Knee-jerk HYPing

[moorfield]

I've been indisposed in Chisinau, Moldova since last weekend (don't ask) and returned to catchup yesterday.

So are we finally losing faith in The Prophet's scripture?

Long ago when formulating my HYP approach, decided that neither I nor anyone else knows anything whatsoever about the distant future, whether of the global economy, the national economy, a business sector or an individual company. Yet the HYP approach is all about the distant future.

https://pro.southbankresearch.com/p/DVL ... 00/?h=true

FWIW, the following notable things have happened to my own HYP since 31 December:
(i) overall portfolio yield has changed from 4.9% to 5.0%
(ii) VOD, JMAT, BATS paid their dividends
(iii) errr, that's it ...

"The distant future" means different for each of us, but if we find ourselves "trading" in response to the last 2 weeks' market activity and/or political chatter about nationalization then is HYP not for us? Investment Trusts are much better equipped to manage such risks on our behalf.

Buna seara!
M

[tjh290633]

You are right, moorfield.

There is too much agonising over volatility in the market. I always consider that everything is relative. If the market as a whole is falling, the important thing to observe is how shares perform relative to the market. The market has gone down nearly 6% since 1st January. I have 4 shares that have risen, 10 shares that have fallen less in terms of share price and 22 shares that have fallen more, ignoring Carillion. Here is the list:

Epic    Change        
KGF        6.54%     1
BLT        4.96%     2
RIO        4.65%     3
BA.        3.18%     4
WMH       -1.09%     5
LLOY      -1.44%     6
S32       -1.45%     7
GSK       -1.67%     8
AV.       -2.63%     9
TSCO      -2.65%    10
CPG       -3.06%    11
IMI       -5.33%    12
SGRO      -5.42%    13
ADM       -5.84%    14
MKS       -6.93%    15
MARS      -6.93%    16
SMDS      -7.01%    17
PSON      -7.36%    18
LGEN      -7.46%    19
RB.       -7.56%    20
AZN       -7.96%    21
BLND      -8.03%    22
INDV      -8.13%    23
ULVR      -8.37%    24
RDSB      -9.15%    25
DGE       -9.16%    26
TW.       -9.52%    27
SSE       -9.96%    28
BP.      -10.13%    29
BATS     -11.85%    30
VOD      -14.95%    31
NG.      -15.34%    32
IMB      -16.80%    33
BT.A     -16.95%    34
TATE     -19.72%    35
UU.      -20.55%    36
CLLN    -100.00%    37

I'm down about 9.6% in terms of share prices, but only 6.6% in terms of value, thanks to a bit of dividend accumulations and some weighting effects.

6 weeks is too short a time to make judgements. 6 years would be better, but some don't have the patience.

TJH

[idpickering]

A great post moorfield, and a welcome reminder that HYP is for the long term, and the short term should be ignored. I did enjoy Stephen Bland's comments, and the one you quote is one of the best IMHO.

Ian.

[Arborbridge]

It might also be worth quoting this from the same link:


" Patience – absolutely vital. You must have the fortitude to hold a share forever without being tempted to trade it, whatever is happening to the market, the news or that particular holding.

Insouciance – absolutely vital. You must be above the enormous volume of constant press or broker comment, or talk on internet message boards or down the pub about markets and shares etc. You must either refrain from reading all that unimportant news and gossip or be able to resist it. Let it flow over you in the knowledge that none of it matters to HYPers who ride out everything. It’s losers who react to all that stuff. Events that seem important at the time are not. Nothing is important except sitting on your shares forever."

Referring to TJH's point about judging over six years rather than six weeks, as a matter of interested I contribute the following:-

My Hyp -

Capital value per unit Feb 15th 2018, 128.84p..... Feb 14th 2012, 109.77p. Increase 17.3%
Income per unit, 12 month rolling value as at end Dec 2017, 6.51p.......end Dec 2011, 5.4p. Increase 20.5%

RPI Dec 2017 278.1p... Dec 2011 239.4p. Increase 16.1%

As I've said before, my conclusion is that HYP has done what it said on the tin. It may not be the very best form of investment, but for a pretty "blunt" technique which the average Joe can apply, it is pretty good - to use that quinessentially British expression.

And this is despite my several disasters such as CLLN and RBS. This isn't the place to discuss whether HYP is a good thing or not compared with other ideas, but I'd just like to show my affirmation to the principle.

Arb.

[Dod101]

And I disagree with very little if anything that has been said. I can take market volatility in my stride and even what I hope are distant political threats.

Where I disagree is the quote from moorfield when it moves on to Strategic Ignorance and the investor almost wilfully ignores straws in the wind re individual companies or sectors. The wise investor will try to see what could happen and decide whether it is worth his while doing anything about it.

I will leave it at that.

Dod

[Arborbridge]

And I disagree with very little if anything that has been said. I can take market volatility in my stride and even what I hope are distant political threats.

Where I disagree is the quote from moorfield when it moves on to Strategic Ignorance and the investor almost wilfully ignores straws in the wind re individual companies or sectors. The wise investor will try to see what could happen and decide whether it is worth his while doing anything about it.

I will leave it at that.

Dod

I won't disagree with that, Dod -but (yes. there's a "but"!) - that's a matter for well educated investors, whereas HYP and it's "leave well alone and let the market take its course" approach is intended mainly for the less well educated - or perhaps time poor - investor. You may have the knack of making well thought out changes, but it isn't for everyone. For the rest, Pyad's conclusion was that one is better off not meddling because it is apt to turn into too frequent trading for no to no real purpose. Frying pans and fires.

Arb.

[vrdiver]

I've been indisposed in Chisinau, Moldova since last weekend (don't ask)

I have to ask! Please tell me you were there making "Red 3"

VRD


https://www.youtube.com/watch?v=AhuHPhey7D4 (42 seconds in)

[Breelander]

... (42 seconds in)

Did you know, if you pause the video at the point you want and right-click on it you can copy a URL to start the video at that time?
https://youtu.be/AhuHPhey7D4?t=42

[Gengulphus]

So are we finally losing faith in The Prophet's scripture?

Long ago when formulating my HYP approach, decided that neither I nor anyone else knows anything whatsoever about the distant future, whether of the global economy, the national economy, a business sector or an individual company. Yet the HYP approach is all about the distant future.

No. We have a whole variety of attitudes towards that quote (and/or very similar ones), ranging from never having had any faith in it at all through having had it once but lost faith in it many years ago, through having had it once but lost it more recently, through having had it once but losing it now to having had it throughout, without losing it at all. And there are also possibilities of not having had it originally but gained it from experience over time, of having flip-flopped between having faith in it and not, of having faith in some parts of it but not in others (*), and all sorts of combinations of those... It's safe to say that only a small proportion of those attitudes can be fairly described as "finally losing faith", and thus that the phrase is not a reasonable description of what we are doing - and probably never will be because we'll never actually have a sufficiently-shared attitude for it to apply anywhere near across-the-board.

Replace "we" with "some of us", and that "No" answer pretty clearly becomes "Yes", for similar reasons - the same large variety of views underlies both a "No" answer to what we are doing as a "Yes" answer to what some of us are doing.

(*) In my particular case, I believe it about the global and national economies and about individual companies, but not about business sectors: some business sectors are IMHO clearly in long-term decline that can confidently be predicted to continue, and can only be 'rescued' from that decline (if at all) by redefining the sectors. An example is that the mechanical typewriter sector has long been in decline, and could have been safely predicted to be in such a decline long ago. It can be 'rescued' by redefining it as the document production equipment sector, but that involves major extensions to both what one regards as a document and the method of producing one - and almost any prediction can be 'proved' wrong by retrospectively trying to redefine what it was about! Or indeed 'proved' right by retrospectively trying to redefine what it was about in a different way...

Gengulphus