Dod101 wrote:Arb
The thing is Arb if it goes down (and I do not think that whatever happens there will be much left for the shareholders) it is not being taken away by the banks. They are going to lose big time.
Dod
Yes, they will lose, but it may be that they will have to settle for a debt for equity swap, as happened to me with SFI. That will leave the banks with the long term hope of salvaging something, but ordinary shareholders with nothing they can sell.
I'm not sure how general a lesson one can learn from these incidents. OK, I got it wrong - along with many other people - but what one should learn isn't so clear. It isn't much use to talk about culture, since none of us really know what is going on inside a company until it is too late. Carillion, on the face of it, was a reasonably large and important company with plenty of work - much of it government work, which ought to have given it some protection.
So my lessons? I'm open to offers, provided they are practical lessons and not vague ones! I'd suggest a start would be:
a) stick to the largest companies in any sector
b) avoid construction and service sectors
c) if in any doubt, decide how much one is prepared to lose and set a stop loss. At least then you know what the ultimate damage will be if the worst happens*.
If c) is distasteful to true HYPers, then one just has to hang on and take it on the nose. One's HYP will survive if it is well constructed - of that I have no doubt. Putting this episode into perspective, painful though it is, the cost will be 2.5% of portfolio capital value compared with Dec 2016**. Not nice, but not something which will stop my pension income in its tracks.
*unfortunately, most of my HYP shares are with A J Bell, and they do not have stop losses AFAIK.
** ignoring IRV, for the moment !
Arb.
