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Which shares to add

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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johnw11
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Re: Which shares to add

#41569

Postby johnw11 » March 27th, 2017, 6:20 am

Hi Gengulphus,

Thanks for that, I forgot AZN is US$ dividend. I normally mark the shares that pay in US$ (or any other currency) such as BP and RDSB, but had forgotten AZN.

Regards

DiamondEcho
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Re: Which shares to add

#41606

Postby DiamondEcho » March 27th, 2017, 10:33 am

With ref to when I suggested^ building a core HYP to start with and then if necessary taking time, rather than lowering standards, to complete the number of desired purchases I came upon a Buffet-ism this morning. Of course he was not your typical HYP-ster, but I was interested to see that he used something of a parallel approach...

'Asymmetry matters a great deal in investment, for the simple reason that when you lose 50pc of your money you have to make 100pc just to get even. This is why Warren Buffett always likes to quote his teacher Ben Graham’s advice: “Rule number one in investing? Don’t lose money. Rule number two? Don’t forget rule number one.”
The best way of avoiding losing money is to invest infrequently and only when you have serious conviction about what you are doing. Buffett calls this waiting for the “fat pitch”, a baseball expression that means only swinging at the balls you are really confident of being able to hit out of the park.'


[From today's Telegraph [$] - titled 'What are the investment implications of triggering Article 50?']

Wizard
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Re: Which shares to add

#41612

Postby Wizard » March 27th, 2017, 10:48 am

DiamondEcho wrote:With ref to when I suggested^ building a core HYP to start with and then if necessary taking time, rather than lowering standards, to complete the number of desired purchases I came upon a Buffet-ism this morning. Of course he was not your typical HYP-ster, but I was interested to see that he used something of a parallel approach...

'Asymmetry matters a great deal in investment, for the simple reason that when you lose 50pc of your money you have to make 100pc just to get even. This is why Warren Buffett always likes to quote his teacher Ben Graham’s advice: “Rule number one in investing? Don’t lose money. Rule number two? Don’t forget rule number one.”
The best way of avoiding losing money is to invest infrequently and only when you have serious conviction about what you are doing. Buffett calls this waiting for the “fat pitch”, a baseball expression that means only swinging at the balls you are really confident of being able to hit out of the park.'


[From today's Telegraph [$] - titled 'What are the investment implications of triggering Article 50?']

This article certainly corresponds to my personal view, which is why I think keeping skme powder dry my pay off, but only time will tell.

Terry.

Gengulphus
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Re: Which shares to add

#41919

Postby Gengulphus » March 28th, 2017, 4:10 pm

DiamondEcho wrote:... I came upon a Buffet-ism this morning. Of course he was not your typical HYP-ster, but I was interested to see that he used something of a parallel approach...

'Asymmetry matters a great deal in investment, for the simple reason that when you lose 50pc of your money you have to make 100pc just to get even. ...

It's not quite as simple as that. Lose 50% of the money you put into an investment, sell it and put the sales proceeds into another investment, and yes, you have to make 100% on the second investment just to get back to where you started. On the other hand, invest equal amounts in two investments and lose 50% on the first, and you only have to make 50% on the second to get back where you started.

Basically, one of the advantages of diversifying is that that Buffet-ism doesn't fully apply!

Gengulphus

Wizard
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Re: Which shares to add

#41922

Postby Wizard » March 28th, 2017, 4:26 pm

Gengulphus wrote:
DiamondEcho wrote:... I came upon a Buffet-ism this morning. Of course he was not your typical HYP-ster, but I was interested to see that he used something of a parallel approach...

'Asymmetry matters a great deal in investment, for the simple reason that when you lose 50pc of your money you have to make 100pc just to get even. ...

It's not quite as simple as that. Lose 50% of the money you put into an investment, sell it and put the sales proceeds into another investment, and yes, you have to make 100% on the second investment just to get back to where you started. On the other hand, invest equal amounts in two investments and lose 50% on the first, and you only have to make 50% on the second to get back where you started.

Basically, one of the advantages of diversifying is that that Buffet-ism doesn't fully apply!

Gengulphus

Except the quote says "50% of your money", so in your scenario that is 50% of the investment in both shares of 100% of one of them. In which case the maths is exactly as Mr B says it is.

Terry.

Gengulphus
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Re: Which shares to add

#41949

Postby Gengulphus » March 28th, 2017, 6:10 pm

Wizard wrote:Except the quote says "50% of your money", so in your scenario that is 50% of the investment in both shares of 100% of one of them. In which case the maths is exactly as Mr B says it is.

No, I said what my scenario is - losing 50% on the first investment, needing to gain 50% on the second one bought at the same time. You get to create your own scenarios if you like, but you don't get to say what mine are! And phrases like "your money" are ambiguous - they don't necessarily mean "all the money you possess". E.g. if I said "I invested in RBS before the 2008/9 financial crisis and lost 90% of my money", I could mean that I'd lost 90% of all my wealth by 'betting the farm' on RBS, but I could equally just mean that I'd lost 90% of the money I'd invested in RBS.

And by the way, I'm not trying to insist that one meaning or the other is the 'right' one and the other one 'wrong'. Rather, I'm pointing out that the "50% loss requires a 100% gain to compensate" asymmetry argument needs to be applied carefully - essentially, it's valid when used about whole strategies, but not when used about individual share selections in a diversified strategy. And too often in the past, I've seen people treating it as an important point about individual share selections, I suspect just through not thinking about which contexts it's valid in and which it isn't...

Gengulphus

Sblake
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Re: Which shares to add

#41977

Postby Sblake » March 28th, 2017, 8:45 pm

LBG - look in best shape out of the banks.


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