Gengulphus wrote:IanTHughes wrote:Gengulphus wrote:And TMF didn't have an analogous standard, just a statement that the yields of the shares should be "high" - and I'm pretty certain that TLF does accept that existing HYP holdings are legitimate if they were high yield by the standards of the time when they were bought. I'm also fairly certain that Cobham was discussed on TMF as a HYP share that far back, though that's only from memory.
I was asking the question based on someone who follows the HYP Strategy not board guidelines for this or any other blog site! And the question I was asking remains: why would an HYPer select a lower yielding share such as Cobham (COB) when such a decision would mean first rejecting what was, to my mind at least, a perfectly acceptable substantially higher yield alternative such as BAE Systems (BAE) - substantially higher Forecast as well as Historical yield you understand?
That question is of interest and has as yet not been answered.
On the contrary, it
has been answered: ethical considerations. You may not accept or even understand those ethical considerations, but the question you've asking is why a HYPer would select the lower-yielding share, not why
you should select the lower-yielding share. So it's not whether the substantially higher-yield alternative is perfectly acceptable to your mind that matters, but whether it is perfectly acceptable to the mind of the HYPer concerned - and the answer is that it's unacceptable for ethical reasons they understand and accept even if you don't.
By “ethical considerations”, I must assume that you mean:
Dod101 wrote:... but I will say that I would not have bought British Aerospace in any case because I do not believe in buying armaments *
* I am assuming that what was meant was “I do not believe in
buying shares in armament manufacturers” rather than the armaments themselves!
And you are right, I do not understand this reason based on my brief exploration of Cobham PLC (COB) from which is gleaned:
https://www.cobham.com/air/defence/Air Defence
Cobham’s technology is embedded on many of today’s most advanced military aircraft to increase their safety and mission capabilities. From development of cutting edge communication and jamming technology through to operational readiness training of pilots, Cobham is a capable through-life partner from nose to tail.
https://www.cobham.com/land/defence/Land Defence
Cobham's advanced Ground Penetrating Radar (GPR) detection and over 150,000 Vehicle Intercom Systems are in military service around the world. Cobham supplies slip rings for radar antennas and tank turrets and Cobham's vehicle restraints and personal thermal management systems keep people safe and increase the effective endurance of personnel.
https://www.cobham.com/maritime/defence/Maritime Defence
Cobham’s microwave and radar technology is embedded in the world’s most advanced maritime defence hardware including the AEGIS class cruiser. Our innovative range of safety and survival equipment, including personal restraints, egress lighting, and underwater oxygen are in use by forces around the world. Cobham also provides specialist electronic warfare and target towing services to aid naval mission rehearsal.
COB may not be involved in making bullets and missiles but they certainly make a deal of money out of systems that ensure those same bullets and missiles kill more effectively!
It would seem that there are bad “armaments manufacturers” and good “armaments manufacturers” or maybe “ethical investing” in theory and “ethical investing” in practice. Of course it could also be that it was not understood what COB’s business was, but that I find hard to believe.
Gengulphus wrote:And speaking of unanswered questions, when are you going to answer the question of exactly what you mean by the singular phrase "the HYP Strategy"? You've told people that they should read up on it on numerous occasions, but different descriptions of HYP strategies differ on numerous details, so that doesn't answer the question - you need to tell people which descriptions you're referring to. The most obvious possibility is pyad's articles on TMF and his posts both on TMF and here - but there are various discrepancies between them as well, so you can't be referring to them, or at least not all of them...
To me, simply put, an HYP Strategy is one where the primary aim is to produce an income stream out of dividends from a portfolio of direct holdings in suitably diverse high-yielding equities, with the intention of using that income stream, now or at some point in the future, to cover living costs, whether basic or luxury.
So, conversely, any Strategy that prioritises Capital growth is not an HYP Strategy in my view. Also, any Strategy that abandons individual equities in favour of handing all decision-making to a fund manager, is not an HYP Strategy in my view. Nothing wrong with either you understand, it is just that they are not HYP Strategies in my view.
I fully appreciate that some people, whilst still maintaining that income priority, believe that the selling off of part of an over-weight holding will lessen the impact of a single holding catastrophe. I would merely point out to them that without the capability of knowing precisely when the peak of capital or income was achieved, the almost inevitable outcome of such a strategy is to lessen the income and/or overall return. So, not a method that I would practice, nor indeed advocate, but I do understand the reasoning behind it.
Others may also try to improve income by selling off low-yielding holdings and re-deploying the capital into a higher yield. I do have some sympathy with that idea but personally I am as yet not convinced as to its success in practice. A low yield may be simply a pre-cursor to future dividend growth which might mean future regrets as to the decision to sell, bearing in mind that none of us have a functioning crystal ball.
All of which brings me back to my original question about rejecting a 6+% yield in one armaments manufacturer in favour of a 3+% yield in another, which I still maintain is a legitimate question, assuming of course that the investor in question is prioritising income as any HYP Strategy should.
Ian