HSBC Interim highlights.

[NeilW]

HYP doesn't sell as a rule. It holds. If you're selling, you're not HYPing. You're doing a variation on value investing - which if you remember is where the PYAD acronym and looking for 'deep value' comes from.

HYP errs on the side of safety by avoiding the 'out' and chasing further value.

[Dod101]

Talk this morning in Hong Kong that the HSBC Chief Risk Officer for Asia Pacific being replaced as well.

Something not right.

If what you say proves to be correct, that begins to make me a bit concerned. I lived and worked in HK for 23 years and know/knew HSBC very well and those working for it. It was never the most competitive but was secure and acted for a very long time as banker of last resort in HK before they had a monetary authority or other form of central bank.

What has changed is that they have for the first time brought in an outsider as Chairman in the form of Mark Tucker. He has a good record first with Prudential Asia and latterly with AIA and could be seen as an ideal man but if he is upsetting the home grown senior staff of HSBC that could have an effect on the whole Group. OTOH maybe that is what is needed. I hope though that it continues in its conservative ways.

Dod

[Arborbridge]

HYP doesn't sell as a rule. It holds. If you're selling, you're not HYPing. You're doing a variation on value investing - which if you remember is where the PYAD acronym and looking for 'deep value' comes from.

HYP errs on the side of safety by avoiding the 'out' and chasing further value.

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I wonder if anyone can lay their hands on anything which would show that PYAD - even if reluctantly - agreed that selling a share were permissable? If not, then many of us are behaving badly

In my view, selling a share which has grown too large (or for which the yield has fallen too far) are practical procedures added to running a pyadic HYP, but the portfolio hasn't transformed into something like a value one instead.

Arb

[csearle]

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I think that might be just an interpretation issue of "as a rule".

Terry, I presume you, and I would't sell as a rule in the sense that selling was an anticipated step, but, as tinkerers, we might do if we felt that we were becoming severely overweight in a stock, or that the stock was in terminal decline (dividend-wise).

So I don't think that can reasonably be interpreted as a suggestion that our kind of HYPs are in any way invalid.

Chris

[funduffer]

HYP doesn't sell as a rule. It holds. If you're selling, you're not HYPing. You're doing a variation on value investing - which if you remember is where the PYAD acronym and looking for 'deep value' comes from.

HYP errs on the side of safety by avoiding the 'out' and chasing further value.

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I wonder if anyone can lay their hands on anything which would show that PYAD - even if reluctantly - agreed that selling a share were permissable? If not, then many of us are behaving badly

In my view, selling a share which has grown too large (or for which the yield has fallen too far) are practical procedures added to running a pyadic HYP, but the portfolio hasn't transformed into something like a value one instead.

Arb

When Pyad first proposed HYP I don’t think he advocated anything on re-balancing.

In the real world though, we have learnt that a HYP that’s starts out balanced (diversified) can, over the years, become very unbalanced (less diversified). See exhibit 1: HYP1

I am not sure what pyad would say now, but he has never said he would advocate re-balancing HYP1, as far as I am aware. From what he writes I get the impression he would leave HYP1 alone to find its own way (barring actions to deal with any corporate events arising).

However, in my mind, less diversification = higher risk, so if one wants to maintain the level of risk one started with when one’s HYP was born, then some re-balancing at some point becomes inevitable. What rules one applies, must be purely a matter of personal risk tolerance.

Tjh’s rules are very well defined and reflect his view of concentration (lack of diversification) risk. Arb’s may be slightly different. My attitude to concentration risk is probably more relaxed still, but even I would not let my HYP end up like HYP1.

There is no HYP rule on this, in my view.

FD

[Arborbridge]

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I think that might be just an interpretation issue of "as a rule".

Terry, I presume you, and I would't sell as a rule in the sense that selling was an anticipated step, but, as tinkerers, we might do if we felt that we were becoming severely overweight in a stock, or that the stock was in terminal decline (dividend-wise).

So I don't think that can reasonably be interpreted as a suggestion that our kind of HYPs are in any way invalid.

Chris

Well, I hope you are right, otherwise we are heretics. However: "HYP doesn't sell as a rule. It holds. If you're selling, you're not HYPing." - seems to me, deserves not quite as liberal interpretation you've given it.
"If you're selling you are not HYPing" and "as a rule" might refer to selling cutters only - which I think Pyad allowed.

Arb.

[Arborbridge]

As regards HYP1, it's probably that Pyad ran it as an experiment, and what would be the point of altering it in that case? He wanted to demonstrate what would happen just to prove a point: that after an indefinite number of years the original strict HYP idea still works.

But that's a pythagoran view of the ideal HYP somewhere in the celestial sphere. Down here in practical land, we have added a few extra safety features, but we are still running HYPs.


Arb

[idpickering]

There is no HYP rule on this, in my view.

FD

Agreed. Each to their own to run your HYP how you want. Sadly there are those here who post in an almost headmasterly manner, which I normally get bored reading.

It’s not complicated, so why make it so?

Ian

[tjh290633]

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I think that might be just an interpretation issue of "as a rule".

Terry, I presume you, and I would't sell as a rule in the sense that selling was an anticipated step, but, as tinkerers, we might do if we felt that we were becoming severely overweight in a stock, or that the stock was in terminal decline (dividend-wise).

So I don't think that can reasonably be interpreted as a suggestion that our kind of HYPs are in any way invalid.

Chris

My criteria for a complete sellout have been stated here before. If a share ceases to pay dividends, with no prospect of resumption in the foreseeable future, then I will sell,unless I decide that it is worth holding for recovery, as was the case with Taylor Wimpey and Lloyds TSB in 2008. I will also contemplate selling if the yield on a share falls to at least 50% of the yield on the FTSE100, but not immediately. Currently I hold Diageo and Compass, both below that level, and a few others close to it. These are companies with big increases in their dividend each year, 5% or so, and are worth holding on to for that reason. In the past I have sold BG Group and Intercontinental Hotels for the low yield they were giving.

In my view, PYAD made the mistake of reinvesting all the proceeds of takeover into a single share in HYP1. This led to the massive imbalance of the portfolio. My rule is that a replacement share is bought at the then median holding value, and the surplus reinvested in the most deserving shares already held. If sufficient funds were released, then two replacements might be contemplated.

I do not consider this to be heresy, but nobody expects the Spanish Inquisition....

TJH

[Dod101]

This is not supposed to be a thread on selling or not; it is about HSBC's Interim Results. I do get fed up of wondering if there is anything new on the topic and find myself immersed in something totally immaterial to it. I have not reported this because that seems a coward's way out. but really.....!

Dod

[Arborbridge]

This is not supposed to be a thread on selling or not; it is about HSBC's Interim Results. I do get fed up of wondering if there is anything new on the topic and find myself immersed in something totally immaterial to it. I have not reported this because that seems a coward's way out. but really.....!

Dod

Just think of it as old men chatting in a pub. You've no need to join in if you don't want to, and it's doing no harm. You don't have to read it either.

Relax.

[AndyPandy]

This is not supposed to be a thread on selling or not; it is about HSBC's Interim Results. I do get fed up of wondering if there is anything new on the topic and find myself immersed in something totally immaterial to it. I have not reported this because that seems a coward's way out. but really.....!

Dod

Just think of it as old men chatting in a pub. You've no need to join in if you don't want to, and it's doing no harm. You don't have to read it either.

Relax.

But you do have to read it in order to find out that it's not on topic. Like Dod, I came here as it was marked as 'new post(s)'. This table is for us to chat about or listen to conversations about HSBC Interims. If you two want to put the HYP world to rights, take your pints of cloudy cider and copy of The God Delusion off to another table.

Moderator Message:
AndyPandy and Dod make good points about the subtle thread drift that has occured here. Back on topic, please, with further wider-ranging discourses posted elsewhere. I'm not saying HY Strategies, as the direction of travel is certainly HYP Practical, but it certainly isn't much to do with HSBC Interims any longer -- MDW1954

[Gengulphus]

HYP doesn't sell as a rule. It holds. If you're selling, you're not HYPing. You're doing a variation on value investing - which if you remember is where the PYAD acronym and looking for 'deep value' comes from.

HYP errs on the side of safety by avoiding the 'out' and chasing further value.

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I wonder if anyone can lay their hands on anything which would show that PYAD - even if reluctantly - agreed that selling a share were permissable? If not, then many of us are behaving badly

AFAIAA, he's never said it's not permissable - only recommended against it. But in any case, I can lay my hands on what you ask for:

https://web.archive.org/web/20071014125 ... ading.aspx

And much more recently:

viewtopic.php?f=15&t=9440 - note that this rather complex deal (described in viewtopic.php?f=15&t=9172) was not a pure cash takeover, so this was only a forced sale of part of the holding, the rest just morphing into something else as can happen e.g. in a merger.

There are others, but that should do to be getting on with.

Gengulphus

[Arborbridge]

HYP doesn't sell as a rule. It holds. If you're selling, you're not HYPing. You're doing a variation on value investing - which if you remember is where the PYAD acronym and looking for 'deep value' comes from.

HYP errs on the side of safety by avoiding the 'out' and chasing further value.

Oh Dear. That sounds as though you conclude that TJH (and myself) are not HYPers.

I wonder if anyone can lay their hands on anything which would show that PYAD - even if reluctantly - agreed that selling a share were permissable? If not, then many of us are behaving badly

AFAIAA, he's never said it's not permissable - only recommended against it. But in any case, I can lay my hands on what you ask for:

https://web.archive.org/web/20071014125 ... ading.aspx

And much more recently:

viewtopic.php?f=15&t=9440 - note that this rather complex deal (described in viewtopic.php?f=15&t=9172) was not a pure cash takeover, so this was only a forced sale of part of the holding, the rest just morphing into something else as can happen e.g. in a merger.

There are others, but that should do to be getting on with.

Gengulphus

Thanks Gen - I believe that was the article I remember. He makes it clear that he prefers eternity, but that "tinkering" is in some circumstance tolerated, though it smells a bit. That definitely requires us to trim or sell reluctantly and not too often, but if we do so in that spirit, we cannot be accused of being "non-HYPers".

Arb.

Moderator Message:
Folks, interesting and HYP-practical this is, it isn't especially relevant to HSBC's interim results, despite an earlier message. Thread now locked. -- MDW1954