pyad wrote:Arborbridge wrote:...Lloyds I'll have a think about. It has strong cover, but I've already sunk a big chunk over the years - 4.25% of capital - with little reward...
We've had this discussion before but I fail to see why the proportion of cost that you have already sunk into Lloyds, or any share, should play any part in a top-up decision. I see no logic to this view and it looks like a superstition in that you appear to regard such a share as jinxed, despite it ticking all your HYP top-up boxes.
Alaric wrote:pyad wrote: I see no logic to this view
It's quite common to impose limits on the percentage by market value, dividend income or both in any one stock. ...
Pyad was replying to Arborbridge's comment saying he would think about Lloyds' percentage by original purchase cost. That's neither imposing a limit nor about its percentage by market value, dividend income or both. And while editing a quote down for brevity is good, editing one down to remove its context and then replying as though it was about something else just ends up wasting the time of every reader who actually checks up on quotes and sowing confusion in the minds of those who don't - please don't do it!
Alaric wrote:... If, despite filters, previous buying decisions have gone badly, maybe there's an unknown factor which the decision making process is ignoring.
Perhaps. Or perhaps there
was such a factor but you now believe you've identified it and you're now taking it into account, know it no longer applies or both. Or perhaps it was just due to the vagaries of the market - shares do go in and out of fashion, often as an overreaction to something that is worth considering but not worth regarding as making the share (or often its sector) taboo.
So IMHO definitely worth having a think about which of those applies, but not worth imposing a limit on percentage of original purchase cost, just using it as an alert that it would be worth reviewing past purchase decisions. In my case, for instance, my Lloyds holding is currently about 50% down on its purchase cost, but that's a mixture of widely-varying returns on purchases at different times in the past. Ones from 2003-2007 show really large losses - the events in 2008 and 2009 were clearly a major factor in that and they at least are played out (which isn't to say that there's nothing similar still lurking in the company, of course...) and I think it's unquestionably the case that investors have generally treated banks and other financials with much more scepticism since then, i.e. that they're much less in fashion. More recent purchases are much more averagish. Overall, I think enough of the reasons for my past poor results have been discovered and dealt with, either by me or the regulators, that I would regard a limit on original purchase cost as inappropriate in the case of Lloyds. But as an alert that if I haven't done that sort of thinking about possible problems in my selection process, I ought to, it's fine.
Gengulphus
I can see that your final selection idea is further to control risk by choosing the lowest of the highest, so to speak - and that idea does have some merit - after all it's Luni red zone thinking in another guise. I've previously shied away from a yield I think suspiciously high myself, as have others here I'm pretty sure. I am never sure if that is a bout of common sense in action, or a failure of courage!
)
Good luck with your purchases.