My “4-C” Trading Portfolio Soared In 2024 – And Should Keep Trending Higher in 2025

Andrew Packer, Grey Swan Investment Fraternity

Happy New Year! Hopefully your investments fared well in 2024, and you beat, or at least kept up, with the S&P 500’s 23% rally.

And it shouldn’t have mattered if you were a day trader or a buy-and-hold investor … 2024 rewarded everyone long the market.

Fidelity reported that the number of 401(K) millionaires hit its highest level ever, a sign that sticking to a simple investment strategy can work out great over time.

For more active traders, 2024 was great for bullish traders. Bearish traders had only a few pullbacks big enough to really profit from. That may change in 2025, as we expect volatility back on the menu.

I found that 2024 was a transformative year for my investments. That’s because I’ve been sticking with what I call a “4-C” portfolio. It’s a way of looking at my “trading” portfolio that allows me to mostly take a passive approach, but also embrace today’s market opportunities.

So without further ado, I’ll share with you the four components of this portfolio, how they fared in 2024, and what I expect in 2025. And then at the very end, I’ll show you how this portfolio performed last year. Even if you don’t want to follow this exact approach, it should give you some ideas for how to position yourself for the New Year.

4-C Component #1: Common Stocks

At its core, about half of my “trading” portfolio is comprised of common stocks that I intend to hold for several years. As long as the fundamentals don’t change, I don’t mind holding indefinitely.

For instance, I’ve held shares of McDonald’s (MCD) since 2009. The burger giant had a volatile year, and ended up declining about 2.2%. After the dividend, it was a breakeven. Hardly something to brag about.

But shares are up nearly six-fold since I bought them in 2009. And with a cost basis of about $50 per share, today’s $7.08 annualized dividend works out

That’s the power of a long-term holding. Other long-term holdings of mine include Berkshire Hathaway (BRK-B), and AT&T (T). Most years, the returns don’t look exceptional, but over time, the returns on these great businesses add up.

But I’m not entirely a value guy. Palantir Technologies (PLTR), a big-data company that’s essentially the world’s top digital defense contractor, soared 340% this year, the second-best returning stock I owned in 2024.

For 2025, my goal is to add some more common stock positions. It depends entirely on what stocks fall into a great buy range, so stay tuned.

4-C Component #2: Cash

The second component to my portfolio is cash. All throughout the 2010s, interest rates were at 0%. Cash was trash. Even in a world of “just” 2% inflation, keeping money in the bank was like holding on to an ice cube and watching it generally melt.

That trend has finally reversed. In 2024, investors could hold cash in a money market account or Treasury bills, earning a yield of over 4%, even as sticky inflation was less than that. As long as there’s a real positive return to hold cash, it should look attractive.

I try and keep my trading portfolio at about 20% cash, but increased that to around 30% in November following the market’s big run, and as interest rates continued to hold up higher. That may be a bit high for younger investors, but if you’re also owning volatile high-risk assets like crypto, it makes sense.

4-C Component #3: Crypto

At the start of 2024, I had about 5% of my portfolio in crypto. Thanks to soaring bitcoin prices, that ended up being closer to 20% before I started to take some profits and lower exposure there.

My largest exposure came from holding shares of MicroStrategy (MSTR). It’s a position I bought in late 2022 as a bitcoin proxy. My goal? Take advantage of bitcoin’s four-year price cycle.

Although 2024 saw the creation of bitcoin ETFs, that wasn’t an option in 2022. MicroStrategy closed the year up 360%, at one point up more than 500%. I took the opportunity to take a “free ride,” selling 20% of my stake in November, and getting back my original capital.

Given bitcoin’s price cycle, I expect more upside into late 2025.

MircoStrategy’s recent decision to embrace an increase in dilution to acquire more bitcoin may lead to much lower share price returns compared to 2024, but I still expect to close out more of this position next year at higher prices than where shares closed the year.

Buy buyer beware – most investors should start with a bitcoin ETF or buy bitcoin itself.

4-C Component #4: Credit

This final component is the “secret sauce” to managing the portfolio.  And it’s where most of the “trading” comes in. Credit is a catch-all term for tools like credit spreads, which are growing in popularity with soaring daily options trading.

For me, credit largely encompasses trades like put selling or covered call writing. Both generate cash. With put selling, you’re willing to buy shares of a company if it falls to a certain level.

During periods of market fears, put selling sounds risky, but with great companies and a knowledge of support zone, these trades can bring in regular amounts of cash.

On the flip side, covered call writing can help you either generate additional cash off of a long stock position, or take some profits along the way. You can even use it to ensure you take a “free ride” on a stock.

Remember, a “free ride” is when you sell part of a position to get back your original cost basis in cash. This ensures you take some profits. And that one portfolio position doesn’t come to dominate your portfolio. Just as you don’t need to be “all in” on a stock, you don’t need to be “all out” either.

For instance, covered call writing allowed me to take “free ride” on Palantir.

I got “called away” on 20% of my position at $80 in late December, recovering my cost basis on the 500-share position in this portfolio. Not too shabby.

I (thankfully) started selling covered calls on part of my remaining MicroStrategy position over the past few weeks as well. Any time a stock makes a big move higher, it will take months to consolidate, and selling covered calls can help take some of the sting out of a multi-month sideways price movement.

With these credit tools, my account continues to increase its cash holdings, which in turn earn a reasonable amount of interest today. Looking to 2025, covered call writing should help generate a good portion of my portfolio’s overall returns.

Wrap-Up: The 4-C Approach in 2025

Thanks to soaring prices in 2024 in Palantir and MicroStrategy, my trading portfolio ended the year up 158%, about 6X better than the S&P 500. And it did so with a 20-30% cash holding.

Going into 2025, I’m happy that the 30% of my portfolio that’s in cash can earn a reasonable return, and also be put to use on during a likely downturn this year.

I do see my crypto allocation coming down later in the year, as bitcoin will likely hit its next cycle peak in the summer or autumn.

Time will tell how this approach works in 2025, and where my 4-C allocation system ends up.

My goal with this approach is to beat the market in an up year, so that’s a check for 2024. But I also want to lose much less than the overall market in a down year … stay tuned. ~ Andrew Packer, Grey Swan Investment Fraternity