PYAD HYP 2019_04 REINVEST – Year Two - Commentary

[Arborbridge]

Well, all you need to do is provide whatever benchmark you believe should be used and make the comparison.

Personally I compare it with various Investment Trusts as well as a portfolio of Investment Trusts. So far the HYP is doing rather better - well ahead in income terms and about level on capital terms

Can you explain how to do that? I've been through the update thread, but I can't find any mention of unit prices or income per unit, XIRR, or any clear way in which I could lift something from your reports and chart them against any other instrument.

I expect I'm just looking in the wrong place as no doubt you have done comparisons yourself. Did I see some graphs somewhere?

This is the HYP Practical board so of course there is no mention of Investment Trusts, or anything else rather than HYP for that matter. No, I keep my own records, which are not broadcast.

To be honest, the portfolio of ITs is only measured against the "Drawdown" version of this virtual portfolio, measuring against this "ReInvest" version would be too much work, which is therefore simply compared with The City of London Investment Trust plc (CTY). It is very easy, simply create a spreadsheet that contains CTY purchases with the same dates and amounts that were used to set up this HYP and, every time a CTY dividend is gathered, make an appropriate purchase. That is what I do anyway.

As I said, in comparison to CTY, the HYP is more than holding its own!

With regard to other "benchmark"s to compare this portfolio to, I would suggest that for every 10 interested posters on here, we might end up with 15 different benchmarks, which is far too much for one person to keep records for! if anyone wants a benchmark they can easily do it themselves, and of course report it on these boards if they see fit

However, if you want me to produce details of "Accumulation" or "Dividend" units just ask. I of course have the data required, although cash amounts will do just as well.


Ian

Well, all you need to do is provide whatever benchmark you believe should be used and make the comparison.

The upshot of your post is that it isn't easy to do in the way you initially suggested to Wizard. Mainly because you are not providing figures in the right way. If you published a set of unitised prices as TJH does, then I'd agree "all you need to do" would be a valid suggestion. As it is, your data is not in a state where it can be compared.

Arb.

[Arborbridge]

The simplest and most obvious measurement of any income portfolio's success is the overall income it produces year on year, as pyad regularly reports (and soon will again I hope). At the inception of any portfolio one can make a reasonable forecast of the income it will produce in the first twelve months, using known dividends and company announcements. At the start of the second year, one can recompute that forecast taking any dividend increases or cuts plus cum- or ex-dividend purchases or sales that have occurred since. And so on.

I think this is an insufficient way of looking at it. There's little point in generating a good income if your capital value is tending towards zero*. A long-term falling capital value is indicative of a declining business going forward, and this will ultimately give a declining income. How much you care about this depends on your life expectancy and your intended legacy, of course.

*I'm not necessarily saying the HYP capital will decline - just that you can't automatically ignore it.

(Hopefully I'm allowed to mentioned capital values. PYAD said it's a secondary consideration, not a taboo subject.)

Not taboo at all! Your point is a valid one and as you say, one's age is a factor too.

Arb.

[IanTHughes]

The simplest and most obvious measurement of any income portfolio's success is the overall income it produces year on year, as pyad regularly reports (and soon will again I hope). At the inception of any portfolio one can make a reasonable forecast of the income it will produce in the first twelve months, using known dividends and company announcements. At the start of the second year, one can recompute that forecast taking any dividend increases or cuts plus cum- or ex-dividend purchases or sales that have occurred since. And so on.

I think this is an insufficient way of looking at it. There's little point in generating a good income if your capital value is tending towards zero*. A long-term falling capital value is indicative of a declining business going forward, and this will ultimately give a declining income. How much you care about this depends on your life expectancy and your intended legacy, of course.

*I'm not necessarily saying the HYP capital will decline - just that you can't automatically ignore it.

This HYP is primarily invested in the FTSE 100. Now you are right, if one believes that the FTSE 100 is trending to zero, investment in the FTSE 100, any investment not just HYP, should be avoided at all costs.

In other words, if you are using the FTSE 100 as a reason for not following the HYP strategy, you are actually stating that no investment should be made in the UK economy, whatever the strategy is called.

Is that what you are saying?


Ian

[Arborbridge]

The simplest and most obvious measurement of any income portfolio's success is the overall income it produces year on year, as pyad regularly reports (and soon will again I hope). At the inception of any portfolio one can make a reasonable forecast of the income it will produce in the first twelve months, using known dividends and company announcements. At the start of the second year, one can recompute that forecast taking any dividend increases or cuts plus cum- or ex-dividend purchases or sales that have occurred since. And so on.

I think this is an insufficient way of looking at it. There's little point in generating a good income if your capital value is tending towards zero*. A long-term falling capital value is indicative of a declining business going forward, and this will ultimately give a declining income. How much you care about this depends on your life expectancy and your intended legacy, of course.

*I'm not necessarily saying the HYP capital will decline - just that you can't automatically ignore it.

This HYP is primarily invested in the FTSE 100. Now you are right, if one believes that the FTSE 100 is trending to zero, investment in the FTSE 100, any investment not just HYP, should be avoided at all costs.

In other words, if you are using the FTSE 100 as a reason for not following the HYP strategy, you are actually stating that no investment should be made in the UK economy, whatever the strategy is called.

Is that what you are saying?


Ian

I think what he said is quite clear: "There's little point in generating a good income if your capital value is tending towards zero*. *I'm not necessarily saying the HYP capital will decline - just that you can't automatically ignore it."

[IanTHughes]

Can you explain how to do that? I've been through the update thread, but I can't find any mention of unit prices or income per unit, XIRR, or any clear way in which I could lift something from your reports and chart them against any other instrument.

I expect I'm just looking in the wrong place as no doubt you have done comparisons yourself. Did I see some graphs somewhere?

This is the HYP Practical board so of course there is no mention of Investment Trusts, or anything else rather than HYP for that matter. No, I keep my own records, which are not broadcast.

To be honest, the portfolio of ITs is only measured against the "Drawdown" version of this virtual portfolio, measuring against this "ReInvest" version would be too much work, which is therefore simply compared with The City of London Investment Trust plc (CTY). It is very easy, simply create a spreadsheet that contains CTY purchases with the same dates and amounts that were used to set up this HYP and, every time a CTY dividend is gathered, make an appropriate purchase. That is what I do anyway.

As I said, in comparison to CTY, the HYP is more than holding its own!

With regard to other "benchmark"s to compare this portfolio to, I would suggest that for every 10 interested posters on here, we might end up with 15 different benchmarks, which is far too much for one person to keep records for! if anyone wants a benchmark they can easily do it themselves, and of course report it on these boards if they see fit

However, if you want me to produce details of "Accumulation" or "Dividend" units just ask. I of course have the data required, although cash amounts will do just as well.

Well, all you need to do is provide whatever benchmark you believe should be used and make the comparison.

The upshot of your post is that it isn't easy to do in the way you initially suggested to Wizard. Mainly because you are not providing figures in the right way. If you published a set of unitised prices as TJH does, then I'd agree "all you need to do" would be a valid suggestion. As it is, your data is not in a state where it can be compared.

Are you suggesting that Wizard is incapable of doing the unitisation required without my assistance?


Ian

[MrFoolish]

This HYP is primarily invested in the FTSE 100. Now you are right, if one believes that the FTSE 100 is trending to zero, investment in the FTSE 100, any investment not just HYP, should be avoided at all costs.

In other words, if you are using the FTSE 100 as a reason for not following the HYP strategy, you are actually stating that no investment should be made in the UK economy, whatever the strategy is called.

Is that what you are saying?
Ian

Well the FTSE has a lot of old economy stocks - I'd point out tobacco and oils in particular. Now you can milk these particular cows for a while, but how far are they from a visit to the knackers yard?

I wouldn't necessarily completely ignore these stocks, but for diversity sake, I wouldn't over-emphasise them. You need some US tech stocks for balance, IMO.

[IanTHughes]

I think this is an insufficient way of looking at it. There's little point in generating a good income if your capital value is tending towards zero*. A long-term falling capital value is indicative of a declining business going forward, and this will ultimately give a declining income. How much you care about this depends on your life expectancy and your intended legacy, of course.

*I'm not necessarily saying the HYP capital will decline - just that you can't automatically ignore it.

This HYP is primarily invested in the FTSE 100. Now you are right, if one believes that the FTSE 100 is trending to zero, investment in the FTSE 100, any investment not just HYP, should be avoided at all costs.

In other words, if you are using the FTSE 100 as a reason for not following the HYP strategy, you are actually stating that no investment should be made in the UK economy, whatever the strategy is called.

Is that what you are saying?

I think what he said is quite clear: "There's little point in generating a good income if your capital value is tending towards zero*. *I'm not necessarily saying the HYP capital will decline - just that you can't automatically ignore it."

But the capital value is not trending to zero.

Last 12 Months | Date      | Cash Value  | P/L (£)     | P/L (%)
Minimum Value  | 23-Mar-20 | 186,405.36  | -90,138.75  | -32.59%
Current Value  | 13-Nov-20 | 231,379.26  | -45,164.85  | -16.33%

Now that trend looks rather good to me


Ian

Moderator Message:
Edited to delete a pejorative sentence describing another poster's views as 'nonsense'. -- MDW1954

[IanTHughes]

This HYP is primarily invested in the FTSE 100. Now you are right, if one believes that the FTSE 100 is trending to zero, investment in the FTSE 100, any investment not just HYP, should be avoided at all costs.

In other words, if you are using the FTSE 100 as a reason for not following the HYP strategy, you are actually stating that no investment should be made in the UK economy, whatever the strategy is called.

Is that what you are saying?

Well the FTSE has a lot of old economy stocks - I'd point out tobacco and oils in particular. Now you can milk these particular cows for a while, but how far are they from a visit to the knackers yard?

I wouldn't necessarily completely ignore these stocks, but for diversity sake, I wouldn't over-emphasise them. You need some US tech stocks for balance, IMO.

You are Mystic Meg and I claim my £5!


Ian

[Arborbridge]

I wouldn't necessarily completely ignore these stocks, but for diversity sake, I wouldn't over-emphasise them. You need some US tech stocks for balance, IMO.

Maybe, but not if you are just investing for an income stream. US tech stocks can be bought for growth outside a HYP - nothing wrong with that - but from my POV they wouldn't help to pay my pension. Anyhow, if you want to go down the road of discussing this subject in more detail, please do not do it here or you will be deleted!

Arb.

Moderator Message:
This discussion should focus on the facts, rather than apply value judgements to other poster's dissenting views. One poster in particular is over-stepping the mark. Please stop. -- MDW1954

[Wizard]

Viewed in glorious isolation the latest update shows the portfolio has lost the investor nearly 10% of their money, so surely the only conclusion one can reach is that it has so far been a poor decision to make the investment as originally suggested by PYAD and subsequently managed by IanTHughes?

What an idiotic statement! If any "virtual investor" was concerned about the capital value that might be available in under two years, then of course the correct decision would have been to leave the whole amount in the bank. Obviously - well obvious to anyone with a modicum of investment experience - that was not the original assumption and therefore the capital was put at risk.

You appear rather new to equity investment and the first thing that you should understand is that the time period one should mark this investment, whether as a success or otherwise, is much longer than the current very short timeline.


Ian

No, what is idiotic is to ignore the fact this is a reinvestment portfolio, so about building a pot to generate income from at a later date. If the portfolio has shrunk the pot it is idiotic to ignore that. I had almost forgotten why I hardly ever post here any more, thankyou for reminding me of why that is with your characteristically rude post.

[IanTHughes]

Viewed in glorious isolation the latest update shows the portfolio has lost the investor nearly 10% of their money, so surely the only conclusion one can reach is that it has so far been a poor decision to make the investment as originally suggested by PYAD and subsequently managed by IanTHughes?

What an idiotic statement! If any "virtual investor" was concerned about the capital value that might be available in under two years, then of course the correct decision would have been to leave the whole amount in the bank. Obviously - well obvious to anyone with a modicum of investment experience - that was not the original assumption and therefore the capital was put at risk.

You appear rather new to equity investment and the first thing that you should understand is that the time period one should mark this investment, whether as a success or otherwise, is much longer than the current very short timeline

No, what is idiotic is to ignore the fact this is a reinvestment portfolio, so about building a pot to generate income from at a later date. If the portfolio has shrunk the pot it is idiotic to ignore that.

Sorry but who exactly was ignoring the capital loss? Not me of course because I posted it in all its glory, so who is it that has so upset you in that way?

All I was pointing out was that, anyone who wanted a particular capital value within 18 months would not have invested in equities! Or do you disagree with that? Of course, if you are not that experienced with investing, maybe you did not know that.

However, if you are that experienced, as you appear to be suggesting, can you please explain why you believe that 18 months is a sufficient time to measure any portfolio's capital value, let alone a portfolio deliberately set up to generate income for re-investment, something which I can assure you is occurring much better than other investment alternatives.

I had almost forgotten why I hardly ever post here any more, thankyou for reminding me of why that is with your characteristically rude post.

Me too


Ian

[88V8]

Ian, thankyou for taking the trouble to create those entertaining charts. I did not reaiise Excel could be so colourful.

I also appreciate the efforts you make in creating the 1910 typewriter version of the data, and I have to confess that my eyesight warms more to the latter than the former.

V8

[Arborbridge]

Thanks for your super efforts Ian. I love messing bout with charts myself, so it's with regret that I say the pie's are difficult to read - at least on my 15 inch screen and my eyesight. For this particular information a bar chart might be easier to read, or even (whisper it!) a table.
However, don't let me discourage you from having go at charts of all sorts.

Arb.

[IanTHughes]

Ian, thankyou for taking the trouble to create those entertaining charts. I did not realise Excel could be so colourful.

I also appreciate the efforts you make in creating the 1910 typewriter version of the data, and I have to confess that my eyesight warms more to the latter than the former.

Oh yes, you can introduce all sorts of colours into excel, like rainbows into our otherwise drab world making lots of pretty pictures!

Hmm … come to think of it, I was drinking a wee bit of wine while creating these Pie Charts. Maybe that is why I selected the pretty colours!

Thanks for your super efforts Ian. I love messing bout with charts myself, so it's with regret that I say the pie's are difficult to read ….

Read? You are not supposed to READ pie charts. You just sit back and enjoy them!

…. at least on my 15 inch screen and my eyesight. For this particular information a bar chart might be easier to read, or even (whisper it!) a table.

Why not buy a properly sized monitor you cheapskate! As for your “table” idea, how last century of you!

Only joking

As I see it, Pie Charts are great for enabling the visualisation of percentages, as well as the comparison of one percentage value with others. In this case the percentage of value or income derived from each Holding or Business Sector, compared with each other percentage value.

Of course, Pie Charts will not properly show zero values which I have therefore deliberately excluded. To do that, I do agree that a Column Chart would be preferable. Perhaps I should create both types and then see who likes what?

However, don't let me discourage you from having a go at charts of all sorts.

Oh no worries on that score, I have now well and truly been bitten by the bug! I was truly looking to get a start on the Dividend Reinvestment process now due on 10 February but, in Lockdown on a bitterly cold day, I was also looking for something to do!

It is still Lockdown and remains bitterly cold so I have now been reading up on “Doughnut” Pie Charts! Imagine, three concentric rings with the outer ring displaying Holding percentages, the middle ring Business Sector percentages and the inner ring Industry Percentages! Now you cannot do that with a boring Column Chart!

Of course, you will not be able to see them on your piddling little monitor, sorry about that!


Anyway, thanks to both of you for the feedback and please be advised that I shall still be presenting the data in tabular form. I was simply looking for a way to make the posts “look” more interesting.


Ian

[PinkDalek]

I found them most entertaining but a little blurry.

For example this one looks fine here https://i.imgur.com/ZUz8kUp.png but not so great on your post here viewtopic.php?p=379862#p379862.

Being very very slightly picky, a pity the RDSB narrative overlaps BP, as it were, but that's the problem with having two holdings in one sector.
Although BLND/LAND appear fine, probably due to them being at 12 o'clock.

A great innovation all the same.

[Gengulphus]

It is still Lockdown and remains bitterly cold so I have now been reading up on “Doughnut” Pie Charts! Imagine, three concentric rings with the outer ring displaying Holding percentages, the middle ring Business Sector percentages and the inner ring Industry Percentages! Now you cannot do that with a boring Column Chart!

So don't make your column charts boring! ;-)

Out of interest, and also to learn a bit more about what I could do with charts in Excel, I had a go at something roughly along those lines using your November 10th data. I didn't bother about business sectors, since this HYP only has three sector duplicates (so there would be little difference between the 'holding' and 'sector' parts of the chart) and I picked up the "FTSE industry" names from the London Stock Exchange pages on the shares:


My own work, using data from viewtopic.php?p=355365#p355365

Not saying that I know how to produce all aspects of that chart automatically - some bits are handcrafted - but it shows the sort of thing that is possible.

Gengulphus

[Arborbridge]

Question, Ian: If pie charts aren't meant to be read, why did you put words all over it?

I look forward to your buying me a bigger srceen for my birthday - and a bigger office to go with it!

[IanTHughes]

[IanTHughes]

It is still Lockdown and remains bitterly cold so I have now been reading up on “Doughnut” Pie Charts! Imagine, three concentric rings with the outer ring displaying Holding percentages, the middle ring Business Sector percentages and the inner ring Industry Percentages! Now you cannot do that with a boring Column Chart!

So don't make your column charts boring! ;-)

Out of interest, and also to learn a bit more about what I could do with charts in Excel, I had a go at something roughly along those lines using your November 10th data. I didn't bother about business sectors, since this HYP only has three sector duplicates (so there would be little difference between the 'holding' and 'sector' parts of the chart) and I picked up the "FTSE industry" names from the London Stock Exchange pages on the shares:

Not saying that I know how to produce all aspects of that chart automatically - some bits are handcrafted - but it shows the sort of thing that is possible.

Very good indeed. Was that based on a Stacked Column chart?

Yes I did see, straight after making the derogatory comment about Column Charts, that much more is indeed possible.

Another toy to play with!


Ian

[IanTHughes]

Question, Ian: If pie charts aren't meant to be read, why did you put words all over it?

Ha ha! Good point!

I look forward to your buying me a bigger screen for my birthday - and a bigger office to go with it!

Sorry but not until I have bought myself a bigger PC.

And that will be ages


Ian