Of course, the year isn't over, and anything can happen. But I'll risk prematurely counting my chickens to squeeze in my annual review before everyone is comatose from too much trifle and plum pudding… myself included.

Reflection is a grossly undervalued practice — not just for investing but also in life. After all, "Those who fail to learn from history are doomed to repeat it." By reviewing what has transpired before, we can better understand what should be done moving forward.

As of today, my stock-picking portfolio has returned 63.9% in 2024 (including dividends). How does that compare to the broader market? Below are a few indices to stack it up against:

• S&P/ASX 200 Index (ASX: XJO) gross total return of 12.3%
• S&P 500 Index (SP: .INX) return of 27.6%
• Nasdaq Composite (NASDAQ: .IXIX) return of 35.0%
• iShares MSCI World ETF (NYSE: URTH) return of 22.3%

I won't claim to be some Sage of the Sunshine State. Some years are better than others, and to claim victory as an investor because of one good year would be fallacious. But there is merit in deciphering what worked and trying to replicate the success repeatedly.

What's inside the share portfolio?

In many ways, this year has been a continuation of the last. Again, tech and consumer discretionary have shined bright despite crimped household budgets.

Some of this is arguably fuelled by the excitement surrounding artificial intelligence. This is supported by such companies seeing their valuations soar more from an increasing price-to-earnings (P/E) ratio than profit growth.

It makes the stellar year somewhat hard to celebrate. Yes, in the short term, it's great for the ego and the wealth on paper. However, it's not what you want as an investor in the long run. The premium paid for a slice in a company can not expand forever; eventually, its earning power must support it.

A few of my top holdings, Tesla and Apple, are guilty of this earnings-deficient rally. The heightened premium probably reflects optimism about future profitability as we hopefully emerge from a high interest rate environment.

A few notable changes were made to my share portfolio this year.

• Increased my ResMed position
• Increased my Meta position (the owner of Facebook, Instagram, and WhatsApp)
• Added Aristocrat Leisure
• Added Alphabet (the owner of Google)
• Reduced my Propel Funeral Partners position on dilutionary concerns
• Exited Duxton Water amid worsening execution
• Exited Elders on increasing margin pressure

Ultimately, my big winners of 2024 are Tesla, Palantir, Pro Medicus, ResMed, Meta, and Aristocrat. In many cases, these are companies that have been (and possibly continue to be) misunderstood.

ResMed is a prime example. Investors ditched the sleep apnea maker, worried that weight-loss drugs would demolish its market. So far, the impact has failed to materialise, with some suggesting the Ozempic craze is giving the sleep apnea market a boost.

I think the lesson here is that it pays to build conviction. Once you've built a conviction based on logic, it's much harder to lose money through emotionally driven decisions.

Change afoot in 2025

A big part of investing is knowing thyself.

I have limited mining knowledge. So, what am I doing investing in Lynas and Albemarle?

Both investments were added to my share portfolio several years ago, rooted in basic supply and demand principles.

While I've managed to achieve decent returns from both, it isn't a great way to invest realistically. A business is more than its market, and I don't possess the comprehension to understand whether Lynas or Albemarle are good companies compared to their peers based on their resources.

For the above reason, I'll probably sell a few positions in 2025 and redeploy the money to companies I can better understand.

The post These stocks made my share portfolio a market-beater in 2024 appeared first on The Motley Fool Australia.

In this article, I pull back the curtain on my entire personal portfolio — at least the portion I actively manage — to give some insight into portfolio construction, my 2023 mistakes, and where I most see opportunity for 2024 and beyond.

Let's begin.

Inside my share portfolio

Despite it being another eventful year full of trials and tribulations, equity markets are in the green as we approach the home stretch. The enticing proposition of 5% interest, or more, on cash savings has failed to put a dent in the S&P/ASX 200 Index (ASX: XJO) — returning 3.3% year-to-date at the time of writing.

Ironically, the tech and consumer discretionary sectors have been 2023's breadwinners — creating some juxtaposition with the ongoing economic tightening. Investors looking ahead to future interest rate cuts might have supported the buoyant optimism in these sectors.

Nonetheless, it meant a much rosier year for my share portfolio, recovering from a rough performance in 2022. As of 7 December 2023, my collection of companies had returned 30.1% YTD, exceeding the Vanguard MSCI Index International Shares ETF (ASX: VGS) by approximately 10%.

While the result is good for the ego, I'll hold off until the 10-year or 20-year return before I go chalking up a win in my books. Still, I'm pleased with the refinement of my share portfolio this year — now holding the following companies:

The 10 largest equity positions in my portfolio constitute approximately 65% of my holdings. This is intentional. These positions are my highest conviction investments, the ones I'm most comfortable having large sums of money in.

During my almost seven years of investing, I've come to learn that time is your most scarce resource as an investor. As such, I dedicate the majority of my time and money towards the top 10 largest holdings in my share portfolio.

If I were to try to know all 22 companies intimately, I think I'd risk being stretched too thin. I still know the nuts and bolts of the remaining 12 companies, but not enough to warrant larger allocations of my wealth to them.

Biggest mistake of 2023

I was taught an expensive lesson this year by an investment in Unity Software Inc (NYSE: U).

Heading into 2023, the game development software company was one of my largest holdings. Due to its robust revenue growth, I was willing to look past the lack of profits. Unfortunately, I also overlooked a few red flags.

The first bright red flag… the company made an enormous US$4.4 billion acquisition at the end of 2022 before refining its own business — funded completely by issuing stock, no less. Secondly, the CEO, John Riccitiello, had a poor track record in making customer-friendly decisions.

Unity announced plans to charge game developers per game download, a move that reportedly would have bankrupted some. The move, since canned, was reminiscent of Riccitiello's proposition to charge Battlefield players to reload in-game.

I eventually sold out of Unity Software in May after learning the hard way how costly poor management can be.

Stock buying plans for 2024

As noted earlier, 14.5% of my share portfolio is sitting in cash. I plan to put this money to work as opportunities arise next year.

For example, Resmed is a relatively recent addition, getting added amid the Ozempic-driven sell-off. I still think the medical device maker trades at an attractive valuation. While weight-loss drugs are expected to reduce the sleep apnea market somewhat, I think the size of the forecast reduction is overblown.

Another ASX share I'm looking to add to is Sonic Healthcare. The chart below shows that Sonic is an insignificant holding in my share portfolio. The paltry position doesn't align with my level of conviction in the medical services provider — it should be much larger.

Lastly, several companies on my watchlist could find their way into my portfolio next year. I'd argue companies such as Kone Oyj, Trane Technologies PLC (NYSE: TT), Super Retail Group Ltd (ASX: SUL), and Nick Scali Limited (ASX: NCK) are high-quality and attractively priced.

The post Rare reveal: A glimpse into my complete share portfolio heading into 2024 appeared first on The Motley Fool Australia.