HYP Practical discussions

[csearle]

...but it's good to have (hopefully) sorted it out!

Yes indeed!

Regards,
Chris

[Gengulphus]

* Discussions about practical purchase decisions of shares for a HYP. Candidate shares should have a dividend yield above the average for the FTSE100 index and be drawn from the constituents of the FTSE 350 index.

You have omitted the requirement for at least 5 years of dividend payments, ideally rising each year, but not having been reduced, which was always in the criteria.

I didn't include such a "requirement" because it doesn't exist! I'm afraid that you're (presumably unintentionally) inventing the idea that such a thing was "always in the criteria", at least in the context of this thread that "the criteria" means those used to determine on-topicness of HYP Practical posts.

A similar requirement was in pyad's original HYP articles, specifically in https://web.archive.org/web/20140528041 ... 01113c.htm where he said with regard to selecting HYP1 that "To obtain a little more choice, I went marginally outside the FTSE 100 index and set £1.5b as my minimum capitalisation filter. This brings in a few shares that are just below the index. The other filters were an increasing dividend over the last five years and net gearing of under 50%." (It's only similar, not identical, because it actually says "increasing" rather than "at least maintained and ideally increased", and there's also a possible difference with regard to 5-year dividend records like Lloyd's 0p, 0.75p, 2.25p, 2.55p, 3.05p.)

But all that TMF's guidance says about an increasing dividend record is "... and safety factors that suggest that their dividend income is sustainable and will hopefully grow. Typical safety factors used are one or more of high market capitalisation, good dividend cover, a good record of dividend growth, and low gearing. HYP strategies vary in which safety factors they use, so no individual safety factor is essential - but having some of them is!", which makes it very clear that while a HYPer can use an increasing dividend as a criterion, they don't have to. And all that TLF's guidance says about it is "Selection criteria may include the yield, the dividend record and a history of increases.", which again says that a HYPer can use an increasing dividend as a criterion but doesn't have to.

So an increasing dividend record has always been in the criteria that a HYPer might use, but hasn't been required by the criteria for over 10 years now.

Gengulphus

[melonfool]

At this point, I think people should re-read this post viewtopic.php?p=153686#p153686

The issue that started this thread, as far as I can see, is resolved. Every little issue is not an invitation for the rules to be reopened and have a ton of requests for rewriting.

If you don't like/agree with/want to follow HYP - don't. That's fine.

The guidelines on how to follow it are established and reasonably well understood by 'regulars'. There will always be disagreements, we could simply have a board and strategy for each individual as we all, quite rightly, have different views.

I propose we spend our time and energy researching shares, be they current HYP, previous HYP, potential HYP or penny shares your granddad bought.

Mel

[Lootman]

But all that TMF's guidance says about an increasing dividend record is "[i]... and safety factors that suggest that their dividend income is sustainable and will hopefully grow.s

This is not TMF so why would that matter? I never read the TMF guidelines and never felt any need to. I think Terry is correct here - for a share to be a good HYP candidate it should at least have some kind of dividend record, UNLESS it is being presented as a "potential" HY candidate, as allowed by HY rules, in which case other arguments must be convincingly made.

[Gengulphus]

Rather than parsing what the words might mean, we should instead perhaps discuss whether the potential of a share to be a valid HY candidate is something we'd like to able to discuss. Personally I think we need a reason to disallow it. That reason may well exist but at least we should have that discussion.

Simple: just about every share under the sun has the potential to become a valid HYP candidate, given sufficient time and luck.

Well, it is in the rules right now so I don't think that a blanket assertion that it should not be is too helpful, without at least trying to understand both the value of discussing potential shares and what would be reasonable criteria for allowing or denying them. The fact you personally don't want that is interesting but you are only one vote and clearly the rule-writers saw the value of it.

I'm afraid that response is a complete non sequitur from the words of mine that you have quoted. They don't say anything that is in the rules right now, the blanket assertion that they make is about something that is, not something that should not be, and they don't say anything about what I personally do or don't want.

Cutting quotes down to what you're responding to is a good principle (as long as you don't cut so far as to remove important context, but that's not the problem here). But cutting them down to what you're not responding to is not - it simply makes it impossible for a discussion to proceed rationally!

Gengulphus

[Lootman]

Simple: just about every share under the sun has the potential to become a valid HYP candidate, given sufficient time and luck.

Well, it is in the rules right now so I don't think that a blanket assertion that it should not be is too helpful, without at least trying to understand both the value of discussing potential shares and what would be reasonable criteria for allowing or denying them. The fact you personally don't want that is interesting but you are only one vote and clearly the rule-writers saw the value of it.

I'm afraid that response is a complete non sequitur from the words of mine that you have quoted. They don't say anything that is in the rules right now, the blanket assertion that they make is about something that is, not something that should not be, and they don't say anything about what I personally do or don't want.

Cutting quotes down to what you're responding to is a good principle (as long as you don't cut so far as to remove important context, but that's not the problem here). But cutting them down to what you're not responding to is not - it simply makes it impossible for a discussion to proceed rationally!

Disagree. The rules clearly state that discussion of potential HY shares is allowed as Chris and I have explained to you. If you want that changed you need to make your case. I trust the Mods to make the necessary judgments. Do you not?

[melonfool]

It is highly unlikely, in fact I would say vanishingly unlikely, we are going to be making any changes to the HYP guidelines.

Mel

[tjh290633]

Agreed with your conclusion, but you're bringing your personal rules about when to consider complete disposal and when not to into a discussion about what is (or should be) allowed on the HYP Practical board. Nothing against them as personal rules, but I would object if they got enshrined into the HYP Practical board guidance and (for instance) people started having posts treated as off-topic because they were discussing selling a share whose yield had dropped to 60% of the market yield!

Gengulphus

Why would that be off-topic? What is magic about 40%, 50% or 60%. All they are doing is disposing of a share which no longer meets their needs.

As I said above, selling is optional, and when and how a sale is made is up to the investor.

TJH

[Lootman]

Agreed with your conclusion, but you're bringing your personal rules about when to consider complete disposal and when not to into a discussion about what is (or should be) allowed on the HYP Practical board. Nothing against them as personal rules, but I would object if they got enshrined into the HYP Practical board guidance and (for instance) people started having posts treated as off-topic because they were discussing selling a share whose yield had dropped to 60% of the market yield!

Gengulphus

Why would that be off-topic? What is magic about 40%, 50% or 60%. All they are doing is disposing of a share which no longer meets their needs.

As I said above, selling is optional, and when and how a sale is made is up to the investor.

Agreed. As I stated earlier, HYP offers no advice about selling, so any approach to selling cannot be off-topic, by definition!

[Gengulphus]

With a minor error in a nested quote corrected, that I've only just noticed because it happened to mess up the formatting of this reply:

But all that TMF's guidance says about an increasing dividend record is "... and safety factors that suggest that their dividend income is sustainable and will hopefully grow.

This is not TMF so why would that matter? I never read the TMF guidelines and never felt any need to. I think Terry is correct here - for a share to be a good HYP candidate it should at least have some kind of dividend record, UNLESS it is being presented as a "potential" HY candidate, as allowed by HY rules, in which case other arguments must be convincingly made.

So you presumably take the "always" in tjh290633's assertion that "You have omitted the requirement for at least 5 years of dividend payments, ideally rising each year, but not having been reduced, which was always in the criteria." as meaning "ever since the TLF HYP Practical board was created", and only need what I said about TLF's guidance to establish to your satisfaction that that assertion (which is not just that "it should at least have some kind of dividend record") is not true. And so for you, what I said about TMF's guidance and pyad's original HYP articles is irrelevant.

Fine - but I'm not writing purely (or mainly, or even anywhere near mainly) for your benefit. Others will consider that "always" to mean something longer term, and they are likely to consider what I said about TMF's guidance and pyad's original HYP articles relevant.

In short, I cannot make what I post contain all relevant arguments and no irrelevant ones in the eyes of all readers. So I'm not even going to try - and if you don't like it, tough!

Gengulphus

[Lootman]

With a minor error in a nested quote corrected, that I've only just noticed because it happened to mess up the formatting of this reply:

But all that TMF's guidance says about an increasing dividend record is "... and safety factors that suggest that their dividend income is sustainable and will hopefully grow.

This is not TMF so why would that matter? I never read the TMF guidelines and never felt any need to. I think Terry is correct here - for a share to be a good HYP candidate it should at least have some kind of dividend record, UNLESS it is being presented as a "potential" HY candidate, as allowed by HY rules, in which case other arguments must be convincingly made.

So you presumably take the "always" in tjh290633's assertion that "You have omitted the requirement for at least 5 years of dividend payments, ideally rising each year, but not having been reduced, which was always in the criteria." as meaning "ever since the TLF HYP Practical board was created", and only need what I said about TLF's guidance to establish to your satisfaction that that assertion (which is not just that "it should at least have some kind of dividend record") is not true. And so for you, what I said about TMF's guidance and pyad's original HYP articles is irrelevant.

Fine - but I'm not writing purely (or mainly, or even anywhere near mainly) for your benefit. Others will consider that "always" to mean something longer term, and they are likely to consider what I said about TMF's guidance and pyad's original HYP articles relevant.

In short, I cannot make what I post contain all relevant arguments and no irrelevant ones in the eyes of all readers. So I'm not even going to try - and if you don't like it, tough!

You are still confusing established HY shares with potential HY shares. Discussion of both are allowed on TLF as per TLF rules.

They may not have been allowed on TMF rules but I cannot imagine who would care about that any more.

I'm clearly wasting my time, as that's another complete non sequitur from the words of mine that you quote. So I'll stop.

You are wasting your time but not for the reason you cite. Chris and I have explained the rules here. Mel has told you they are not being changed, and yet still you rail against the machine. Give it up.

[Gengulphus]

Well, it is in the rules right now so I don't think that a blanket assertion that it should not be is too helpful, without at least trying to understand both the value of discussing potential shares and what would be reasonable criteria for allowing or denying them. The fact you personally don't want that is interesting but you are only one vote and clearly the rule-writers saw the value of it.

I'm afraid that response is a complete non sequitur from the words of mine that you have quoted. They don't say anything that is in the rules right now, the blanket assertion that they make is about something that is, not something that should not be, and they don't say anything about what I personally do or don't want.

Cutting quotes down to what you're responding to is a good principle (as long as you don't cut so far as to remove important context, but that's not the problem here). But cutting them down to what you're not responding to is not - it simply makes it impossible for a discussion to proceed rationally!

Disagree. The rules clearly state that discussion of potential HY shares is allowed as Chris and I have explained to you. If you want that changed you need to make your case. I trust the Mods to make the necessary judgments. Do you not?

I'm clearly wasting my time, as that's another complete non sequitur from the words of mine that you quote. So I'll stop.

Gengulphus

[Gengulphus]

It is highly unlikely, in fact I would say vanishingly unlikely, we are going to be making any changes to the HYP guidelines.

If that's the case, it is likely, in fact I would say overwhelmingly likely, that you will continue getting this sort of debate about what they mean.

Gengulphus

[Gengulphus]

Agreed with your conclusion, but you're bringing your personal rules about when to consider complete disposal and when not to into a discussion about what is (or should be) allowed on the HYP Practical board. Nothing against them as personal rules, but I would object if they got enshrined into the HYP Practical board guidance and (for instance) people started having posts treated as off-topic because they were discussing selling a share whose yield had dropped to 60% of the market yield!

Why would that be off-topic? What is magic about 40%, 50% or 60%. All they are doing is disposing of a share which no longer meets their needs.

To deal with "What is magic about 40%, 50% or 60%" first, the personal rules that you brought into the discussion said "Finally the share rises to such an extent that the yield is now less than half that of the market. It could also be that the dividend has been reduced but the share price has not fallen in sympathy, so that the yield is still below an acceptable level. This is when complete disposal may be considered, but is not compulsory. Topping up is definitely off the agenda." I.e. you brought 50% into the discussion, so shouldn't you be telling us, not asking me, what's so magic about 50%?

I brought 60% into the discussion, so I'll answer the question about it: the only thing 'magic' about having dropped to 60% of market yield is that it's a big drop, but not as far as your 50% of market yield.

As to "Why would that be off-topic?", it would be if your sentence "This is when complete disposal may be considered, but is not compulsory" got enshrined into the guidance, because the initial "This is when" makes it into an identification of the times when complete disposal may be considered and not just an example of such a time. As a result, at 60% of market yield, complete disposal would not be allowed to be considered - or at least there would be a reasonable interpretation of the sentence that said it was not allowed.

But as the "(for instance)" indicates, all of that is just an example of what could go wrong. My main point is that I don't want personal rules, however good, to become part of the HYP Practical guidance simply because someone has asserted them in a thread like this one and nobody has objected. The guidance probably won't change, as Melonfool has said, but if it does, whoever revises and/or reviews it might well look through this thread to see what needs to be in it - and an unchallenged assertion could easily be seen as such a thing. On what the guidance's requirements should be, I would be in favour of a form of Occam's Razor: they should be as complex as needed to achieve acceptable results about what is on-topic on the board, but no more complex. Applied to the matter of selling, I haven't seen any need for them to contain anything more than the current "LTBH" requirement, and so I don't want anything more about selling (such as selling at half of market yield) to get into them. Or at least, not without careful consideration of whether it is needed and why: it's perfectly possible I've missed a need for the requirements to say something more about selling, but if so, that need should be identified.

Gengulphus

[scotia]

"and still they gazed, and still the wonder grew"
that one small point could generate such a volume of responses

[melonfool]

It is highly unlikely, in fact I would say vanishingly unlikely, we are going to be making any changes to the HYP guidelines.

If that's the case, it is likely, in fact I would say overwhelmingly likely, that you will continue getting this sort of debate about what they mean.

Gengulphus

I meant now, as a result of this, not *ever*. There may well be a compelling reason to change them in future.

We had these things all the time on TMF (despite people rose tinted historical spectacles being somewhat blurred at the edges) and I very much doubt any version could ever be agreed, abided by (abound?) and never questioned again, so we accept this happens.

The issue of whether ULVR can be discussed has been resolved - it can. It's clear in the guidelines. The thread was moved as the discussion in the thread had morphed more to strategy with people saying things like 'it should be in every portfolio' etc. It is recognised that it is not high yield, but also that it has been in the past and is an HYP regular. (it also seems to me that if people say 'it's not in my portfolio because it's not high yield' they should not then have to defend that position on the High Yield Portfolio board!)

The rest of the discussion is near to impossible to follow with people misquoting, misrepresenting etc. If a group of HYP users (and I am at a loss to see why people who don't 'believe in' HYP should be involved at all) want to get together and bash out some new guidelines then fine - come along and tell us when it's done. But for now this thread has not led to any enlightenment for me, nor can I see anything in which makes me think "aha, THAT is the thing I need to go and ask Clariman to add/remove/amend".

I wonder if we need a board just to discuss HYP guidelines actually.....now *that* could work!

Mel

[gryffron]

Moderator Message:
Ok. Rules are clear Unilever can be discussed on HYP.

I think this discussion has gone on long enough. With nothing new being added and responses getting increasingly personal. So thread being locked now.
Gryffron