Nelson Capital spent the fourth quarter tax-loss harvesting (where appropriate) to offset large capital gains taken in 2023 and making some adjustments to better position our portfolio for 2024.

The Magnificent Seven were the best performing stocks of 2023 and three of them fall within the technology sector. We added to our position in Apple (tkr: AAPL), one of the Magnificent Seven, to bring our position to a market weight relative to the S&P 500. We also purchased the Technology Select Sector SPDR Fund (tkr: XLK), an ETF (exchange traded fund) that tracks the technology sector of the S&P 500 to get us closer to our technology sector target. With an expense ratio of just 0.10%, XLK gives us more diversified exposure to the technology sector at a very low price.

In the finance sector, we initiated a position in Arthur J. Gallagher & Co (tkr: AJG), one of the largest global insurance brokers. Unlike traditional insurance companies, insurance brokers do not underwrite policies. Instead, its revenue is generated primarily from commissions and fees. Arthur Gallagher is not subject to the same catastrophe losses that traditional insurers face, yet it still benefits from insurance premium hikes, resulting in more predictable revenues. Furthermore, insurance is a critical expense for most businesses, regardless of macroeconomic conditions, which further solidifies the reliability of its revenues. Arthur Gallagher also continues to invest in software portals and other technology that enables customers to access information and services, providing a superior experience while concurrently lower operating costs.

In the fixed income space, we extended duration in our treasury ladder using a barbell approach by adding 7-year and a 10-year Treasury bonds while retaining some exposure in the short end of the yield curve. With rate cuts on the horizon, we were able to lock in higher yields for longer, especially if we believe the inverted yield curve will soon reverse course and return to a more normal upward sloping curve.

Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Capital Management, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.