The Lemon Fool

I mentioned in the "Tesco - don't laugh but..." thread, that I'm making a start on studying what happened to my HYP voluntary sells over the years, and comparing that history with what actually happened with the capital released.

Finding a rule for what I bought next is not without peril, but relatively easy. I know what was bought after the sell date, and will "buy" the next one or two shares which are needed to make up the given amount of capital. Even that isn't without a question mark as regards charges if an odd amount is left over, such that the trade would be uneconomic.

However, the bigger concern is: what happens to the dividend stream accrued? I need a simple rule which would make the exercise of some use and which is a close as it can be to avoiding hindsight bias. There seem to be three approaches:

a) just accrue the dividends as cash - for ever
b) by more shares in the same investment when the amount is economic
c) by shares in a different company.

a) seems unrealistic in that I've always bought shares when cash is accumulated
b) I will rule out unless at or near the time the cash accrued becomes economic, the existing company was subject to a re-investment in my real life HYP
c) seems acceptable as a solution if b) does not work. The danger is that it would become messy to operate with small numbers of several company shares, creating more work in the process.

There's also a bigger question looming: should I do this as an exercise on the basis of one holding sold at a time, or as a portfolio which includes all those shares sold? In the first selling case which occurs (RTO), I could, for example, simply run the clock forward for the holding of Rentokil, or alternatively for RTO plus RBS plus DSGI etc.

It does not seem so easy - which is why I've put it off for so long!

Any ideas from those of you who have done this previously?

Arb.

Arborbridge wrote:I mentioned in the "Tesco - don't laugh but..." thread, that I'm making a start on studying what happened to my HYP voluntary sells over the years, and comparing that history with what actually happened with the capital released.

Any ideas from those of you who have done this previously?

Arb.

That's a great idea, I'd be interested in your findings. Unfortunately I can't do quite the same thing because I don't always replace the cash from sells into another share or at least not in a meaningful way. I'm still sitting on the remnants of CLLN for example !

RC

Arborbridge wrote:There's also a bigger question looming: should I do this as an exercise on the basis of one holding sold at a time, or as a portfolio which includes all those shares sold? In the first selling case which occurs (RTO), I could, for example, simply run the clock forward for the holding of Rentokil, or alternatively for RTO plus RBS plus DSGI etc.

It does not seem so easy - which is why I've put it off for so long!

Any ideas from those of you who have done this previously?

Arb.

I think that you can only hope to do it one share at a time, Arb. For me the big complication is the number of times a share has been either topped up or trimmed back, while I was holding it, and what might have happened had I not sold.

At its simplest, you could take the SP when sold, then make a cash flow up to date with all the dividends (if any) declared and the current price to get some idea of the return. The do the same for the replacement share(s).

You also have to take account of any corporate actions, returns of capital, share splits, etc. I don't think it is practicable to attack more than one share at a time.

TJH

ReformedCharacter wrote: Unfortunately I can't do quite the same thing because I don't always replace the cash from sells into another share or at least not in a meaningful way. I'm still sitting on the remnants of CLLN for example !

RC

I guess we all have odd cash lurking about like that, but the simple rule is that whichever share comes along next (in the real portfolio history), that cash is deemed to have contributed to it. I do not believe it necessary to have purposefully to have "decided" to buy the next share with that particular dollop of cash: that's de facto what happened. No chance of hindsight bias in that particular operation.

Arb.

tjh290633 wrote:

Arborbridge wrote:There's also a bigger question looming: should I do this as an exercise on the basis of one holding sold at a time, or as a portfolio which includes all those shares sold? In the first selling case which occurs (RTO), I could, for example, simply run the clock forward for the holding of Rentokil, or alternatively for RTO plus RBS plus DSGI etc.

It does not seem so easy - which is why I've put it off for so long!

Any ideas from those of you who have done this previously?

Arb.

I think that you can only hope to do it one share at a time, Arb. For me the big complication is the number of times a share has been either topped up or trimmed back, while I was holding it, and what might have happened had I not sold.

At its simplest, you could take the SP when sold, then make a cash flow up to date with all the dividends (if any) declared and the current price to get some idea of the return. The do the same for the replacement share(s).

You also have to take account of any corporate actions, returns of capital, share splits, etc. I don't think it is practicable to attack more than one share at a time.

TJH

Thanks for that. Fortunately, in my case there are precious few trims, maybe none, so I do not think this will be a big problem. Splits etc. would be my bane, and I have a sneaking suspicion I might just not include those shares where there are too many complications. Frankly, to much complication would make the operation too much trouble for my poor little brain I haven't yet checked my list of voluntary sells, but it is not a large number.

Arborbridge wrote:I mentioned in the "Tesco - don't laugh but..." thread, that I'm making a start on studying what happened to my HYP voluntary sells over the years, and comparing that history with what actually happened with the capital released.


Arb.

Is this really the end result of working hard, saving and investing wisely...not forgetting to reinvest dividends. Build up a nice lump sum and retire early to pursue all those things we dream about when tied down with work and bringing up family. At last, I have the time to settle down in a cosy corner and work out what would have happened if I hadn't sold those shares back in the day....???

BarrenWuffett wrote:

Arborbridge wrote:I mentioned in the "Tesco - don't laugh but..." thread, that I'm making a start on studying what happened to my HYP voluntary sells over the years, and comparing that history with what actually happened with the capital released.


Arb.

Is this really the end result of working hard, saving and investing wisely...not forgetting to reinvest dividends. Build up a nice lump sum and retire early to pursue all those things we dream about when tied down with work and bringing up family. At last, I have the time to settle down in a cosy corner and work out what would have happened if I hadn't sold those shares back in the day....???

No, The end result is enjoying a fully active life, in my case. Summers away living on my yacht, countless operas, ballet, concerts, theatre, meals out, trekking holidays - whatever takes my fancy. This is by its very nature, a one diamensional financial board: I am a multifaceted person and here you only see one face.
I'm sure it is the same for you and the other posters and I wouldn't draw the conclusion that what we read here defines the person.


Arb.