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Pearson Trading Statement

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ReformedCharacter
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Re: Pearson Trading Statement

#51731

Postby ReformedCharacter » May 6th, 2017, 8:06 pm

Arborbridge wrote:Julian,

If you need reliable income (increasing) and only a yield of that order, why not just bung it in an IT, such as City of London?
That would fulfill the requirement and give you sound sleep with no further investment decisions to make.

It seems to me that only if folk need to improve on that sort of yield by shooting for - say, 4.5- 5% - does HYP come into its own.

Arb.


That's a very good post IMO. It's certainly the way I see it. My intention is to reduce my single company shareholdings and increase ITs as I get older and my judgement can be trusted even less than it can now. Whether this is a good strategy or whether I would have a better outcome from just buying ITs now is another matter. I seem to remember that you benchmark against an IT, CTY perhaps? I'd be interested to be reminded of your conclusions if that is the case.

RC

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Re: Pearson Trading Statement

#51732

Postby Arborbridge » May 6th, 2017, 8:55 pm

I seem to remember that you benchmark against an IT, CTY perhaps?


Not quite. My comparison was with a basket of income ITs which include CTY. I must pull together some figures sometime to present - I intended to do it the year end 2016, but never got around to it!

The only thing I can do quickly tonight is a rather sad plot of my HYP capital chart against ITs and OEICS - this doesn't tale any account of the all important income, unfortunately. It is in effect just a comparison of "share price", but you can see the HYP is dismal compared with the others, and though just ahead of the FTSE.

Image

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Re: Pearson Trading Statement

#51810

Postby ReformedCharacter » May 7th, 2017, 11:57 am

Arb, thanks for taking the time to post that.

RC

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Re: Pearson Trading Statement

#51846

Postby Julian » May 7th, 2017, 2:48 pm

Arborbridge wrote:Julian,

If you need reliable income (increasing) and only a yield of that order, why not just bung it in an IT, such as City of London?
That would fulfill the requirement and give you sound sleep with no further investment decisions to make.

It seems to me that only if folk need to improve on that sort of yield by shooting for - say, 4.5- 5% - does HYP come into its own.


Arb.


Many thanks for your input Arb although I do sometimes think you're reading my mind or have tapped into my computer. When I made my comment about "Ideally my minimum (yield) is 4.00% but with the current market strength I consider 3.90% or maybe even 3.80% to be "close enough" if I consider the divi on what I'm about to buy to be particularly secure" I was actually looking at the figures for City of London (CTY) as I was writing that. I didn't bother to be explicit because my post was already long and ITs such as CTY are considered off topic here but I thought I'd let you know how on-target your suggestion is.

In fact if I sell PSON on Monday I will release about 2 units worth of cash to re-invest and I do sometimes only invest 0.5 units when I consider a share a bit towards the limits of my risk profile. In this case my likely re-allocation would be...

1 - 1.5 units into CTY. I like this IT and already have a pretty decent holding. This also supports my general strategy of gradually shifting my portfolio weight away from what was once 100% HYP to a more even balance of income ITs vs HYP. At the moment I'm doing this by investing all surplus divis (my safety margin) and new ISA contributions, part of which now comes from sell-offs from the non-tax-sheltered part of my HYP each year. That only results in a small change to the relative weighting of income ITs vs HYP each year so wholesale sell-off of something like PSON also offers an opportunity to accelerate the shift without incurring CGT issues.

2 - The remaining 0.5 units into either a slightly more adventurous IT (an internationally focused one, I won't go into the candidates so as not to go off topic) or else either a top-up to an existing HYP share or a new HYP selection. I would still play pretty safe on this re-investment but might look for something more in the 4.0% to 4.5% yield range.

My shift to ITs doesn't indicate any disillusionment with HYP by the way, it has served me superbly since 2001. It's just that I am now 100% living off cash generated by my investments with no new money from salary going in, and maybe it's also me getting older (57 at the moment), but I find myself become increasingly irritated by divi cuts and even unpredictable divi movements due to currency fluctuations (which might be all positive now but will almost certainly have some negative impacts later). I know that for HYP the overall portfolio performance matters and as long as any steps back are more than offset by a sufficient number of steps forward it is all par for the course but I still find myself increasing drawn to ITs where the steps backwards and forwards are essentially hidden from the investor. There is a price that is paid for that but it is one that, at least for half of my portfolio, I am willing to pay.

- Julian

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Re: Pearson Trading Statement

#51861

Postby Itsallaguess » May 7th, 2017, 3:48 pm

Julian wrote:
I know that for HYP the overall portfolio performance matters and as long as any steps back are more than offset by a sufficient number of steps forward it is all par for the course, but I still find myself increasing drawn to IT's where the steps backwards and forwards are essentially hidden from the investor.

There is a price that is paid for that but it is one that, at least for half of my portfolio, I am willing to pay.


I should firstly say, just to make my personal position clear, that I'm of a similar view to you with regards to HYP and IT's, and have a large element of my HYP capital invested in a number of income-related Investment Trusts, for many of the same reasons as you've explained.

That said, I just want to pick up on your point regarding the 'steps backwards and forwards' essentially being 'hidden from the investor' where IT's are concerned.

I think this is an interesting point, but one that lands purely at the feet of our own investor-psychology. In a way, our share-related HYP's are Investment Trusts, concerned as they are with often diverse shares in often diverse sectors.

So why do we treat our share-related HYP's as something different? Why do we allow ourselves to concentrate unduly on the shares within our HYP's, with their share-related yields, and share-related share-prices?

I think one of the biggest improvements to my own HYP-view in recent years, as my HYP has matured and settled down a great deal, is to do exactly this; look at the overall capital, overall yield, and overall income as being the most important aspects, and try not to worry so much regarding the single shares occupying the HYP itself.

It's a much simpler investment-life now, having taken this approach for the past few years. The income keeps rolling in, I re-invest when I'm happy with my cash-reserve (another IT-related aspect that I'm very happy indeed to emulate, as it allows me to keep 100% invested in my already-purchased shares, and so doesn't present me with any pressure to actually sell any already-held shares...), and I keep an eye on the overall capital, overall yield, and overall income.

I could argue then, that my HYP consists entirely of Investment Trusts.

It just happens to be the case that I run one of them..

Cheers,

Itsallaguess

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Re: Pearson Trading Statement

#51869

Postby Arborbridge » May 7th, 2017, 4:27 pm

Julian, Itsallaguess,

Both interesting posts and the three of us share several characteristics. Like Julian, I'm living entirely from my investments, having had no employed salary since 2010 (I think - my goodness, without checking, I can't even remember!). As Itsallaguess says, I consider that my HYP is, in essence, an IT and I'm the manager. But if you look at the chart in this thread, I'm not sure that my results are to be celebrated. In fact, as I've joked previously, if I were one of the Directors, I would probably sack myself. The saving grace is that I am achieving a rather higher yield than most ITs.

Julian and I both mention CTY and that's because we are thinking along similar lines, rather than because I have a line into his PC. CTY was one of my earliest holdings, and is one of my biggest and most dependable. When cash is available, and if I'm as a loss to know how to deploy it, provided CTY yields around 4%-ish, then I often put a little more into it.

Having said I'm not 100% confident that I am the best "IT manager", I do find HYP does pretty much what I expect of it and provides a great deal of interest. In the future, given that my income has reached a threshold I can live with, it might well be that creeping age dictates that more will go into ITs even if the yield is lower - but look at TJH! About ten years older than me and still happy to run a HYP, and convinced it is the best form of investment.

I must pull all this together before long and publish my up to date charts of the comparison between income generated by the portfolios - HYP, IT and OEIC.

Moderator Message:
this is straying far off topic. Keep to op and PSON, ITs have their own board. Posts will be deleted if off topic continues. Raptor.

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Re: Pearson Trading Statement

#51905

Postby Dod1010 » May 7th, 2017, 7:42 pm

Mr Mod If I can sneak in a very brief response, I agree with all three of the last posts. What we need is a HYP Strategies Board because this is a most interesting topic although far from Pearson and I will say no more.

Dod

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Re: Pearson Trading Statement

#51919

Postby moorfield » May 7th, 2017, 9:20 pm

Itsallaguess wrote:look at the overall capital, overall yield, and overall income as being the most important aspects, and try not to worry so much regarding the single shares occupying the HYP itself.


+1 completely agree Itsallaguess, have a dozen recs from me.

As much as I'd like to expand on that I'll have to resist tempation per Raptor's request, but happy to continue elsewhere.

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Re: Pearson Trading Statement

#51982

Postby bluedonkey » May 8th, 2017, 10:25 am

I think one of the biggest improvements to my own HYP-view in recent years, as my HYP has matured and settled down a great deal, is to do exactly this; look at the overall capital, overall yield, and overall income as being the most important aspects, and try not to worry so much regarding the single shares occupying the HYP itself.


I concur!

Julian
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Re: Pearson Trading Statement

#66637

Postby Julian » July 12th, 2017, 11:16 am

With all discussion about Carillion these last few week I thought I would bump this most recent thread on Pearson just to mention, in case anyone who cares might not have noticed, that PSON (probably this forum's most recent previous problem child before CLLN) seems to have just had another sharp sell-off - about another 10% off its value in the last couple of days.

- Julian

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Re: Pearson Trading Statement

#66652

Postby Breelander » July 12th, 2017, 11:48 am

Julian wrote:... I thought I would bump this most recent thread on Pearson just to mention, in case anyone who cares might not have noticed, that PSON (probably this forum's most recent previous problem child before CLLN) seems to have just had another sharp sell-off - about another 10% off its value in the last couple of days.


That would be in reaction to this...
viewtopic.php?f=15&t=6255

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Re: Pearson Trading Statement

#66676

Postby TahiPanasDua » July 12th, 2017, 12:58 pm

Some time ago I mentioned that I used to work at a coalface where some of Pearson's products were used along with an increasingly wide selection of very high quality competitors and excellent multi-media options. It's a very tough and rapidly evolving business. It would be a braver man than me who could invest in any of the operators with any long term confidence.

TP2

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Re: Pearson Trading Statement

#66763

Postby eyeball08 » July 12th, 2017, 4:32 pm

Bought Pearson for my new HYP in 2008 and have had eight years of good income from them. However they are completely changing their business model and now selling off income earning bits to prop up their balance sheet and the share price with a share buy-back. I sold out last month at 710p and have bought into Marstons brewery instead. Bit of a tiddler but higher yield than Greene King and hopefully the market for beer will not disappear.


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