jackdaww wrote:so how much better if you had avoided carrillion and interserve ?
Not a useful practical question to ask, because just about any strategy's performance would be improved markedly if it had avoided what have turned out with hindsight to be its worst performers. The potentially useful questions to ask about possibly having run a different strategy in the past involve strategic changes one could plausibly have made then for reasons based
only on information available at the time - and even those questions generally end up having to be based on hypothetical speculation rather than on reality, making them rather more suitable for High Yield Shares & Strategies than for HYP
Practical. For instance, "how much better or worse performance would I have got if I'd never voluntarily sold any shares from my HYP?" comes about as close as one can to being answerable without any hypothetical speculation, since how the shares one sold performed subsequently is a matter of fact - but given enough time, eventually one of them will probably be taken over, and then you're left having to hypothetically speculate about what you would have replaced it with - a decision you never had to make in reality because the holding was long gone by the time of the takeover. And indeed, for many HYPers, even before that any topping-up decision after the sale might have been made differently due to the sector distribution of the HYP being different after the sale than it would have been if the sale hadn't happened...
jackdaww wrote:it has been mentioned many times on these boards that low margin contractors are best avoided.
I try
never to go by how many times something has been mentioned on these (or any other) boards - it would give those who use '
proof by repeated assertion'
far too much influence over my portfolio!
How many different posters have mentioned something is a more plausible thing to pay attention to, but I do know that it can lead one badly astray. The clearest reasonably recent example I remember was the miners BHP Billiton and Rio Tinto towards the end of 2015, when I was seeing poster after poster saying that the "commodity supercycle" was over, that miners were doomed to years of non-profitability, that they'd sold their holdings, that they recommended "never invest in miners" as an investment principle, etc, etc, etc - all at about what turned out to be close to the worst time to sell miners for many years! Further back, the most memorable example is that lots of tech companies had large numbers of people mentioning them very favourably in late 1999 and early 2000... And those two examples are by no means the only ones - they're just the most blatantly obvious ones that spring to mind.
So before deciding whether to pay any attention to cases where a large number of people are mentioning a company in a particular way on these boards (or their predecessors at TMF), I would want to take a good look for
all cases where that had happened and enough time had elapsed to be reasonably sure whether they had turned out to be right in practice, and to gather enough such cases to be reasonably sure I'd got a representative sample. Unfortunately, that isn't possible: the TMF boards are gone, preventing such a look at anything pre-TLF, and there are very few cases where the three years that we've had since TLF came into existence are enough time to be certain about the outcome, far too few for reasonable certainty. Furthermore, the few that there are may well be biased by a "lemons ripen quicker than oranges" effect - a poor outcome such as Carillion can become reasonably certain quite quickly and decisively, good recoveries tend to take longer, so a short data gathering period like 3 years gives more opportunities for a poor outcome to reach reasonable certainty than a good one.
But although I say that doing that is "unfortunately" impossible, even if it were possible it would be an enormous amount of work to go through many years of posts on these boards scanning them for notably good or bad mentions of shares and gathering the statistics about how many different posters had made them - certainly
far more work than I would be willing to take on! So although such an exercise would not actually be impossible, I think it would be hopelessly impractical...
So basically, I think it's hopelessly impractical to try to properly establish whether paying attention to how many posters are mentioning a share favourably/unfavourably is a good idea or not. And therefore, that all we can base a decision on about whether to pay attention to it or not to do so is anecdotal evidence and 'gut feel'. Mine is that paying attention to it would have saved me money and lost me money about equally often, and I'm not certain whether they would have balanced out to net savings or a net loss, but either way they would have been close to zero. So I don't bother paying attention to it! (And that conclusion is also in keeping with it being
another known type of fallacious argument.)
Other people's mileage may differ, of course - but I do urge people to neither sour-cherry-pick nor sweet-cherry-pick just a few cases of a lot of people expressing one particular opinion about a share when deciding whether it's worthwhile.
Gengulphus
