Alaric wrote:dealtn wrote:I'm assuming it's the "rules" required to create such a portfolio that is missing for you, not the fact that such shares exist, and can over time "grow" from a low initial yield return to a substantially higher income?
In fairness, the "rules"" for selecting such Companies are missing for everybody although some of the managers of some of the more concentrated IT portfolios may have discovered a proxy for them.
How do you select Companies such as Unilever, Diageo, Compass? They have to do well in terms of future profits and also have a policy of distributing these profits by way of dividends. That such Companies may be in short supply is indicated by the observation that their share prices increase even faster than their dividends, resulting in dividend yields below the index average. A "Strategy" that sorts by yield and discards below the index average is not going to find them.
Yes, hence my question (to someone else). Rules are difficult to find to create an "ideal" system (in advance), yet people like to have them. I suspect that many who "worship" at the HYP altar are rule followers, and to be fair the system has, at least to date, provided what it claimed to do, a growing (if concentrated) income stream for HYP1, and lots of other successes too (although survivorship bias might be limiting the evidence on the other side of the spectrum - few advocates suffering failure would be on the board pushing the system I would think).
Where I think it gets emotional (as an outsider looking in) is that many seem to proclaim it as the "best" way, rather than one of the successful ways, of running a portfolio.
It has produced a growing, above inflation income return, better than "cash" or "annuity", but so (would) have many other systems, including something as simple as investing in a low cost tracker. Projecting forward to make claims about the system's future income is of course difficult. Will it outperform a tracker, or a portfolio of low yield shares is by necessity an unknown. What will be certain is that some shares selected will be disasters, and the high yield is probably reflective of higher risk of that here, and some will be stars. In ignoring the majority of shares it is possible to invest in, and concentrating on essentially a small number of already large companies, many of whom are high yield only because they are going through a "bad patch", it is certain that many stellar performers will be missed.
Does that mean HYP is a "bad" thing, or merely likely to be sub-optimal? Does it mean a good performer as HYP1 has turned out to be on a total return basis is impossible, or improbable, to achieve again? We don't know, but it does feel that many on the site in general, and on that board in particular, seem to "know" a lot more than it would seem is "knowable" and get very defensive about it.
The irony that amuses me most when I see the board rise in apoplexy is that the system was designed for those who would be happy to be "invest and ignore" types not concerned by the day to day fluctuations in the market, perhaps only occasionally if at all interacting with what was going on in the world of equity investing. Yet, that is the investment board, that appears (by volume of posts) to be where the least tolerant behaviours and abilities to ignore are displayed.
