Pickering time: new holding?

[Dod101]

I think what you call "margin of safety" in your example above is what we refer to on the board as "income reserve". It's cash or near cash tht can be released in an emergency or to make up for a dividend shortfall in the case of a market crash.

Margin of safety is the percentage of the main body of investments which are not being drawn down for income. For example, my target for margin of safety for my HYP is 25% - that is I drawn done 80% of my HYP income.

Thanks. I live and learn. A margin of safety (per your definition) is to me quite unnecessary. I just call it surplus income I suppose and dispose of it as I please. The reason I ignore it is because having been living off my dividends for the last 25 years or a bit longer, I would never have had to draw on it.

My 'income reserve' is just the surplus lying in my income collection bank account, which because of the drought of the last two or three months is pretty thin right now. It will improve from now on.

My index linkers are my fall back if required in extremis.

Off topic so will say no more.

Dod

[Arborbridge]

I think what you call "margin of safety" in your example above is what we refer to on the board as "income reserve". It's cash or near cash tht can be released in an emergency or to make up for a dividend shortfall in the case of a market crash.

Margin of safety is the percentage of the main body of investments which are not being drawn down for income. For example, my target for margin of safety for my HYP is 25% - that is I drawn done 80% of my HYP income.

Thanks. I live and learn. A margin of safety (per your definition) is to me quite unnecessary. I just call it surplus income I suppose and dispose of it as I please. The reason I ignore it is because having been living off my dividends for the last 25 years or a bit longer, I would never have had to draw on it.

My 'income reserve' is just the surplus lying in my income collection bank account, which because of the drought of the last two or three months is pretty thin right now. It will improve from now on.

My index linkers are my fall back if required in extremis.

Off topic so will say no more.

Dod

I was only using (I hope!) a strategy and definitions devised by HYPers such as Gengulphus and others from years back. It was based on the possible requirements forced on us by the credit crash when incomes dropped around 40% and were slow to recover.

So the definitions of "Income Reserve" and "Margin of Safety" were solidified by Gen, and I've just gone with those terms ever since. There's nothing mandatory about it, of course, but it is just part of the default jargon on the board. Unfortunately, since leaving the TMF some of these old ways and terms have been forgotten about or modified.

When my Safety Margin can never get "too large", but when it does, I'll think what to do with it - like Buffett or Gates do! A high SM doesn't seem to bother them - and as you say, one can just give it to dependents or do other philanthropic works. Much better than giving it to some wretched nursing home corporation.

Arb.