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Whether HYP (as defined in the guidelines) works

General discussions about equity high-yield income strategies
Bouleversee
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Re: Whether HYP (as defined in the guidelines) works

#221830

Postby Bouleversee » May 15th, 2019, 3:28 pm

FWIW Investors Chronicle has just sent me an email which refers to an article on this very subject which you should be able to get, as I did, without being a subscriber if you google the heading: Reality is catching up with dividend dogs, or clicking on the following link may work: https://www.investorschronicle.co.uk/co ... dend-dogs/

Incidentally, there is fortunately no danger of my having to sell any of my holdings to make up for cut/axed dividends as I haven't drawn any of my ISA divs. yet so can easily afford to take the total return approach which I prefer and has by and large worked well for me. As someone else said, it's horses for courses and pointless continuing to argue about it. Each to his own and good luck to all.

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Re: Whether HYP (as defined in the guidelines) works

#221836

Postby Alaric » May 15th, 2019, 4:40 pm

IanTHughes wrote: Furthermore, I did not select it in anticipation of a dividend cut but in the expectation that the dividend would not be cut.


What would it have taken to change your expectation? You didn't seem too interested in Vodafone's past stock price history.

IanTHughes wrote:
The dividend yield offered with a purchase of Compass Group (CPG) is currently too low for inclusion in HYP. The clue is in the name: "High Yield Portfolio" or HYP. Get it now?


Which is why I have come to realise that HYP can be a flawed strategy for stock selection because it discards possible future outperformers on the grounds that the market has already priced in some of the dividend growth and instead selects future cutters where the market has priced in the likely future cut.

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Re: Whether HYP (as defined in the guidelines) works

#221843

Postby IanTHughes » May 15th, 2019, 4:56 pm

Alaric wrote:
IanTHughes wrote: Furthermore, I did not select it in anticipation of a dividend cut but in the expectation that the dividend would not be cut.


What would it have taken to change your expectation? You didn't seem too interested in Vodafone's past stock price history.

Another simple question, how many do you have? I would have changed my expectation if I thought that the dividend was under threat. I did not, so my expectation remained intact.
Alaric wrote:Which is why I have come to realise that HYP can be a flawed strategy for stock selection

In which case, please do not follow the HYP Strategy!

Alaric wrote:because it discards possible future outperformers on the grounds that the market has already priced in some of the dividend growth and instead selects future cutters where the market has priced in the likely future cut.

Oh dear, I thought I had made it clear and simple enough for you to understand. Obviously I was wrong and my apologies if you are still confused. I am afraid that all I can usefully do now is repeat myself:
IanTHughes wrote: VOD was not selected by the HYP Strategy, but by me for my HYP. Furthermore, I did not select it in anticipation of a dividend cut but in the expectation that the dividend would not be cut. Just to make it crystal clear and simple for non-HYPers such as yourself to fully understand: selecting shares that you expect to suffer a cut in the dividend is not part of the HYP Strategy.
and
IanTHughes wrote: The dividend yield offered with a purchase of Compass Group (CPG) is currently too low for inclusion in HYP. The clue is in the name: "High Yield Portfolio" or HYP.


I am sorry but, if you still do not understand, you will have to ask someone else, better qualified than me obviously, to explain it to you


Ian

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Re: Whether HYP (as defined in the guidelines) works

#221859

Postby Alaric » May 15th, 2019, 5:47 pm

IanTHughes wrote:
I am sorry but, if you still do not understand, you will have to ask someone else, better qualified than me obviously, to explain it to you


As a method of selecting stocks for total return, HYP is flawed. You disagree, or are disinterested in total return.

If you select stocks on the basis of recent dividend divided by current price expressed as a percentage, the stocks with the highest percentage are liable to be those where the price has recently fallen and the lowest those where the price has risen.

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Re: Whether HYP (as defined in the guidelines) works

#221863

Postby IanTHughes » May 15th, 2019, 6:13 pm

Alaric wrote:
IanTHughes wrote:
I am sorry but, if you still do not understand, you will have to ask someone else, better qualified than me obviously, to explain it to you

As a method of selecting stocks for total return, HYP is flawed.

Seriously, how many times do you need to be told: "the principal aim of the HYP Strategy is a Sustainable and Rising Income Stream". Why do you persist in determining the success, or otherwise, of an Investment Strategy by measuring the achievement of something it is patently NOT DESIGNED TO DO. Please, if you do not understand the question, just ask!

Alaric wrote:You disagree, or are disinterested in total return

Well, anyone analysing the success or otherwise of the HYP Strategy would dismiss your analysis, based as it is on a measurement of "Total Return" which, as I am sure even you must understand by now, is not the aim of the Strategy.


Ian

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Re: Whether HYP (as defined in the guidelines) works

#221866

Postby Alaric » May 15th, 2019, 6:21 pm

IanTHughes wrote:Well, anyone analysing the success or otherwise of the HYP Strategy would dismiss your analysis, based as it is on a measurement of "Total Return" which, as I am sure even you must understand by now, is not the aim of the Strategy.


Ignoring capital is just wrong and should carry a health warning about being damaging to your wealth. Still if you like a sea of red.

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Re: Whether HYP (as defined in the guidelines) works

#221868

Postby IanTHughes » May 15th, 2019, 6:25 pm

Alaric wrote:
IanTHughes wrote:Well, anyone analysing the success or otherwise of the HYP Strategy would dismiss your analysis, based as it is on a measurement of "Total Return" which, as I am sure even you must understand by now, is not the aim of the Strategy.

Ignoring capital is just wrong and you carry a health warning about being damaging to your wealth. Still if you like a sea of red.

The HYP Strategy, including my own interpretation of it, DOES NOT IGNORE CAPITAL. Something anyone who understands the strategy, as well as investing generally, would know. Obviously that group of individuals does not include you!


Ian

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Re: Whether HYP (as defined in the guidelines) works

#221875

Postby Alaric » May 15th, 2019, 7:00 pm

IanTHughes wrote:The HYP Strategy, including my own interpretation of it, DOES NOT IGNORE CAPITAL.


I think you are contradicting yourself. You say Total Return should be ignored and then say that you don't ignore capital values. I thought we had established that if a stock yields 9% or 10%, any warnings from a reducing share price are to be ignored.

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Re: Whether HYP (as defined in the guidelines) works

#221886

Postby IanTHughes » May 15th, 2019, 7:24 pm

Alaric wrote:
IanTHughes wrote:The HYP Strategy, including my own interpretation of it, DOES NOT IGNORE CAPITAL.

I think you are contradicting yourself.

Well, show me those contradictions!

Alaric wrote: You say Total Return should be ignored and then say that you don't ignore capital values.

To my knowledge, I have never, ever, said that "Total Return or Capital Values" should be ignored. But, I say again, please show me if I did and I will make a correction.
What I have said, as anyone who understands my posts would know, without the reminder that you appear to need, is:
IanTHughes wrote:HYP looks for Dividend Growth, not simply sustainability. As well as that, it is an Income Strategy, aimed at creating a growing Income Stream, leaving the capital value to meander along wherever it will. Of course, if one succeeds in getting the Growing Income Stream, Capital Appreciation will occur, at some point. But remember, Total Return is not how one measures the success of HYP. that

Or do you believe that I said something else? Maybe you simply "understood" something else. Maybe it was a dream …. well only you can say.
Alaric wrote:I thought we had established that if a stock yields 9% or 10%, any warnings from a reducing share price are to be ignored.

You may have established that, I certainly did not.


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Re: Whether HYP (as defined in the guidelines) works

#221888

Postby Alaric » May 15th, 2019, 7:31 pm

IanTHughes wrote:To my knowledge, I have never, ever, said that "Total Return or Capital Values" should be ignored.


IanTHughes wrote: But remember, Total Return is not how one measures the success of HYP.

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Re: Whether HYP (as defined in the guidelines) works

#221891

Postby IanTHughes » May 15th, 2019, 7:38 pm

Alaric wrote:
IanTHughes wrote:To my knowledge, I have never, ever, said that "Total Return or Capital Values" should be ignored.


IanTHughes wrote:But remember, Total Return is not how one measures the success of HYP.

My point exactly! Oh sorry, it was my point that you were confirming. Well what can I say apart from

Thank you!


Ian

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Re: Whether HYP (as defined in the guidelines) works

#221892

Postby Darka » May 15th, 2019, 7:38 pm

This has sadly turned into one of the most pathetic threads I've seen on the Lemon Fool, I thought that things were bad at times on the Motely Fool, but this takes it to another level....

This could have been a useful thread with a meaningful discussion, but why bother with that when you can just have a stupid argument instead.

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Re: Whether HYP (as defined in the guidelines) works

#221896

Postby IanTHughes » May 15th, 2019, 7:42 pm

Darka wrote:This has sadly turned into one of the most pathetic threads I've seen on the Lemon Fool, I thought that things were bad at times on the Motely Fool, but this takes it to another level....

This could have been a useful thread with a meaningful discussion, but why bother with that when you can just have a stupid argument instead.


What argument are you talking about? After a lengthy discussion it appears that Alaric and I are in complete agreement. As an income strategy, the HYP Strategy is a compete winner!


Ian

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Re: Whether HYP (as defined in the guidelines) works

#221900

Postby Darka » May 15th, 2019, 7:48 pm

IanTHughes wrote:What argument are you talking about? After a lengthy discussion it appears that Alaric and I are in complete agreement. As an income strategy, the HYP Strategy is a compete winner!
Ian


I do appreciate your sense of humour though :)

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Re: Whether HYP (as defined in the guidelines) works

#221901

Postby Alaric » May 15th, 2019, 8:07 pm

IanTHughes wrote: As an income strategy, the HYP Strategy is a compete winner!


It's rubbish as a Total Return strategy. Even as an income strategy, you might get higher returns from junk corporate bonds possibly with less risk to your capital.

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Re: Whether HYP (as defined in the guidelines) works

#221907

Postby IanTHughes » May 15th, 2019, 9:12 pm

Alaric wrote:
IanTHughes wrote: As an income strategy, the HYP Strategy is a compete winner!


It's rubbish as a Total Return strategy.{/quote}
Can you prove that? No, I thought not! But who cares, Total Return is not what HYP aims for.
Alaric wrote:[Even as an income strategy, you might get higher returns from junk corporate bonds possibly with less risk to your capital.

Oh my goodness "Junk Corporate Bonds", that does take me back. In the 1980's I worked for a couple of London Bond Houses and one in New York as well.

Obviously, you must know a lot more than I do but, come on, please tell me, how did you manage to make a Growing Income Strategy out of "Junk Corporate Bonds"? Myself and my then colleagues never did manage that. Of course, we never had access to someone with your obvious expertise.



Ian

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Re: Whether HYP (as defined in the guidelines) works

#221911

Postby Bouleversee » May 15th, 2019, 9:29 pm

IanTHughes wrote:
Darka wrote:This has sadly turned into one of the most pathetic threads I've seen on the Lemon Fool, I thought that things were bad at times on the Motely Fool, but this takes it to another level....

This could have been a useful thread with a meaningful discussion, but why bother with that when you can just have a stupid argument instead.


What argument are you talking about? After a lengthy discussion it appears that Alaric and I are in complete agreement. As an income strategy, the HYP Strategy is a compete winner!


Ian



OK, so now that is settled, can we resume the argument on the Investment Strategies board (Mods, where have you been?), where Alaric might have a better chance of winning and I'd give him my vote?

Nooooooooooooooooooooooooooooo!!!!!!!!!!!!!!! I was only joking! Enough already!!!!!!!!!!! I am going to stop reading the HYP boards and suggest Al. follows suit rather than banging his head against a brick wall. Let's leave HYP to those whose main concern is income (I'd no idea investment bankers were so short of the readies), which is fair enough. We won't know till the end of the day (and then it's only our heirs who will know) which was the best strategy overall. Till then, can't we just do what we think is best and share thoughts and info. without being quite so scathing and point scoring. I, for one, don't claim to know all the answers and can only do what seems best for my circumstances, in view of my personal investment experience, and requires the least time and effort. I am always happy to hear another point of view but not to have it shoved down my throat as the only one worth having, and I won't forget the income and capital I no longer have from CLLN, IRV and the div. cuts and reduced c.v. in various other HYP choices, whereas some of my other non=HYP holdings continue to produce large dividends in relation to a small investment and their capital value has increased massively. One can get nasties jumping out of the woodwork with any share, however, and luck plays a large part so a carefully monitored mixed bag approach (avoiding ultra-high yielders) might work out best till we run out of time and ability to monitor and switch to another strategy and another board.

I take it nobody bothered to read the I.C. article?

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Re: Whether HYP (as defined in the guidelines) works

#221921

Postby Alaric » May 15th, 2019, 9:46 pm

IanTHughes wrote: please tell me, how did you manage to make a Growing Income Strategy out of "Junk Corporate Bonds"?


Reinvest part of the excess yield when the going is good. But I don't see how you get a growing income strategy out of cutters like Vodafone, junk like Carillion, and a refusal to consider high growth lower yield shares.

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Re: Whether HYP (as defined in the guidelines) works

#221926

Postby IanTHughes » May 15th, 2019, 9:58 pm

Alaric wrote:
IanTHughes wrote: please tell me, how did you manage to make a Growing Income Strategy out of "Junk Corporate Bonds"?

Reinvest part of the excess yield when the going is good.

Oh no! How much of my income must I forego and "re-invest"?
Alaric wrote: But I don't see how you get a growing income strategy out of cutters like Vodafone, junk like Carillion, and a refusal to consider high growth lower yield shares.

Will this do?
Image

But come on, show me your Junk Bond Strategy over the same time period, please!!!

I am just so interested in how an expert like yourself managed to do what we never could.


Ian

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Re: Whether HYP (as defined in the guidelines) works

#221930

Postby Bouleversee » May 15th, 2019, 10:05 pm

Is one allowed to ask for a similar chart to show what happened to the capital value per unit over the same period or is that too irrelevant for this board and must be asked on Investment Strategies?


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