how I vacillate

[Arborbridge]

Some frank confessional:

I've been steadily revising my holdings so that I do not have so many split between brokers. I've become fed up with the additional admin for small dividend amounts.

Well, anyway, I had a chance yesterday to carry out a chunky rationalisation by buying some addition shares in Diageo in my SIPP, then selling in iDealing ISA. As it happened, my cheap "buy" deal went through yesterday, and I was supposed to close off the rationalisation exercise by selling my iDealing holding today.

I've entered up my buy in HYPTUSS, and find that DGE is now 1.5x median and quite a chunky holding. I'm looking at it, and there's a lovely fat sum in a solid dependable company which has given me a reliable dividend and 15% XIRR , and my mind is quite liking the look of it. There's a little worm here saying "don't sell. why sell? what's not to like? just 'cos you can't be bothered to write up a split holding of dividends"

Aw chucks! I hate this. Perhaps inertia will, as often the case, take hold of me. I tell myself: I'll just wait a bit longer - perhaps until DGE reaches 2x median. Perhaps set a stop loss and sit it out? Doh! I'm living in Much-pickering-in-the-Marsh.

Arb.

[richfool]

(As you hold it already), - leave it alone then. Good global exposure and earnings and at a time when the £ is weak and Brexit uncertainty exists.

[idpickering]

Some frank confessional:

I've been steadily revising my holdings so that I do not have so many split between brokers. I've become fed up with the additional admin for small dividend amounts.

Well, anyway, I had a chance yesterday to carry out a chunky rationalisation by buying some addition shares in Diageo in my SIPP, then selling in iDealing ISA. As it happened, my cheap "buy" deal went through yesterday, and I was supposed to close off the rationalisation exercise by selling my iDealing holding today.

I've entered up my buy in HYPTUSS, and find that DGE is now 1.5x median and quite a chunky holding. I'm looking at it, and there's a lovely fat sum in a solid dependable company which has given me a reliable dividend and 15% XIRR , and my mind is quite liking the look of it. There's a little worm here saying "don't sell. why sell? what's not to like? just 'cos you can't be bothered to write up a split holding of dividends"

Aw chucks! I hate this. Perhaps inertia will, as often the case, take hold of me. I tell myself: I'll just wait a bit longer - perhaps until DGE reaches 2x median. Perhaps set a stop loss and sit it out? Doh! I'm living in Much-pickering-in-the-Marsh.

Arb.

Hi Arb, nice post.

I hold Diageo, as you may know, and they are my smallest holding in capital value terms, at 1.9% of the 28 share HYP whole. With a low dividend yield, I must admit that I'm reluctant to add to my holdings, as much as I'd like to though. I got around this want by bringing another share, in a similar sector on board, that being Greene KIng. They amount to 2.7% in capital value of the HYP. So between them that's 4.6% of the whole. That'll do for me for now with either of them.

Regards,

Ian.

[toofast2live]

Some frank confessional:

I've been steadily revising my holdings so that I do not have so many split between brokers. I've become fed up with the additional admin for small dividend amounts.

Well, anyway, I had a chance yesterday to carry out a chunky rationalisation by buying some addition shares in Diageo in my SIPP, then selling in iDealing ISA. As it happened, my cheap "buy" deal went through yesterday, and I was supposed to close off the rationalisation exercise by selling my iDealing holding today.

I've entered up my buy in HYPTUSS, and find that DGE is now 1.5x median and quite a chunky holding. I'm looking at it, and there's a lovely fat sum in a solid dependable company which has given me a reliable dividend and 15% XIRR , and my mind is quite liking the look of it. There's a little worm here saying "don't sell. why sell? what's not to like? just 'cos you can't be bothered to write up a split holding of dividends"

Aw chucks! I hate this. Perhaps inertia will, as often the case, take hold of me. I tell myself: I'll just wait a bit longer - perhaps until DGE reaches 2x median. Perhaps set a stop loss and sit it out? Doh! I'm living in Much-pickering-in-the-Marsh.

Arb.

Run your winners. Us HYPsters run enough losers. It takes nerves of steel to trim your winners and top up your "not-so-winners" a la TJH.

Do you need more income? Man can only eat so much caviar

[kempiejon]

Arb,

You'll know your own mind and what helps you sleep at night but my advice that I sometimes ignore would be to not overweight holdings, diversity is protection. I went overweight in banking 2009 thinking I'll adjust later on as I'm still building; that was not my smartest move on my income generating strategy.
Nothing could happen to Diageo though could it? If you're lucky it'll crash and come back to median value with massive yield only to re-base the dividend next year. Just sit it out.
I wouldn't have bought the extra slug in the first place as I'm with IanP, a great share but not entitled to new money, my holding is also well below median and not getting any more cash so I don't think I can help other than to say - "you don't want to do that"

[Arborbridge]

I wouldn't have bought the extra slug in the first place as I'm with IanP

Jon, just to be clear, the intention was never to buy and hold and extra slug, but to buy in one account and sell in the second, purely as a re-organisation exercise. I was willing to pay the small cost of buying and selling to make life more convenient..... but now I have the extra slice of winner, it occurs o me I might as well hang on to it!

As toofast2live implied: above the point at which one has enough income, 2.7% yield from a reliable company is not to be sneezed at.

I will let you all know what I do - whenever it occurs.

[kempiejon]

Jon, just to be clear, the intention was never to buy and hold and extra slug, but to buy in one account and sell in the second, purely as a re-organisation exercise. I was willing to pay the small cost of buying and selling to make life more convenient..... but now I have the extra slice of winner, it occurs o me I might as well hang on to it.

Yes I did get that, in fact I'm in the same position with TATE, BT, BP, IMB all my largest holdings and all held both in and out of the ISA where I was buying in the ISA intending to sell outside but didn't quite, I perfectly understand the predicament so I try and make myself sell first then transfer the money to the right account and then buy what I like the most - not exclusively the same share.

[monabri]

held both in and out of the ISA where I was buying in the ISA intending to sell outside

You're not alone! Lloyds in my case (2017 that is, not 2009) at 2x median holding.

[Itsallaguess]

I've been steadily revising my holdings so that I do not have so many split between brokers. I've become fed up with the additional admin for small dividend amounts.

Hi Arb,

I've got a couple of holdings split across more than one account, but don't seem to have the issues you've got regarding any extra 'admin'. At least, I don't think I have..

Can you give a bit more detail on what this 'additional admin' entails exactly, as I think it might help with the wider discussion to be honest?

Cheers,

Itsallaguess

[77ss]

Yes I did get that, in fact I'm in the same position with TATE, BT, BP, IMB all my largest holdings and all held both in and out of the ISA where I was buying in the ISA intending to sell outside but didn't quite, I perfectly understand the predicament so I try and make myself sell first then transfer the money to the right account and then buy what I like the most - not exclusively the same share.

When intending to move a share into (or out of) a tax shelter I first buy or sell depending on whether I think the share price is high or low, whether or not I don't mind being overweight or underweight, and where I have the readies. Not completely straightforward!

Extra admin? I don't see it. In fact I quite like having some shares split between a dealing account and an ISA. If one is unfortunate enough to pick a dud , at least some of the losses could be offset against excess capital gain.

[Arborbridge]

Had I been able to buy and sell in the same session, naturally the "head problem" wouldn't have arisen. It was only because the buy went through on a day I was not at home and couldn't sell that it arose.

Admin? Well, I must admit I am ridiculously admin heavy and wouldn't recommend anyone doing it my way!. It would be lengthy to describe it, but I am not running a smooth system. Not being clever at software integration, it means I am having to enter one dividend in several different places for different purposes. Probably around for or five times for each dividend if you include the original paper logbook I initially write the dividends in and my charting program is sometimes use to put clips up on here. There's no need to do this, but I like to!
A classic Doris would just let the dividends roll in and that would be the end of it.

Arb.

[Gengulphus]

Run your winners. Us HYPsters run enough losers. It takes nerves of steel to trim your winners and top up your "not-so-winners" a la TJH.

Alongside my HYP, I run a similar-sized smallcaps portfolio. The two contain the bulk of my shares, which in turn are the bulk of my investable wealth - a very rough ballpark breakdown of the investable wealth is 40% HYP, 40% smallcaps, 10% other shares, 10% not shares.

I run the HYP in a similar (but not identical) income-oriented manner to TJH, which I would characterise as making sure it stays within fairly strict diversification limits by trimming where necessary and subject to that:

• selling "losers" or holding them for recovery - judgement call on an individual-case basis, and of course I don't always get the judgement right;
• holding "middlers";
• topping up "winners" (though holding back from doing so where necessary to stay within my diversification limits - otherwise I would sometimes have to indulge in the obvious nonsense of simultaneously both topping up and trimming a share!);
• keeping an eye open for "newcomers" - though with absolutely no urgency to find them: the portfolio is entirely adequately diversified for me, but there's no point in turning down a sufficiently good new share in favour of a less good top-up, especially as it helps to restore diversification lost to the occasional takeover.

The exact boundary between "middlers" and "winners" is somewhat flexible - as "winners" get topped up, they become excluded from being topped up further by the diversification limits, and so I look a bit further down the scale for shares to top up - i.e. basically I start treating the best "middlers" as "winners" instead. But that can only go so far before I find that a "newcomer" is the better home for the money I want to invest - it doesn't inexorably eventually turn every share I've got into a "winner".

I do of course use a HYPish idea of what "winners", "losers" and "middlers" are - one that is largely income-oriented. The best "winners" are those that have produced the best rising dividends with the least identifiable loss of dividend safety (preferably no such loss or even a gain). Because capital value and safe dividend income tend to go together, they tend to also be "winners" on a capital-oriented or total-return-oriented basis - but only "tend to": there are exceptions where capital values have gone up while dividends have grown only very slowly, remained static or even been cut. Furthermore, "largely income-oriented" doesn't mean "paying no attention to capital at all" - in particular, a share that produces far less income than its current capital value could produce (i.e. currently has a decidedly low yield) can start to be counted as a "loser" if its yield goes low enough. The net result is that my HYP sometimes counts shares as "winners" when I think you would count them as "not-so-winners", and sometimes counts them as "losers" when I think you would count them as "winners" - and so you wouldn't necessarily recognise my description above as entirely accurate.

But whatever you think of it, I can assure you that it doesn't take "nerves of steel" to run it. On the contrary, it's specifically designed to do its job in as non-nerve-wracking a way as I can. It produces a lot more income than I require to live on - it would have quite a large safety margin over my required income even if I had to move into a care home - and it is sufficiently well-diversified that no company-specific or sector-specific problems are going to seriously damage its income safety margin. In short, its job is to provide me with a safe, adequate income while not worrying me unduly (*), and it achieves a high level of safety by being well-diversified and having a very high income safety margin.

The smallcaps portfolio is a different story. It doesn't have an income-generating job, but instead one of giving me a bit of fun, challenge and excitement that the HYP isn't designed to (the HYP does of course occasionally actually produce a bit of excitement, but that's not its aim!), plus an IHT-saving job (quite a few shares in it are AIM shares that I believe qualify for IHT business relief once I've held them for 2 years) and a minor job of acting as a capital reserve as insurance against the possibility that my confidence in the HYP's income generation is misplaced. It does in fact generate a fair amount of income, but its yield is well under that of the HYP and its basic aim is total-return-based growth: the income arises because I regard the payment of at least some dividends as a good sign that a company's apparent growth is real, not because I'm really looking for more income. And so its definition of "winners" and "losers" is total-return-oriented, and I think the way I run it is much closer to what you would think of as running winners and cutting losers.

I also don't have anything like the same reliability requirements on it, so am much less strict about diversification than I am for the HYP: I'll run its winners a long way, and indeed quite possibly top them up along the way. But that does have its limits: earlier this year a holding that I bought about 10 years ago, and that I've been running as a clear winner for about the last five, was approaching 40% of the smallcaps portfolio (so about 15% of my total investable wealth). Running it further is what I've found needs "nerves of steel" - and I don't have them: I've trimmed it to prevent it becoming an even larger percentage of my investable wealth a number of times so far this year, and will continue to do so if it continues rising in price. (I'm not talking about TJH-like trimmings by 25% here, by the way. It's quite an illiquid smallcap, and about 1-2% of my holding is about as much as I can realistically sell at once. So even quite gentle share price rises after trimming can push me into doing another trimming.)

To forestall a possible question, for reasons I mostly won't go into, I'm not going to name the share concerned. But one of the reasons is that I think that if I were to do so, it would be taken by some readers as a recommendation of the share no matter how much I said that I wasn't recommending it, and I really don't want to be seen that way. I've had shares in the smallcaps portfolio that have looked like winners to the extent that I've topped them up along the way to quite a large extent, and that have then turned into losers. That's a good way to lose a lot of money - which is a risk I can afford to take in my smallcaps portfolio, but not one I want to even remotely encourage anyone else to take! And indeed not one I'm taking myself to anything like the same extent as I have done in the past: I'm a lot more cautious about topping up winners in the smallcaps portfolio than I used to be.

On the subject of recommendations, by the way, I am not recommending my overall strategy as revealed above as suitable for others. Apart from anything else, it's simply not available to most because of a lack of capital - I have a lot more than most as a consequence of tech boom gains, a substantial portion of which I didn't lose in the subsequent bust because I didn't have the "nerves of steel" required to continue running all of them.

So to sum up, I really don't understand your comment that running a HYP in a TJH-like manner requires "nerves of steel", and that's based on practical experience both of running a HYP in a TJH-like manner with very little nervous strain, and of running a non-HYP that runs winners to a much greater extent and (along with earlier tech boom experience) has revealed that I don't have the "nerves of steel" required to do that beyond a certain point.

(*) Or to be precise, that's its primary job. It does have a secondary CGT-planning job, as a reserve of unrealised capital gains and losses that can be realised as needed. That's done by 'shading' its decisions in the required direction rather than drastically altering them. For example, last tax year I had a very big capital gain in the "other shares" due to the ARM takeover, and also some big capital gains in the smallcaps portfolio due to the trimming mentioned above, so could usefully realise some capital losses to offset them. So towards the end of March, I looked at my HYP and found it had a number of holdings standing on big unrealised capital losses. Three of them were "losers" for which my judgement call had been to hold for recovery, but the CGT situation was enough to tip that judgement call towards selling - so they're gone from my HYP. Another was on quite a big unrealised capital loss but was a (dividend-oriented) "winner": for that, I sold the unsheltered holdings and bought as much as I reasonably could in tax shelters (i.e. basically "bed & ISAing", though in fact I used both an ISA and a SIPP). That wasn't quite enough to restore my holding, so I finished the job by repurchasing the rest of the shares last week (more than 30 days after the sales) in my unsheltered CREST account - which also means that I'm back on the share register, something I like because it means I get communications directly from the company rather than filtered through nominee brokers. The losses on the rest of the shares standing on significant unrealised capital losses weren't as big and the shares weren't close to a selling decision by the HYP, so I decided to keep them - essentially, I decided I preferred keeping my HYP's income diversification to the relatively small CGT savings I could make by selling them.

By the way, I'm aware that I could have done some more manoeuvring with tax shelters, selling inside them and buying outside, to make more cash available inside them for the CGT-saving manoeuvre of selling outside and buying inside, and did consider it. That however roughly doubles the costs of a CGT saving, and coupled with the facts that the losses were less major ones, making the CGT savings relatively small, and that the value of a CGT saving from realising a loss now is always partially offset by a reduced expected level of future CGT savings, I decided that wasn't justified.

Gengulphus

[miner1000]

Hi Arb,

As a LTBH person you should have no urge to sell. If people want to trim winners then fine. I (as I have mentioned before) bought Diageo as a "bank account" in which to put my safety margin cash as I did not want the money to be losing value. Since then the share has gone up about 30% and pays a good divi. I am not inclined to sell it even if it grows to three times the median value of my 30 or so HYP. As someone has mentioned it is an international share in the Unilever class in terms of income diversity and forex hedging. The only reason someone would sell would be if they need more income and are looking for a higher yield. If you dont need the extra income Diageo would seem to be at least as safe as the building society.
Just my thoughts as usual. Miner

[tjh290633]

Run your winners. Us HYPsters run enough losers. It takes nerves of steel to trim your winners and top up your "not-so-winners" a la TJH.

Do you need more income? Man can only eat so much caviar

Why does it take nerves of steel? I found that the nervousness came when I realised that LLOY was 16% of my portfolio. Alongside that, Zeneca was about 12% and that is what started me resolving to impose a limit on capital share of any one holding.

You might get a feeling of gratification if one share takes off and dwarfs all the rest. I wouldn't.

Having lived through high inflation, and mortgage rates of 10-12% or more, I don't regard a rising income as something to be sniffed at. As I've said elsewhere, when the time comes to have to pay for care, a little bit of income can be very welcome. Also spending on that can save having to pay IHT on the cash involved in due course.

TJH

[pyad]

...If you dont need the extra income Diageo would seem to be at least as safe as the building society.
Just my thoughts as usual. Miner

That is a very unsafe assertion. BS and bank deposits are guaranteed by the government (up to £85,000 per organisation). Equities carry no capital protection so cannot, however attractive, be "as safe as a building society". And it's not just about the chances of going bust, equities fluctuate, cash deposits cannot.

Clearly I and all HYPers believe that the strategy will do way better than cash deposits over time or we wouldn't be doing it, but the belief they will do better is not at all the same as saying shares like DGE or whatever are as safe as deposits. They are not and never can be. The point is we accept the lesser degree of safety - usually expressed as "higher risk" - in return for the chance of a better long term income, maybe capital growth too.

[Bouleversee]

77s said:

"Extra admin? I don't see it. In fact I quite like having some shares split between a dealing account and an ISA. If one is unfortunate enough to pick a dud , at least some of the losses could be offset against excess capital gain."

My experience has always been that the gain was outside the ISA and the subsequent loss within it. Very annoying!

[miner1000]

.If you dont need the extra income Diageo would seem to be at least as safe as the building society.
Just my thoughts as usual. Miner



That is a very unsafe assertion. BS and bank deposits are guaranteed by the government (up to £85,000 per organisation). Equities carry no capital protection

You are of course correct Pyad. My real point was, which share would you rather own, Diageo or Bradford and Bingley?
Miner

[funduffer]

Arb,

When I bed and ISA a share, I ask my broker (iWeb) to do it. They only charge one fee, and I don't get the opportunity to vacillate!

If your broker offers this facility, I suggest you do this, then switch your computer off, go for a walk, and the share will be sitting in your ISA account next time you log on!

FD