
cogal/E+ through Getty Photos
One yr in the past, you predicted that the S&P 500 would achieve 24% in 2023, proper?
Liar!
Sorry about that, however I’m simply enjoying the chances. Possibly you had been probably the most bullish bull on the market and also you really acquired it proper, however I’m guessing you weren’t practically that optimistic — that you simply had been extra like a lot of the investing world pundits who forecast both minor positive factors or vital ache (full with a recession) for 2023.
For instance, Morgan Stanley’s Michael Wilson, the top-ranked analyst within the 2022 Institutional Investor survey for appropriately calling that yr’s market slide, predicted a 21% decline within the first quarter of 2023 and solely a 2% achieve for the yr.
Oops! SPDR S&P 500 ETF Belief (SPY) really gained 24% and had a complete return of 26% (together with dividend reinvestment).
This tells us a few issues: Analysts aren’t at all times proper (not even shut), and it’s not straightforward to foretell what route wacky Mr. Market is gonna take us.
Certainly, one may say that trying to spend money on shares based mostly on general market predictions is a idiot’s recreation. That’s why I don’t attempt to do it. I make investments repeatedly, promote sometimes, and simply watch the market do what it’s at all times performed over time — go greater.
That definitely was the case once more in 2023 with my Progress & Revenue Portfolio, the school fund I’ve been constructing for my grandkids since June 2020.
On the finish of 2022, the GIP was price $5,656, and complete return since its inception had been a measly 4.4%. Properly, have a look at it now!

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Had I panicked after a troublesome 2022 and offered a bunch of shares, or scaled again my investments, I’d have missed out on an amazing yr for the market. And the GIP wouldn’t have a 27.3% complete return from inception via the top of 2023.
No marvel my son Ben’s youngsters — four-year-old twins Jack and Logan, and their four-month-old brother Noah — are so completely happy!

Photograph by Creator
Eight of the GIP’s holdings crushed the market’s complete return in ’23. Sure, tech led the best way (because it led the general market), however betting app DraftKings (DKNG), warehouse retailer Costco (COST) and animal health-care agency Zoetis (ZTS) additionally contributed properly to the portfolio’s advance.

YCharts
One other inventory within the GIP, railroad CSX Corp. (CSX), has a 15.5% complete return since I added it in August (and purchased extra in September). Had I gone with SPY as an alternative, the return would have been solely 7.8%.
In the meantime, I even have been constructing a school fund for my daughter Katie’s youngsters, three-year-old Owen and 22-month-old Piper, since October 2021.

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Up to now it hasn’t performed in addition to the opposite a part of the portfolio — exhibiting a 3.9% loss via the top of 2023 — partly as a result of it has been dragged down by the minus-18% complete return of Financial institution of Nova Scotia (BNS).
Nonetheless, my newest purchase, Canadian Nationwide Railway (CNI), has a 15% complete return since I added it on Sept. 6. That’s greater than double SPY’s 7.3% achieve in that span … and like most kiddos, Owen and Piper love a market-thrashing inventory!

Photograph by Creator
Excessive Achievers
Owen and Piper additionally love going to Costco, particularly for the oodles of meals samples which might be handed on the market. With a 77% complete return, COST has been the Progress & Revenue Portfolio’s high performer from inception via the top of 2023. The corporate makes billions of {dollars} yearly on membership charges earlier than it ever sells a single product, giving it one of the best enterprise mannequin in all of retail. The inventory continued to defy gravity in 2023, going up one other 49%.
A number of of the GIP’s excessive achievers — most notably Lam Analysis (LRCX), Microsoft (MSFT) and Amazon (AMZN) — have benefited from traders going ga-ga over every little thing associated to synthetic intelligence. These firms are about much more than AI, nevertheless.
As a provider of elements that go into the processing of semiconductors, Lam is a basic “pick-and-shovel” firm, and chip shares had been on a tear just about all yr. Microsoft, Alphabet and Amazon are expertise conglomerates which might be dominant names in quite a few industries. (I do know, I do know, GOOGL and AMZN really are labeled in sectors aside from expertise … however please.)
As nice a bounce-back yr because it was for the likes of Alphabet, Lam and Amazon — every of which had a unfavorable complete return via the top of 2022 — the GIP place that basically rocked in ’23 was DraftKings.

YCharts
The above chart reveals how DKNG got here out of the gate scorching after I first purchased it in June 2020, the way it dive-bombed from late 2021 to mid 2022, the way it stagnated the remainder of 2022, and the way it has rallied for the reason that begin of ’23. It was up an astounding 209% within the yr simply ended.
Yeah, I’d have been higher off simply shopping for the index as an alternative of DKNG again in 2020, however DraftKings was at all times a hypothesis play, and we’ll see what occurs within the coming years. The corporate has but to show a revenue however expects to in 2024, and sports activities playing has grow to be extra widespread than ever.
On the down facet, a number of of the portfolio’s positions had solely single-digit proportion complete returns (and even unfavorable returns) in 2023, together with long-time favorites similar to Pepsi (PEP), Lockheed Martin (LMT) and Johnson & Johnson (JNJ).

YCharts
Nike (NKE) shares fell 12% on Dec. 22 after the corporate launched an earnings report that included a income miss and warnings about future gross sales. Issues could possibly be rocky for the sportswear big near-term, however I nonetheless like proudly owning this dominant, omnipresent model over the lengthy haul.
UnitedHealth Group (UNH), which led the GIP with a 48% complete return via the top of 2022, barely managed to interrupt even in ’23. The trade has been dealing with growing regulatory hurdles and political strain, however analysts nonetheless count on UNH’s earnings to develop by 12% in 2024 and 13% in 2025.
Valuation Station
A number of GIP shares look fairly overvalued, led by Costco (41.4 ahead P/E ratio), Zoetis (34.1), Microsoft (33.5), Mastercard (31.2), and Apple (29.1).
In the event you’re constructing your portfolio the identical approach I’m constructing this one — with small, month-to-month buys over the course of 15-20 years — valuation is much less essential. That’s doubly true of “growthier” shares that just about at all times appear costly. (Valuation issues quite a bit to me in my private portfolio, the place I make bigger and less-frequent buys; for instance, I’m not including to my COST place there at its present value.)
I’ll say that the 2 Canadian banks within the Owen/Piper portion of the portfolio – Financial institution of Nova Scotia and Toronto-Dominion (TD) – supply probably the most compelling values, with ahead P/E ratios round 10 and higher-than-usual yields (6.6% for BNS and 5% for TD). Johnson & Johnson, with its sub-16 ahead P/E ratio and near-3% yield, seems to be barely undervalued.
Notably, there are many analysts on the market who nonetheless love among the development shares with sky-high valuation metrics.
For instance, 54 of the 55 analysts monitored by Refinitiv think about Amazon to be both a robust purchase or purchase, and their imply 12-month goal value of $177 suggests 15% upside.

Refinitiv, through constancy.com
CFRA analyst Angelo Zino may be very bullish on Microsoft, saying: “Our Robust Purchase score is especially based mostly on AI alternatives in addition to MSFT’s ongoing cloud transition, with robust traction for cloud variations of Workplace, Dynamics, Groups, and Azure infrastructure cloud companies. … We see a slew of various ways in which MSFT will have the ability to monetize the explosion of generative AI (e.g., cloud, CoPilot integration, OpenAI, Search growth), driving appreciable upside potential to our/Avenue consensus views trying forward.”

CFRA, through schwab.com
Mastercard is a type of always-expensive shares, however many analysts are nonetheless in purchase mode as a consequence of its robust fundamentals, vast moat and pristine stability sheet.

Jefferson Analysis, through constancy.com
Revenue Report
“Progress” is that this portfolio’s first identify, and that’s its main goal. Nonetheless, through the years, I do count on the GIP to provide materials revenue on its option to serving to pay for our grandkids’ school prices.
Most GIP firms fall into the low-yield, high-growth class of dividend payers. Zoetis is an effective instance, with its 0.9% yield and its common 25% dividend development over the previous 5 years.
The entire portfolio’s dividend-paying holdings — together with these within the Owen/Piper portion — declared will increase in the course of the course of the yr, from LRCX’s 15.9% increase to the two.9% hike of BNS (and every little thing in between).

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Two good bonuses had been introduced, as effectively. Costco can pay a $15 per share particular dividend, and Disney, which eradicated its dividend early within the pandemic, is bringing again a 30 cents/share payout.
Wrapping Issues Up
So, after closing at 4,770 in 2023, the place will the S&P 500 be on the finish of 2024? Listed below are predictions from quite a few funding banks and analytical companies:

Yahoo Finance
Even probably the most bullish count on solely a few 9% achieve, whereas the most important bear is forecasting a 12% decline.
What do I consider all that? Not a lot. I don’t know what the market will do in 2024… and judging from analysts’ forecasts a yr in the past, neither do most of them.
So I’ll simply preserve investing a bit at a time into the Progress & Revenue Portfolio, month after month and yr after yr. To me, particularly in a portfolio with such a long-term goal, it’s the one approach that is sensible.
Keep in mind, it’s not my intent to get any investor to copy the GIP. The concept is to current shares for additional analysis and to debate investing ideas.