMANCE
On eToro I tracking my performance since 2017 and I’m a Popular Investor (now on abbreviated to P.I.) since 2018. My average annual return is over +37.12% per year, +1150% 𝐢𝐧 8 𝐲𝐞𝐚𝐫𝐬 ! (numbers as of december 31, 2024).
My portfolio is public, and you can see my performances in real time, certified directly by eToro, on my account page: https://www.etoro.com/people/ilmatematico/stats
STRATEGY
I have 3 investment areas (liquidity excluded):
· ETFs, Value stocks & Dividend stocks;
· Growth stocks;
· Cryptocurrencies.
I usually keep 10% liquidity in the account, but this value can change depending on the moment.
I invest for the long term. So I consider myself primarily an investor, not a trader. I also do speculative trades with a 6–24 month time horizon, but basically my time horizon is the long term.
To find out the difference between the two terms you can read this post of mine: https://etoro.tw/3CcE65c
My investment strategy is quite aggressive. With a long-term time horizon, I aim to increase risk for potentially higher returns, leveraging the time variable to mitigate risks. Therefore, a long-term perspective is essential.
My three areas of investment are as follows:
ETFs, Value stocks & Dividend stocks are the most “prudent” part of my portfolio. Forgive me if I tell you that I have never conceived of investing in bonds, which are too conservative, IMHO, and which I consider to have a risk/reward that is not worth investing in. The need for this block lies in the need to reduce the volatility of the portfolio, both to protect the portfolio from declines and to keep the Risk Score assigned by eToro to its investors low. Typically dividend companies and Value stocks are very resistant to moments of crisis, but they also know how to give nice surprises as in the case of $MSFT (Microsoft) which, taken from a value company, this year has outperformed both SP500 and NASDAQ100 or like $PAGP (Plains GP Holdings) which taken for its dividends, has made +150% and now pays a dividend that is almost 15.5% per year compared to the carrying price.
Growth stock selection is the first very aggressive part of my portfolio. these are stocks of companies that are expected to grow at a rate significantly above the market average. Usually this selection aims to outperform the benchmark: Greater growth therefore greater risk. These stocks remain in the portfolio until they become overvalued (which does not exclude the “forever” time horizon).
Cryptocurrencies: This is the other third of my portfolio that is normally considered high-risk. Even if cryptocurrencies have strong volatility and are classified as risky assets, it must be said that they have a risk/reward that very few assets can offer at the moment. This is why I was approximately 30% exposed to this asset. For the future, and we will talk about it later, the forecast is a progressive decline in this % in the portfolio, until it reaches relatively small shares in the portfolio.
My goal is to maximize returns while minimizing risk, and it really seems like I’m succeeding. Analyst @PGuenther’s rankings confirm my approach in this recent post.
SOCIAL
If you are an eToro user but you don’t follow me yet, I invite you to add me to your list of followed people by clicking on this link:
https://www.eToro.com/people/ilmatematico
My Social Media accounts:
on Twitter: https://twitter.com/il_matematico
on Instagram: https://www.instagram.com/ilmatematico.investor/
💹ABOUT MY INVESTING STYLE
Here’s some more information about my investment style:
#️⃣ I AM A DIRECTIONAL INVESTOR
This means that our portfolio grows when the markets rise, and falls when the markets fall, and the contribution of my strategy aims to grow more than the market when this is rising and losing less than the market when it falls; by doing so we ultimately outperform the market. as a consequence of this strategy, in the months when the markets go down, my portfolio goes down too; it is therefore natural that I will have several months that close in the red. But it is in these months when, with low prices, I buy the discounted stocks with which we will outperform the markets when they go up again! According to eToro statistics, on average, for 5 months every year my portfolio ends up in the red, but this has not stopped me from earning more than 30% per year.
#️⃣ I INVEST FOR THE LONG TERM (I’M AN INVESTOR, NOT A TRADER) Also as a consequence of the previous point I am an investor not a trader, and my time horizon is long-term. I also hold some speculative positions which are for diversification purposes. In my 8 years on eToro I have earned an average of more than 30% per year, but there have been periods of very long drowdown. At this moment, anyone who started copying me before November 2024 is in strong profit.
#️⃣ MY PORTFOLIO IS RISKY
High returns mean high risk. Portfolio exposure to growth stocks and crypto exposes to significant but considered risks. Every risk I take is because I have evaluated the risk-return ratio and I believe the opportunities are much greater than the risks. It is enough to be right not always, but most of the time, to have a profitable portfolio. Hunting for assets that seem riskier than they really are is my specialty and that is also demonstrated by the fact that for many months now, I have been among those who do it best, as evidenced by this analysis of the top 25 Popular Investors: https://etoro.tw/4fT5mXU
Performance 2024
2024 has been a surprising year for the markets in many ways. This has allowed us to boost our performances which, despite the decline at the end of the year, have given very positive results:
IlMatematico : +35.00%
Nasdaq100: +24.91%
SPX500: +23.37%
Total Cryptocurrency Market Cap (by Coinmarketcap): +97.57%
The Q4 2024 saw portfolio growth of 8% almost all concentrated in the month of November, within which also occurred a good part of the Christmas rally that was expected in December.
My annual goal of outperforming the SP500 was fully achieved again this year with an outperformance of more than 11% versus the benchmark, but the thing that amazes me is the long-term performance:
HISTORICAL PERFORMANCES FROM 2017 TO 2024:
- @IlMatematico : +1150% (CAGR = 37.12%)
- $NSDQ100 : +274%
- $SPX500 : +158%
Some numbers:
-> In 2024 my portfolio increased by +35%, which becomes +103.5% if we extend the performance measure to 2023 as well
-> In 8 years on eToro my portfolio has increased by +1150%. This means that if you had invested $1000 in January 2017 you would have $12500 today
-> The CAGR (i.e. year-on-year growth) so far has been 37.12%
-> In the same period the Beta was 0.94 and the Risk Score dropped from 4 to 3
(Please note! Past performances are absolutely not indicative for the future)
You can see in any moment, my updated eToro Fact Sheet at this link: https://bullaware.com/factsheet/IlMatematico
A final note concerns my ability to achieve one of the main objectives of my strategy, namely the ability to select assets whose risk is overvalued by the market. Well, according to the analysis of a well-known eToro analyst (the Popular Investor @pguenther ) who is committed to evaluating this very characteristic, in 2024 I was the eToro Popular Investor in the top 25 who more than any other had a good result with the minimum risk. All the details can be found here: https://etoro.tw/4hk1W1f
Key TAX advantages of a long-term investment strategy
In this paragraph, I want to highlight the hidden tax advantages of my long-term investment strategy. Understanding these advantages can give you a better understanding of how some of the mechanisms of finance work, as well as giving you peace of mind regarding the taxes you will pay.
1️⃣ Fewer Transactions Mean Lower Taxes and Fees: A long-term investment approach, like mine, focuses on holding assets for extended periods. This strategy inherently reduces the number of trades executed. Fewer transactions translate to:
Less Commission’s costs.
Each trade typically incurs a commission fee or a spread. Fewer trades mean you pay less in these fees.Reduced Tax Liability.
In most jurisdictions, capital gains are only taxed when profits are realized, i.e., when you sell an asset. By minimizing trades, you delay the realization of gains, thereby deferring tax payments. This allows your capital to grow through compound interest without immediate tax deductions.
2️⃣ Tax Optimization Through Loss Harvesting: Another significant advantage is the ability to optimize taxes by strategically selling underperforming positions.
- Offsetting Gains with Losses.
Selling assets that are in a loss position (in the red) can generate capital losses. These losses can offset any realized gains, effectively reducing your overall taxable income in most jurisdictions.
- Lower Tax Burden.
By offsetting gains with losses, you can decrease your final tax liability.
MY PORTFOLIO: YEAR-END TAX POSITION
If you have been copying my portfolio strategy for all the 2024, here’s an approximate view of your tax position:
Annual Gain before taxes: Approximately 35%
Realized Capital Gains: About 8% of your investment copy amount to date. You will pay taxes on this amount (E.G. in Italy, this would be taxed at 26%.) Dividends: 0.7% of the portfolio. (Again, taxed at your national rate, such as 26% in Italy.)
Practical Implication: For Italian investors who have followed my strategy since the beginning of the year, you can expect to pay roughly 2–2.5% in taxes on your copy amount for 2024. This is quite favorable, especially considering a year-end gain of around 35%!
COMPARING INVESTORS TO TRADERS: A TAX PERSPECTIVE
One of the distinct advantages of copying long-term investors over active traders is the tax treatment of profits:
Investors: Capital gains are taxed only upon realization, allowing for deferred tax payments and potential tax optimization.
Traders: Any gains, such as a 35% profit, are fully subject to taxation immediately. The actual tax burden depends on the individual trader’s portfolio management, but it generally results in a higher tax liability compared to a long-term investment approach.
THEN
I hope this paragraph clarifies the additional tax benefits of my long-term investment strategy and alleviates some concerns for those worried about excessive taxation. By adopting a strategic, long-term approach, you not only enhance your investment growth but also optimize your tax obligations.
Performance of my copiers
As I already wrote, the fact that I am making money does not always guarantee that my copiers will be making money.
Much depends on when the copy is started. If all the assets in the portfolio were purchased after the copying began, then you can be guaranteed that the performance of the capital being copied and the Popular Investor you are copying will be aligned. Otherwise, it may not be guaranteed.
The reason for this statement is very simple: let’s assume an asset that prices 100, which then rises to 300 and finally falls to 200. If the P.I. buys the asset at 100 and then sells it at 200, there is a 100% profit on that asset. But if a Copier started copying when the asset was worth 300 and then finds it sold by the P.I. at 200, in this case the copier have a loss of 30%.
However, thanks to All Time High, it is very satisfying to say that those who have been following me since before November 2024 are certainly making money. As of December 1, 2024, according to eToro statistics, more than 97% of my copiers were in the green.
Finally, note how the performances of the last year, matches the historical average CAGR, somehow demonstrate that I am not “living off a position of privilege” of an initial and temporary period of fortune, but that the performances are still noteworthy.
My investments & my numbers
In this section we will delve into the contents of my portfolio and provide detailed information on the assets that compose it.
ALLOCATION
At the time I’m writing my portfolio is currently allocated with 13% in cash and 87% invested. The invested portion is distributed as follows:
Stocks & ETF : 73.2%
Cryptocurrencies: 26.8%
The following graph is the distribution of my portfolio with the most significant positions updated as of January 9, 2025.
Portfolio breakdown
Sector breakdown
Diversification Across Industries
Fair Value
In this graph I report an indicative value of the fair value of the equity portion of the portfolio as calculated by the portfolio analysis tool on the simplywall.st website.
The Portfolio Fair Value is determined using the Discounted Cash Flow (DCF) method, an intrinsic valuation technique that forecasts future cash flows of each stock in your portfolio. By considering growth projections and applying a risk-adjusted discount rate, the DCF method translates future cash flows into present value, offering a comprehensive view of the portfolio’s intrinsic worth. This insight helps investors understand the strength and potential risks of their portfolio, guiding strategic decisions like rebalancing.
Portfolio Fair Value Calculation:
Portfolio Price: Total of (Number of Shares × Holding Price per Share).
Portfolio Fair Value: Total of (Number of Shares × ‘Simply Wall St’ Net Present Value per Share).
Of course, the difference between the sum of the theoretical values of the companies calculated with the DCF and the current values, is not at all certain that they are values that are destined to fill up over time, but as a guideline it can be an evaluation criterion to be added to all the others.
Returns
In this graph, I report an indicative value of ROE, ROCE & ROA of the equity portion of the portfolio as calculated by the portfolio analysis tool on the simplywall.st website. Overall, my portfolio metrics consistently beat the market average.
eToro Stats — Portfolio Metrics in the last 2 years
On the Bullaware performance analysis site, you can see the main ratios that allow you to evaluate the performance of a Popular Investor. Here are my ratios over my last 2 years, with a total score of 8.6/10 (The score indicated is a Popular Investors evaluation metric calculated directly by Bullaware.com.On the site you can find the same metrics calculated over different time periods.).
Simple guide to metrics
Beta: In finance, Beta is a number that measures how much an investment (like a stock) moves compared to the overall market. If the Beta is 1, it means the investment tends to move up and down exactly like the market. If the Beta is greater than 1 (for example, 1.5), the investment is more volatile, meaning it will likely go up or down more than the market. If the Beta is less than 1 (for example, 0.5), the investment is less volatile, so it will move less than the market. In simple terms, Beta helps investors understand how risky or stable an investment is compared to the market.
Sharpe Ratio: The Sharpe Ratio is a number that tells you how much more an investment pays you than a safe option, taking into account the risk you take. Basically, if you invest in something risky (like stocks), the Sharpe Ratio helps you understand if that risk is worth it in terms of returns. The higher the number, the better the investment balances rewards and risk.
Sortino Ratio: The Sortino Ratio is similar to the Sharpe Ratio, but it only measures the risk related to losses, ignoring positive volatility (when returns are above average). Instead of considering all volatility, the Sortino Ratio focuses only on negative deviations, meaning when the investment loses value compared to a certain target or minimum desired return. In simple terms, it tells you how much return you’re getting for every “unit” of downside risk. A higher Sortino Ratio means the investment is generating good returns without too much risk of losses.
Jensen’s Alpha: It is a measure of how much an investment outperforms or underperforms compared to its expected return, based on its risk. In simpler terms, it tells you if an investor is adding extra value through skill, beyond what the market or a benchmark would predict. If the alpha is positive, it means the investment did better than expected, given its risk level. If the alpha is negative, the investment underperformed compared to what was expected. So, Jensen’s Alpha helps to judge if an investment’s performance is due to good management or just general market movements.
Omega Ratio: It is a measure that compares the chances of getting good returns versus bad returns from an investment. It looks at all possible returns, both above and below a certain target (like your expected profit), and then calculates how much more likely you are to get positive returns than negative ones. In simple terms, a higher Omega Ratio means the investment has a better chance of giving you more gains than losses, while a lower ratio suggests more risk of losses. It’s useful for understanding the balance between reward and risk.
Treynor Ratio: The Treynor Ratio measures how much return an investment earns for each unit of risk taken, but it focuses specifically on the risk related to the market (also called systematic risk or beta). It tells you if you’re being rewarded fairly for taking on market-related risks. In simple terms, a higher Treynor Ratio means the investment is giving you better returns compared to the amount of risk you’re taking in relation to the overall market. It’s helpful for understanding if an investment is worth the risk you are exposed to due to market movements.
Information Ratio: The Information Ratio measures how well an investor or an investment perform compared to a benchmark (like a market index) while considering the extra risk taken. It shows how much extra return is generated for each unit of risk that’s different from the benchmark. In simple terms, the Information Ratio tells you if a fund manager is consistently beating the market while taking reasonable risks. A higher ratio means the manager is doing a good job of delivering extra returns without taking on too much extra risk.
Calmar Ratio: The Calmar Ratio measures how much return an investment generates compared to its biggest losses (called the maximum drawdown). It helps you understand the balance between reward and risk by comparing how much profit you can make versus how much you might lose in a downturn. In simple terms, a higher Calmar Ratio means the investment is giving good returns without large drops in value, while a lower ratio means the investment might have bigger losses compared to the profits it makes. It’s useful for evaluating the riskiness of an investment.
MY INVESTMENTS IN THE LAST QUARTER
Below I tell you about the operations that I opened in the last quarter of 2024. For the operations of previous quarters you can refer to my previous quarterly reports.
This last quarter was full of new operations compared to the rather small average of new positions that I normally open. Now that I collect them in this document I realize how numerous they actually were. Of these operations only one is part of the magnificent 7, proving that all in all if you look carefully there are still undervalued sectors.
For each position I will present you a description resulting from the synthesis of my post for which I explained the reason for the purchase, followed by an evaluation with respect to the situation updated at the time of writing (around 10–20 January 2025).
There were 6 opened in Q4 2024 :
$NVDA NVIDIA Corporation
Does Nvidia really need any introduction? The “almost monopolist” in the supply of chips for the new data centers dedicated to AI, with its new Blackwell chip and the new markets that are opening up in humanoid robotics and quantum computing still promises great growth potential despite the high price. In the fall I made a first speculative operation by buying a share of shares at a price of $ 108 and reselling them at $ 146.
After the last quarterly, I opened a new longer-term position by opening a new position at $ 135 with the idea of reassessing the situation in a couple of quarterly reports.
$MC.PA LVMH Moet Hennessy Louis Vuitton SA
Founded in 1987 and headquartered in Paris, France, LVMH Moet Hennessy Louis Vuitton SA is a world leader in luxury fashion, beverages and accessories. I have been waiting for this stock to retrace for a long time to add it to my portfolio with a “forever” time horizon and at the moment the position occupies 3.75% of my portfolio.
$VCTR Victory Capital Holdings Inc
is a diversified asset management firm offering a range of investment products, including mutual funds, ETFs, and private funds. My purchase price was $69.80.
Key Reasons for Investing in VCTR for the Long Term:
#️⃣ Robust Financial Performance
#️⃣ Consistent Dividend Growth
#️⃣ Strong Profitability Metrics
At this time, a month and a half after the first purchase, the position is still slightly down (-3%), but given the indefinite time horizon, this is not a worrying element.
$CCL Carnival Corp.
It is a leading leisure travel company, primarily engaged in the cruise industry. Founded in 1972 and headquartered in Miami, Florida, the company operates a fleet of 87 ships that visit approximately 700 ports worldwide under well-known brands such as Carnival Cruise Line, Princess Cruises, Holland America Line, and others. In addition to cruises, Carnival offers port destinations and related services, also owning and operating hotels, lodges, glass-domed train cars, and motorcoaches. The company sells its cruises primarily through travel agents, tour operators, vacation planners, and websites.
This position is considered speculative although I will wait for the next quarterly to set a take profit. At the moment it occupies 2.7% of my portfolio and is in profit of about 17% made in less than 2 months.
$AGX Argan Inc.
Driven by unprecedented demand for energy infrastructure, this construction and engineering company has significantly outperformed the industrial sector. This company offers expertise in servicing both traditional and renewable energy sectors. Its revenue increase double digits across multiple segments, climbing 61% compared with the previous year, its strongest showing since 2017.
The stock is poised to continue capitalizing on significantly higher energy demand in the wake of the AI revolution, global electrification of vehicles, and the replacement of old power plants.
After opening a speculative position of about 2% of my portfolio, it was closed after a gain of about 36%. I reopened a new small position and it currently occupies 1.3% of the portfolio and is up 18%.
$NVO Novo Nordisk A/S
Novo Nordisk is a Danish multinational pharmaceutical company, a world leader in diabetes care. The company is known for developing and manufacturing innovative drugs for the treatment of diabetes, obesity, and growth disorders. In addition to diabetes, the company operates in other therapeutic areas such as hemophilia and hormone replacement therapy. After a crash caused by (in my opinion marginal) issues with the results of a trial, the shares continued to fall until recently reaching half of their ATH. Given the interesting value for a solid company that is in no way experiencing difficulties, I decided to “buy the dip” at the price of $85, buying a stake equal to 1% of my portfolio. At the moment the price has fallen by another 7% but since the characteristics of the company remain unchanged I will make a further entry in January.
Dividends
Let’s now delve deeper into a part of the stocks in the portfolio that produces an incoming flow of dividends.
But what are dividends?
Stock dividends are payments that a company gives to its shareholders, either in the form of cash or additional shares of stock. These payments come from the company’s profits and are divided based on how many shares each person owns.
Why dividend stock?
In view of the current market turbulence, and to control the risk score, I decided to set up our portfolio with a portion of dividend stocks. In that 40% of value and dividend stocks, there are the shares we are referring to. So we are talking about the most defensive part of the portfolio.
The advantages of dividend stocks are that, in general, they are less subject to volatility and that in most cases the dividend distributed is not too affected by the ups and downs of the market.
You can learn more about this topic by reading the following post:
WHY I AM BUYING DIVIDEND SHARES
The disadvantages of dividend stocks are that they generally have lower growth than the market average. As always, with lower volatility and lower risk, we have lower earnings.
My dividends LTM
In this graph you can see the evolution of dividends on my account over the last 12 months (Last Twelve Months) .
Representing dividends graphically poses a challenge because they are distributed unevenly throughout the year, making it difficult to create a sufficiently informative visualization. For this reason, I chose to create a chart where the sum of the dividends from the previous 12 months is shown for each month. By considering a full year, the visual information makes sense again, and the growth effect of investing in dividends becomes clear.
The blue value, month by month, indicates the growth of the LTM dividend, compared to the first dividend of the period considered; so if the first month is 1 and February is 1.05 it means that compared to the previous month, the LTM collected dividends in February grew by 5%.
Overall, between January 2024 and December 2024, dividends grew by 15%. Although there is interesting growth, this is significantly lower than the 60% that occurred in 2023. This significant decline occurred mainly due to the fact that in 2023 the creation of the portion of the portfolio dedicated to dividends was completed and therefore the growth in 2024 is due only to the growth of the dividends of the stocks in the portfolio.
Compared to the entire portfolio, the dividends received were equal to approximately 1.28% of the entire portfolio.
If instead we consider only the portion of the portfolio dedicated to assets listed on the stock exchange, the percentage rises to 2.2%. Compared to the yield on cost, the % rises to 2.6%.
For 2025, assuming that the portfolio does not change, a 39% increase in dividends is expected (based on the estimate of future dividends made by Simplywall.st)
eToro Risk Score
In eToro the Risk Score indicates how sharply the value of that investment changes over time. The sharper the deviation, up or down, the more volatile the investment and the riskier it may be considered.
eToro encourages Popular Investors as me and the other investors to keep their risk score low, so one of the few limitations of being Popular Investors is the constant need to deal with the RISK SCORE.
The consequence of keeping the risk score under control is having to keep the volatility of the portfolio low. To achieve this goal, 40% of my portfolio is dedicated to ETFs, Value stocks and Dividend stocks which notoriously make the portfolio less volatile than Crypto and growth stocks.
Compared to 2023 where my Risk Score was on average 4, this year I reached the important milestone of going down to 3.
The risk distribution on my assets is the follow:
My journey on eToro (What else happened in 2024)
After I passed the certification test on CISI Level 3 International Certificate in Wealth & Investment Management, at January I become an Popular Investor Elite.
This means entering the elite of eToro’s best investors.
As I write, I have been in the Top 15 of the most followed Popular Investors on eToro for 6 months and for many months I have been the most copied Italian PI. An acknowledgement I am truly proud of.
In September, two important events marked the eToro family calendar:
First event: My first Popular Investor summit
An hour’s train ride from London we had an unforgettable experience at the Tylney Hall Hotel, where over 100 popular investors from all over the world gathered for a 3-day investment retreat. Over the course of three days, we witnessed inspiring discussions, insightful workshops, and valuable networking opportunities. The retreat began with social media and marketing workshops, followed by deep dives into investment strategies with industry leaders from Blackrock, Softbank, and a fireside chat with Lord Fink. We also had the privilege of gaining exclusive insights from eToro’s CEO, YoniAssia and connecting with fellow Popular Investors during dinners and leisure activities.
A few days later, near Milan in my Italy, we were able to attend the eToro Diamond Event, with many other Popular Investors; this is the now traditional meeting that brings together eToro Diamond investors with a representation of the best Italian and global Popular Investors.
And just as at the end of 2023 I took the CISI Level 3 exam to become a Popular Investor Elite, similarly at the end of December 2024 I enrolled in the training course for the CISI Level 4 which, after passing 2 further exams over the course of 2025 (and perhaps even 2026), will allow me to become a Popular Investor Elite Pro.
My Portfolio management criteria and my Strategy
In general, the composition of my portfolio is as follows:
· 30% Growth Stocks
· 40% Conservative assets: Value stocks, Dividend Stocks or ETF
· 30% Crypto
I am normally 85–90% invested while I keep the remainder in cash or gold.
Regarding any purchase operation, it is done by purchasing assets in a minimum amount of 2% of the portfolio, up to a maximum of 4% in the first purchase. Subsequent purchases are typically 1%.
However, usually no asset is purchased in an amount greater than 10% of the portfolio. If, however, as a result of value changes, an asset exceeds 10%, it is usually not rebalanced until it reaches its fair value.
In general, the following guidelines apply to the criteria used to purchase or sell assets:
· Value Stock or dividend-paying assets: These are typically held indefinitely or occasionally sold if fundamentals change.
· Growth Stocks and Cryptocurrencies: These are typically held in the portfolio until they reach their target value and then sold.
In addition, we also keep a close eye on the economic and political landscape to make informed decisions about the direction of the markets. We also maintain a diversified portfolio to mitigate risk and capitalize on market opportunities.
Finally, it is worth noting that I use Tax Harvesting whenever it is deemed appropriate (but in any case rather rarely), which will therefore translate into sales of assets at heavy losses, to be repurchased after having accounted for the losses.
To defend the portfolio from the uncertain markets of the recent period, I have slightly modified my portfolio by giving it a defensive structure mainly focusing on dividend stocks that I believe are undervalued.
Copier Questions
Welcome to the section dedicated to questions from my copiers and those who follow me on eToro.
It is normal on eToro to be available to its copiers to answer questions that are asked. Some of these, however, are of general interest and therefore I propose them again here because they can be of interest to everyone. Furthermore, through a specific post, I collected other questions that my copiers wanted to ask me and here I will try to answer them. I hope something interesting comes out of it.
The questions below were collected from the following post: https://etoro.tw/3E1Cj7f
I repeat: Nothing in the following should be considered investment advice. The following is for educational purposes only and are only market analyses, developed starting from subjective evaluation parameters.
So let’s start with the questions:
Q: What expectations can we have regarding Donald Trump’s second term and which markets will benefit greatly?
A: According to most observers, the Trump administration’s economic policies will mainly benefit the following sectors:
Traditional Energy: The Trump administration has promoted the United States’ energy independence, supporting fossil fuels such as oil, natural gas and coal. This includes accelerating drilling permits and developing energy infrastructure.
Defense: Increased military spending is a key component of the “America First” policy, benefiting US companies in the sector.
Finance: Deregulation initiatives aim to reduce constraints on financial institutions, potentially increasing the profitability of banks.
Small and Medium-Sized Businesses: Tax and deregulation policies are designed to stimulate the growth of US SMEs, especially those operating in cyclical sectors.
Cryptocurrencies: The Trump administration has shown openness towards digital assets and cryptocurrency markets in general. In addition to benefiting crypto valuations, this should also benefit related companies related to the sector.
Finally, it should be noted that at the macroeconomic level, a policy is expected that could give a strong boost to inflation.
Q: Let’s say you have €1000 available for a 10 year old boy and a 15 year old girl… where would you invest them knowing that they will have 10–15 years to eventually yield results?
A: Knowing that I have a sufficiently long time horizon, I would probably opt for a stock index based on your risk appetite and geographic residence; in order from most to least risky I would aim for an ETF on the Nasdaq, on the SP500 or finally on any MSCI World. In my opinion, these, in this order, could be the markets that should obtain the best performances in the next decade. Generally, I would advise against going all-in on a single product. Instead, I recommend creating a diversified portfolio to protect yourself against a variety of scenarios. However, given the modest size of the amount, focusing on a single product could also be a viable option. Generally, it is not possible to answer this type of question, but I have outlined an answer precisely by virtue of the value indicated which is more comparable to a “significant gift” than to an “investment” in the classic sense.
Q: What do you think about stocks like $QBTS (D-Wave Quantum Inc), $RGTI (Rigetti Computing Inc), $IONQ (Ionq Inc)?
A: Listening to the main analysts, promising prospects emerge for the quantum computer market. Currently valued at around one billion dollars, the sector is expected to reach 20 billion by 2030, with a global economic impact estimated at 2,000 billion dollars by 2035. While the market in general seems rather promising, it seems rather difficult to me to be able to identify the winning company in this race right now, knowing that in a few years, a good part of them will have gone bankrupt or been absorbed. In my opinion, the outsiders in this sector are some companies that are already part of the magnificent 7 (such as Alphabet) that seem to be quite advanced in research.
Q: what could potentially be a target price for BTC and ETH in 2025? and what AltCoin do you think has the biggest potential?
A: Regarding my ideas on Bitcoin you can see the paragraph of this document dedicated to my outlook on 2025; for everything else, regarding the altcoin world, I really have no idea what could happen. It is a world too large and complex to be dedicated to full time. There are many other people who could answer you much better than I, keeping in mind that no one knows the future and therefore every discussion is in terms of “most likely event”. Having said that, at the moment it seems that Donald Trump’s second term will be a favorable period for crypto in general. We’ll see.
Q: What do you think about investing in nuclear energy? Since I think it will be the future of energy (I don’t know if here in Italy but certainly in the US). Which stocks would you buy?
A: I am not particularly skilled on the subject, but I certainly agree that in the coming years the energy sector will be a key sector. Rather than focusing on the specific nuclear energy sector, I would broaden my gaze to the entire industry (which I am already doing).
Q: How do you see the recovery of Asian markets? Is it possible? When?
A: Difficult to answer, even if the Chinese government is keen to let you know that it will give all its support. As I write, Donald Trump is also showing signs of openness towards China; if this were to materialize, it could be of help. Of course, the Chinese government must first solve a series of problems that it is currently trying to stifle (the real estate crisis first and foremost), but if it keeps its promises, a flood of aid is about to be released into its markets.
That’s all folks! (Outlook for 2025)
In conclusion, we can say that 2024 has been very positive.
2 weeks from the end of the year we were at +40% which however in the last few days has retraced down to 35%, but it is still an excellent result, in line with my historical performances.
What will 2025 be like?
It’s hard to say, but one of the things that seems most likely is that it will be one of the most unpredictable years in recent memory.
FactSet, one of the most famous American financial software and database companies, predicts that in 2025 the S&P 500 will have an average earnings growth of 11.9%, driven by the growth of listed companies. Considering that on average these values are underestimated by 6-7%, we could have an earnings growth between 13% and 20%. In practice, even from this point of view, we can probably expect a positive year for the US Markets.
On the other hand, we have the more pessimistic analysts who expect a Donald Trump presidency characterized by hyperinflationary policies that could push capital out of the stock markets to take refuge in the bond markets.
By the end of Q2 2025, we should be able to understand how this year will go.
What about Bitcoin and cryptocurrencies?
In 2023 and 2024 crypto covered about 30% of my portfolio, being the asset that more than any other demonstrated growth potential at a much lower risk than the market quoted. This choice was rewarded with a portfolio growth of 100% in 2 years , generated in large part by crypto. At the beginning of 2024, however, the future of crypto was not yet clear and for this reason, at the height of the success of Bitcoin & co. I began to anticipate that my idea was to start a decumulation plan on crypto until they dropped to 15% of my portfolio. This surprised several of my copiers and followers who couldn’t understand why at the top of the crypto world’s success I thought of easing up: the main reason was that there wasn’t enough information to reliably estimate how this world would evolve even in the short term, and a market without information is a risky market, and I really don’t like risk if it’s not well compensated. Additionally, in the absence of any major news, 2024 seemed to be the year the crypto market reached maturity, and a mature market is a market with significantly less growth.
But now something has changed. First of all, Trump’s election as president has made it clear to everyone that this will be a crypto-mandate: what to me seemed like a comfortable position intended only to collect the vote of crypto holders and then be abandoned once elected, has instead been confirmed and strengthened after the elections with the appointment of many crypto enthusiasts in key roles in the next American administration. Already now, Bitcoin’s capitalization is 2 Trillion, but the recognition of Bitcoin as an institutional asset opens the doors to the influx of important institutional capital that could further increase its value and greatly decrease its volatility. Of the many theories of important analysts that I follow, the one that I consider most concrete is that the future trend of Bitcoin will be closely tied to global liquidity and will therefore follow increases and decreases. This alone can make us understand that the road will not only be uphill but will be a succession of ups and downs in conjunction with monetary inflation and liquidity crises. But the moral of it all is that Bitcoin, in the long term, seems like it could really be a protection against fiat currency inflation and seems destined to reach new highs every time large quantities of fiat are printed in the world. Moral of the story: never before has the 150K seemed like a highly probable goal (I would never have said it just a year ago) and almost no one would be surprised if this goal were reached in 2025. And this is just a conservative target. An asset destined to rise so much with such a high probability is difficult to replace with other assets, and this is why my idea of decreasing has now been abandoned: when market conditions and available information change, you have to change your strategy. 2025 will therefore be another year where Bitcoin will be the main asset in my portfolio and will remain in the portfolio in practically the same percentage as the current situation.
Different situation for Ethereum and Solana: for these other two assets, the future is still uncertain, and much will depend on the liquidity inflows that the related ETFs will see. We will continue to monitor the situation and evaluate what to do as the numbers show us a path. As already said several times, in today’s vast panorama of the crypto world, there are too many interesting coins that should be studied carefully and not having infinite time, I stay within my circle of expertise, limiting myself to the three main ones, even if, to be honest, I’m not sure if $SOL or $ETH will both still be in my portfolio in three years.
For me, as always, my goal is to outperform the S&P 500 by at least one percentage point.
Will I do it for the ninth year in a row? 😜
As Usual, I will keep you informed of any new developments and opportunities in the market, and I will always be available to answer any questions you may have.
I am @IlMatematico, and through my algorithms, I try to extract value from the markets. Always stay updated with my posts by following me on my eToro profile (It’s free!). I’ll wait for you on my profile:
https://www.eToro.com/people/ilmatematico
This content is not intended to be investment advice. The following is for educational purposes only. Investments in securities and other financial instruments always involve the possibility of losing capital. Past performance does not guarantee future returns. The content of this article is not intended in any way to constitute a solicitation of public savings or investment advice in shares or any other financial instrument.