Itsallaguess wrote:... but one thing I would add, now that I've got the opportunity and is something I don't think I've ever seen discussed before, is that even through all the years back on TMF, I cannot remember a single high-yield investor who began their approach using the HYP Practical strategy and then perhaps ventured out into things like income-related Investment Trusts (and other potential 'wider-scoped' income-related strategies), who then later went on to declare that they were unhappy with that second move, and that they were moving back to a more vanilla HYP Practical strategy....
If anyone else can declare that they've done so, ...
I'll take your use of "the
HYP Practical strategy" to be shorthand for "a strategy that matches the requirements of the
HYP Practical board", because as I've said before, there are numerous different strategies that match those requirements.
And I cannot say I entirely fit your description, because I began my investment career (beyond accumulating cash savings, that is) by occasionally buying shares in well-publicised IPOs (mainly the government privatisations of the mid-to-late 1980s and early 1990s) and quite literally putting the certificates in the bottom drawer of my desk and more-or-less forgetting about them. Around the same time, I got some shares in my employer as a result of employee share options, and quite a few years later, shares in another employer similarly. Every now and then, a small dividend cheque would arrive in the post and I would eventually get around to banking it. And that was the limit of my investment activity: I was very much an "eternity buy & hold investor", never selling a share voluntarily until 1998 (though there had been enforced sales by takeovers before that), and even then it was a matter of special circumstances to do with shares in the second employer. That was in the early lead-up to the tech boom and the shares I sold had already been affected significantly, so I suddenly found myself in possession of a very nice sum of money and so finally got around to being a bit more organised about my investing... Part of it went into funds ISAs over the next couple of years and I selected the funds that they invested in to be a few income-oriented funds with different geographical focusses - IIRC UK, US, Europe and Far East. So those were my first deliberately income-oriented investments - I was getting nicely-rising dividend income from several of the privatisation shares, but I hadn't chosen them with income in mind, just a general impression gathered from newspaper articles that they were good investments. (I wouldn't be anything like that trusting of newspaper articles these days, and shouldn't have been then! But as it turned out, those ones were generally correct...)
And then the tech boom really got going, and my remaining shares in the second employer (I'd only sold a small fraction of them) shot up in value - and I finally got around to actually setting myself up with a broker account and doing some 'normal' sales. I sold three more tranches of shares in the second employer in November 1999, December 1999 and March 2000, as a result of which I had life-changing sums of money to invest. And I didn't really know what strategy to use... My solution to that was to park most of it in bank deposits and similarly-secure investments, while splitting the remainder between running various different strategies (mostly inspired by TMF, which I'd joined in October 1999) that I thought might suit me. They included a Value strategy which focussed on high yield as a value indicator, but didn't really care whether it actually got any dividend income or not - and some of its most successful investments were bought in 2000 and sold just a few months later for a substantial capital gain, but without passing through an ex-dividend date and so never paid me a dividend. And it did very well in 2000 and early 2001, even while the market was falling as the tech bubble collapsed - which isn't surprising if you look at the FTSE 350 Higher/Lower Yield indices for that period: they show that higher- and lower-yield shares were generally behaving
very differently from each other at the time. I.e. about all that I'm now certain I was doing right with that strategy was choosing to be in high-yield shares.
In November 2000, pyad published his original HYP articles. I liked the look of the strategy from the moment I read them, but was a bit cautious about their simplicity - e.g. saying nothing about what to do about takeovers and other corporate actions. TMF shortly later created their High Yield Portfolio board (later to morph into High Yield Share Strategies when their HYP Practical board was split off in 2008) and I joined in on it; over the next few months, I learnt more and got various ideas about it from that and decided to run it as another 'experimental' strategy. IIRC, it was funded by the proceeds of having decided that one or two others of the 'experimental' strategies didn't suit me well enough and closed them down. So HYP was my third strategy using high yield as a major element in its choice of investments and my second income-oriented strategy. And that's what means that I don't fit your description - I didn't
begin my approach using a HYP strategy.
By early 2003, I'd gained enough experience of running the 'experimental' strategies to know that most of them didn't really suit me, and to know that I felt ready to commit more thoroughly to the ones that did. In particular, the high-yield-based Value strategy had begun well and continued quite reasonably into 2002, but from the late spring of 2002 onwards, it was doing pretty badly - basically, the market had moved into full 'bear' mode, affecting high-yield shares as well as everything else. It also basically relied upon me taking a moderately detailed look at the portfolio and (IIRC) the top 200 shares by market cap once per week, which had begun as being quite interesting as I learnt how the market behaved but had become rather tedious, as well as consuming an uncomfortable amount of my spare time and being rather depressing - I knew that the portfolio was falling in value and didn't need a weekly extended reminder of the fact! So I dropped all but two of the 'experimental' strategies, namely HYP and a mainly AIM-based smallcap strategy. I did keep the income-oriented funds ISAs going, though I was no longer adding to it.
And that's how it remained until latish last year, when I finally got around to tidying up the income-oriented funds ISAs and a few other funds ISAs from early on - my share accounts generally hadn't been ISAs early on, as I didn't want to waste my ISA allowances on what might have turned out to be 'experimental' strategy mistakes (and in a few cases did!). That was basically because I'd never got on well with fund investing or other forms of collective investing: as far as I'm concerned it just replaces the job of choosing companies with that of choosing fund managers, and I find the former far easier. In essence (though maybe a bit unfairly!), I'd prefer to make my own investing mistakes than to pick people to make them for me... And while picking companies is in many ways picking their managers, so it might be argued that I'm just picking many managers rather than few - but good diversification does involve picking enough of what you're diversifying about. And there is the difference that I can see myself following the old advice to pick a company that any idiot can run, because sooner or later one will, but how on earth do you pick a fund that any idiot can run? (Yes, I know one decent answer to that, namely that you pick index trackers - and there is a loose sense, which I'm afraid I'm not willing to explain, in which they do feature in my investing.)
The other thing to say that the way I run my HYP has slowly morphed towards (though not into) the 'more vanilla' forms. For example, I've always been a tinkerer, selling HYP shares occasionally but not enough to mean that my strategy no longer meets the LTB&H requirement of HYP Practical. But as the years have gone by, I've done so less and less, as I've discovered that much of my tinkering has been just as likely to jump from the frying pan into the fire as the reverse.
So the movement of my high-yield/income-oriented investments, such as it is, has generally been towards a more vanilla HYP Practical approach. I do still run the mainly AIM-based smallcap strategy and don't plan to stop anytime soon, and it does sometimes produce a lot of dividend income, even more than my HYP in very occasional years - but that income is not to be relied upon and not particularly aimed for.
So all in all, I definitely don't fit your description in all details, and might not in any that you regard as important. But I have moved
away from some other high-yield/income-oriented strategies and towards HYP, based on experience of the former.
Gengulphus