Selection of underperforming shares

[Lootman]

no one building an HYP, which after all is supposed to produce an above average yield, is likely to buy such shares at times when their yield is low.

Then again, once one has built, if one is able and willing to afford a few low yielders, one may purchase growthiness sturdies such as these.

I see it as the other way around. When you are building a portfolio (of any type) the concern is to build the capital base whilst you are earning and saving, so that the resultant pot can support you in retirement. That argues to buy lower-yielding shares that have greater prospects of a growth in dividends and therefore capital.

Whereas, the older someone is, the more there is a desire for jam today, via a higher yield, since there may not be so many tomorrows. So that argues for the average yield of your portfolio to be higher, the older you get. Some other sources believe that you should increase the percentage of bonds as you age as well, but that isn't thematic here.

As an example I have always pursued dividend growth rather than a nominally high yield, since I have not (yet) perceived myself as being old enough to over-emphasise a high running yield for its own sake.

It seems to me that investors routinely make decisions like this. One example is the choice to buy an annuity, for example, although again that is not an equity strategy. Or how about the decisions many of us make to defer a pension in order to get an eventual higher payout? The idea of trading off current income against future security is a common one, and the number of years you think you have left is surely a factor in such determinations.

In this context, it might be logical to target a lower yield whilst growing a portoflio and, indeed, some suggest that HYP is more a strategy for when you are retired rather than when you are building wealth.

[Itsallaguess]

In this context, it might be logical to target a lower yield whilst growing a portfolio and, indeed, some suggest that HYP is more a strategy for when you are retired rather than when you are building wealth.

Hi Lootman,

I see this view promulgated quite regularly with regards to income-investing, but I sometimes wonder if it's really about as useful as suggesting that someone should consider having 'higher-paid employment' throughout their working career, rather than sticking with their current 'lower-paid' approach to work - easy to suggest, but perhaps not quite as simple to implement....

Such a view also doesn't seem to take into account many of the other varied factors that might mean that a particular investor might simply 'prefer' to run a single-strategy investment-campaign, even if by doing so people might suggest they are likely to see 'worse returns' when compared to a multi-strategy approach. Is an income-investor 'guaranteed' such improvements by following more than one strand of investment during their lifetimes?

I'm personally willing to give up some 'potential gains' that 'might' have occurred were I to take a multi-strategy approach, if by doing so I can gain confidence that the 'single-strategy approach' that I am taking is still likely to deliver to my long-term needs, and to do so in a way that makes investment-life as simple and enjoyable as I would prefer it to be.

I think the best way, for me at least, to both achieve this and to see if my expectations of achieving it are sound, is to stick to a single-strategy approach and visualise trends in both income and capital over very long periods.

If a single-strategy approach can be seen to work 'well enough' during a number of market cycles, then for me personally that is sufficient enough for me not to want to look further afield at other multi-strategy approaches.

So yes, it 'might be logical' to target a lower yield whilst growing a portfolio, but that doesn't detract from the fact that under some circumstances, it also 'might be logical' to stick to a single-strategy approach, even if the potential returns by doing so may be less...

If those returns are still 'enough', and it's perhaps been done in a way that's been enjoyable, simple, and persistent in long-term delivery, then that's reason enough for me to consider it as a viable approach, without feeling the need to look at other strategies that may well not suit an individual investor in those same areas...

Cheers,

Itsallaguess

[tjh290633]

Note also that the restored context makes it clear that by "they", I meant HYPers. The HYP Practical board guidance is written by Clariman, who AFAIAA is not a HYPer, and so the rule that it contains about the yield of a HYP share being above that of the FTSE 100, and is probably set by him and stooz (who also AFAIAA is not a HYPer) as owners of the site after discussion with the moderators. It also has the exception implied by "Discussion of potential shares, and of shares which have been selected in the past, is acceptable on the HYP Practical Board." - so the share that is already in one's HYP, having been bought on a yield of 6% and now having a yield of 3% as a result of its price doubling, is not excluded from being discussed there.

So the HYP Practical board rule is not terribly good evidence of what HYPers in general think should be the rule for HYPs, more of what the owners and moderators of the site think is a workable rule for the board, and I would be fairly certain that some HYPers think it too loose a restriction, some think it about right and some think it too tight. About all that you can reasonably deduce from the HYP Practical rule about the HYPers who use the board is that they are not too unhappy with it and are willing to live with it. That leaves quite a lot of room for differing opinions about what it ideally should be! (Though note I'm not trying to start a discussion about that here - the place for such a discussion is on the Biscuit Bar, and here I'm just saying that the existing rule does not imply that HYPers are generally "so opposed" to shares that don't meet it. At a guess, it's probably more that moderators are "so opposed" to having a rule that requires a lot of work to check up on if a post is reported...)

Gengulphus

Sorry for the long quote, but trimming it is a problem when using a mobile phone. I got rid of the irrelevant matter with an effort.

For the avoidance of doubt, the HYP guidance was drafted by me, with input from a couple of other moderators. Neither Clariman nor Stooz had any input.

TJH

[IanTHughes]

….but for most of the last ten years, investors in Unilever, Compass, Diageo and even just FTSE 100 trackers would have done much better than VOD investors despite the higher yield of the latter.

If you are so sure that the above is correct and of course will continue to be true, why do you not set up a test portfolio, reported on these boards, so that in future we can make a comparison between your Income Portfolio and those HYP's, both virtual and real, that are already reported. It really does not take much effort once the initial selections have been made.


Ian

[Gengulphus]

Note also that the restored context makes it clear that by "they", I meant HYPers. The HYP Practical board guidance is written by Clariman, who AFAIAA is not a HYPer, and so the rule that it contains about the yield of a HYP share being above that of the FTSE 100, and is probably set by him and stooz (who also AFAIAA is not a HYPer) as owners of the site after discussion with the moderators. ...

For the avoidance of doubt, the HYP guidance was drafted by me, with input from a couple of other moderators. Neither Clariman nor Stooz had any input.

Thanks for the correction - not something I was aware of, nor AFAIAA something I even could have been aware of. In the light of it, I'll correct "written by Clariman" in what I said to "posted by Clariman" - which of course makes no difference to the fact that Clariman put his name to it and is one of the two owners of the site.

Gengulphus

[Lootman]

In this context, it might be logical to target a lower yield whilst growing a portfolio and, indeed, some suggest that HYP is more a strategy for when you are retired rather than when you are building wealth.

a particular investor might simply 'prefer' to run a single-strategy investment-campaign, even if by doing so people might suggest they are likely to see 'worse returns' when compared to a multi-strategy approach. Is an income-investor 'guaranteed' such improvements by following more than one strand of investment during their lifetimes?

I'm personally willing to give up some 'potential gains' that 'might' have occurred were I to take a multi-strategy approach, if by doing so I can gain confidence that the 'single-strategy approach' that I am taking is still likely to deliver to my long-term needs, and to do so in a way that makes investment-life as simple and enjoyable as I would prefer it to be.

I think the best way, for me at least, to both achieve this and to see if my expectations of achieving it are sound, is to stick to a single-strategy approach and visualise trends in both income and capital over very long periods.

I can certainly agree that having a single strategy during an entire lifetime is ideal, at least if you want an easy life. And many investors tinker around too much, as I have done at times. Moreover what you suggest is certainly possible, as TJH's long, detailed records demonstrate.

All that said, I wonder how many investors have a perfectly formed set of investment objectives when they start out, as opposed to modifying those objctives as time goes on, as life events happen and as they learn more about both investing and themselves?
I
Certainly in my case I started out as a speculator, with a desire to "get rich quick". I was not thinking of it as being a retirement strategy at all. My early attempts were a very mixed bag and over time I learned how to better manage risk through diversification and other tactics. Moreover my needs from investing changed as I had children, watched them leave home, worked in the investment business, retired and so on. It's feasible that I could have figured out a lifetime strategy when I first started (1980s) but in practice it didn't happen that way.

Then there are changes in the investment vehicles available. For instance trackers barely existed in the 1980s and ETFs certainly didn't. They now form the core of my portfolio but by definition could not have done back then. Again, HYP only started being discussed about 20 years ago and so prior to that you would have had to have stumbled across something like that almost accidentally to have adopted that strategy before then.

If one assumes that someone starts investing when they are 30, retires at age 60 and lives to be 90, how likely will it be that the exact same strategy will be relevant throughout that period? That's like saying that the methodology chosen in 1959 will still meet your needs today. I believe that TJH might assert that that is exactly what he did. But I'm not sure that a majority of folks are as smart and diligent as he is.

For the avoidance of doubt, the HYP guidance was drafted by me, with input from a couple of other moderators. Neither Clariman nor Stooz had any input.

Thanks for the correction - not something I was aware of, nor AFAIAA something I even could have been aware of.

It has been mentioned on these boards before that TJH drafted the guidelines, so you certainly could have been aware of that, even if as it happens you never read those references.

As a practical matter, I've never seen either stooz or clariman post about HYP and so I'd take a wild guess that they would probably defer to TJH on the subject in most or all circumstances.

[JamesMuenchen]

The latest Gospel is being monitored on a monthly basis.

viewtopic.php?f=15&t=17909#p234372

Quoting the current market value, dividends and accrued dividends benchmarks it against the "under the bed" or current account portfolio. It's winning.

This virtual portfolio is barely 3 months old so It is far too early to make any conclusions.

Doesn't it show how HYP selection might tend towards underperforming shares?

Looking at the Reinvestment version you are demo-ing
viewtopic.php?f=15&t=17908&p=241371#p241371
we see that IMB was purchesed on 21.03.2019 for 14,988.79.

By 31.05.2019 IMB stood on a loss of -4,111.59 and received a top-up of £3,159.52.

On the latest update 02.08.2019, IMB is still highest yielding but rejected for a further top-up, with a reference to a deterioration in its dividend policy and its portfolio weighting. Loss stands at -2,790.47 against income of 177.67

The 3rd candidate for a top-up, ITV, is rejected due to held dividend. Loss -2,560.57 against income of 629.20

The 4th candidate, AV, is selected for a top-up of £2,172.43. It is on a loss of -419.11 against income of 754.67

The 2nd candidate by yield ranking, IGG, was rejected based on its portfolio weighting. This was "already high enough", having increased in value slightly by 666.74

True it is only a couple of months, but it surely backs up some of what Alaric has claimed about favouring investment in underperforming shares that have fallen.

It's clear this selection process favours relative weakness, even over high yield.

[IanTHughes]

The latest Gospel is being monitored on a monthly basis.

viewtopic.php?f=15&t=17909#p234372

Quoting the current market value, dividends and accrued dividends benchmarks it against the "under the bed" or current account portfolio. It's winning.

This virtual portfolio is barely 3 months old so It is far too early to make any conclusions.

Doesn't it show how HYP selection might tend towards underperforming shares?

Looking at the Reinvestment version you are demo-ing
viewtopic.php?f=15&t=17908&p=241371#p241371
we see that IMB was purchesed on 21.03.2019 for 14,988.79.

By 31.05.2019 IMB stood on a loss of -4,111.59 and received a top-up of £3,159.52.

On the latest update 02.08.2019, IMB is still highest yielding but rejected for a further top-up, with a reference to a deterioration in its dividend policy and its portfolio weighting. Loss stands at -2,790.47 against income of 177.67

The 3rd candidate for a top-up, ITV, is rejected due to held dividend. Loss -2,560.57 against income of 629.20

The 4th candidate, AV, is selected for a top-up of £2,172.43. It is on a loss of -419.11 against income of 754.67

The 2nd candidate by yield ranking, IGG, was rejected based on its portfolio weighting. This was "already high enough", having increased in value slightly by 666.74

True it is only a couple of months, but it surely backs up some of what Alaric has claimed about favouring investment in underperforming shares that have fallen.

It's clear this selection process favours relative weakness, even over high yield.

And if I had reported at Close of Business on 1 August ……

EPIC | Company                | Shares  | Cost (£)     | Price (p)   | Value (£)    | Value (%) | P/L (£)    | Div Rec'd (£) | Ex-Div (£) | Total Inc (£) | Overall (£) | Yield (%) * | Year Inc (£)
AV   | Aviva                  |  3,637  |   14,996.21  |   409.6000  |   14,897.15  |     5.73% |    -99.06  |       754.67  |      0.00  |       754.67  |     655.61  |       7.32% |    1,091.10 
BA   | BAE Systems            |  3,043  |   14,995.20  |   558.0000  |   16,979.94  |     6.53% |  1,984.74  |       401.67  |      0.00  |       401.67  |   2,386.41  |       4.05% |      687.71 
BHP  | BHP Group              |    838  |   14,992.51  | 1,936.2000  |   16,225.36  |     6.24% |  1,232.85  |         0.00  |      0.00  |         0.00  |   1,232.85  |       4.92% |      798.15 
BLND | British Land Company   |  1,273  |    7,494.24  |   502.4000  |    6,395.55  |     2.46% | -1,098.69  |        98.65  |      0.00  |        98.65  |  -1,000.04  |       6.36% |      406.46 
BP   | BP                     |  1,347  |    7,496.10  |   538.7000  |    7,256.29  |     2.79% |   -239.81  |       108.64  |      0.00  |       108.64  |    -131.17  |       6.14% |      445.76 
CCL  | Carnival Corporation   |    384  |   14,979.79  | 3,738.0000  |   14,353.92  |     5.52% |   -625.87  |       152.57  |      0.00  |       152.57  |    -473.30  |       4.32% |      619.88 
GNK  | Greene King            |  2,266  |   14,994.78  |   632.6000  |   14,334.72  |     5.51% |   -660.06  |         0.00  |      0.00  |         0.00  |    -660.06  |       5.25% |      752.31 
GSK  | GlaxoSmithKline        |    941  |   14,999.37  | 1,710.4000  |   16,094.86  |     6.19% |  1,095.49  |       178.79  |      0.00  |       178.79  |   1,274.28  |       4.68% |      752.80 
HSBA | HSBC Holdings          |  2,425  |   14,998.27  |   666.0000  |   16,150.50  |     6.21% |  1,152.23  |       190.04  |      0.00  |       190.04  |   1,342.27  |       6.18% |      998.26 
IBST | Ibstock                |  5,849  |   14,999.47  |   224.2000  |   13,113.46  |     5.04% | -1,886.01  |       380.18  |      0.00  |       380.18  |  -1,505.83  |       4.33% |      567.35 
IGG  | IG Group Holdings      |  2,762  |   14,999.32  |   576.2000  |   15,914.64  |     6.12% |    915.32  |         0.00  |      0.00  |         0.00  |     915.32  |       7.50% |    1,193.18 
IMB  | Imperial Brands        |    719  |   18,148.31  | 2,149.5000  |   15,454.91  |     5.94% | -2,693.40  |       177.67  |      0.00  |       177.67  |  -2,515.73  |       9.61% |    1,485.16 
ITV  | ITV                    | 11,652  |   14,999.08  |   108.0500  |   12,589.99  |     4.84% | -2,409.09  |       629.20  |      0.00  |       629.20  |  -1,779.89  |       7.40% |      932.16 
LAND | Land Securities Group  |    818  |    7,499.19  |   791.0000  |    6,470.38  |     2.49% | -1,028.81  |        95.29  |      0.00  |        95.29  |    -933.52  |       5.87% |      379.96 
RDSB | Royal Dutch Shell      |    309  |    7,481.66  | 2,472.0000  |    7,638.48  |     2.94% |    156.82  |       114.23  |      0.00  |       114.23  |     271.05  |       6.14% |      468.90 
SLA  | Standard Life Aberdeen |  5,503  |   14,997.65  |   299.7000  |   16,492.49  |     6.34% |  1,494.84  |       786.92  |      0.00  |       786.92  |   2,281.76  |       7.21% |    1,188.64 
SMDS | DS Smith               |  4,310  |   14,997.11  |   347.3000  |   14,968.63  |     5.75% |    -28.48  |       224.12  |      0.00  |       224.12  |     195.64  |       4.66% |      698.22 
VOD  | Vodafone Group         | 10,077  |   14,998.48  |   151.6600  |   15,282.78  |     5.87% |    284.30  |       375.37  |      0.00  |       375.37  |     659.67  |       5.33% |      814.19 
WPP  | WPP                    |  1,780  |   14,997.55  |   975.6000  |   17,365.68  |     6.68% |  2,368.13  |       663.94  |      0.00  |       663.94  |   3,032.07  |       6.15% |    1,068.00 
     |                        |         |              |             |              |           |            |               |            |               |             |             |             
     | Sub Total:             |         | £258,064.29  |             | £257,979.73  |    99.16% |   -£84.56  |    £5,331.95  |     £0.00  |    £5,331.95  |  £5,247.39  |       5.95% |  £15,348.19 
     | Cash Bal:              |         |   £2,172.43  |             |   £1,698.41  |     0.84% |            |               |            |               |             |             |             
     | Ex-Dividend:           |         |              |             |     £474.02  |     0.00% |            |               |            |               |             |             |             
     | Cash Out:              |         |              |             |       £0.00  |           |            |               |            |               |             |             |             
     |                        |         |              |             |              |           |            |               |            |               |             |             |             
     | Total:                 |         | £260,236.72  |             | £260,152.16  |           |            |               |            |               |             |             |             
     | From:                  |         |              |             |              |           |            |               |            |               |             |             |             
     | Cash In:               |         | £254,904.77  |             | £254,904.77  |           |            |               |            |               |             |             |             
     | LESS Cash Out:         |         |       £0.00  |             |              |           |            |               |            |               |             |             |             
     | Dividends:             |         |   £5,331.95  |             |              |           |            |               |            |               |             |             |             
     | Overall P/L:           |         |              |             |   £5,247.39  |           |            |               |            |               |             |             |             
     |                        |         |              |             |              | XIRR      |            |               |            |               |             |             |             
     | Total:                 |         | £260,236.72  |             | £260,152.16  | #NUM!     |            |               |            |               |             |             |

Wow, portfolio capital increased by £5,247.39? Not a bad result for just over 4 months wouldn’t you say? Well a complete amateur investor might say that, but that is not me!

How does that song go?

“What a difference a day makes …
Twenty four little hours”

I am sorry but the messianic cult of HYP detraction will just have to show some patience


Ian

[Alaric]

Wow, portfolio capital increased by £5,247.39? Not a bad result for just over 4 months wouldn’t you say? Well a complete amateur investor might say that, but that is not me!

As far as I can see, that's marginally less than the accumulated dividends. What would an investor in a FTSE 100 ETF got over the same period?

[IanTHughes]

Wow, portfolio capital increased by £5,247.39? Not a bad result for just over 4 months wouldn’t you say? Well a complete amateur investor might say that, but that is not me!

As far as I can see, that's marginally less than the accumulated dividends. What would an investor in a FTSE 100 ETF got over the same period?

Is that more hindsight on your part? What allowance have you made for the fact that a number of shares in the portfolio were bought only days before going ex-dividend?

But in truth, as I said:

Well a complete amateur investor might say that, but that is not me!

Only a novice to investing would try to make any analysis of any strategy based on such a short time-frame!

By the way, what about my challenge?

viewtopic.php?f=31&t=18353&p=240436#p240436

….but for most of the last ten years, investors in Unilever, Compass, Diageo and even just FTSE 100 trackers would have done much better than VOD investors despite the higher yield of the latter.

If you are so sure that the above is correct and of course will continue to be true, why do you not set up a test portfolio, reported on these boards, so that in future we can make a comparison between your Income Portfolio and those HYP's, both virtual and real, that are already reported. It really does not take much effort once the initial selections have been made.

Are you going to take on HYP with your own Income Portfolio? Or are you simply going to continue to rely on hindsight as you do now?


Ian

[Alaric]

Are you going to take on HYP with your own Income Portfolio?

There is no one well defined HYP strategy. Selecting by dividend yield can be selecting stocks for recovery. Vodfone being a recent example.

[Itsallaguess]

Are you going to take on HYP with your own Income Portfolio?

There is no one well defined HYP strategy. Selecting by dividend yield can be selecting stocks for recovery. Vodfone being a recent example.

Whilst true, that should not stop you being able to come up with your own comparative income portfolio of 'lower-yielding-but-fast-growing-dividend' shares....

Are you able to say why you're not willing to compile such a comparative portfolio?

I'm sorry to say that whilst I think you're arguments are compelling, your continued reluctance to follow through with a sample portfolio looks to be damaging the credibility of such views....

Cherry-picking specific examples that bolster your view will only get you so far, I'm afraid, and there comes a time where an ongoing demo portfolio is going to be required if you want your income-approach to gain any real credibility.....

Why so shy?

Cheers,

Itsallaguess

[Alaric]

I'm sorry to say that whilst I think you're arguments are compelling, your continued reluctance to follow through with a sample portfolio looks to be damaging the credibility of such views....

The lazy approach is not to be greedy and just chose a FTSE 100 Tracker at around a 4.5% yield. Either that or an IT regarded as a proxy for the market as a whole. It's benchmarking.

[Itsallaguess]

I'm sorry to say that whilst I think you're arguments are compelling, your continued reluctance to follow through with a sample portfolio looks to be damaging the credibility of such views....

The lazy approach is not to be greedy and just chose a FTSE 100 Tracker at around a 4.5% yield. Either that or an IT regarded as a proxy for the market as a whole. It's benchmarking.

But if I've understood you correctly, one of your main arguments is that by selecting specific shares with 'lower yields' that those usually found in many HYP options, your approach would see those 'lower yielding' shares raise their income faster, and more reliably, than the HYP offerings.

Are you suggesting that a 'lazy approach' such as buying a FTSE tracker or market-proxy-IT will satisfy that specific aspect of your argument too?

If this is the case, why have you even mentioned 'lower-yielding-but-faster-growing shares' at all in your discussions, if you don't plan on utilising such specific investments to gain an income-advantage over a higher-yielding approach?

Cheers,

Itsallaguess

[Alaric]

Are you suggesting that a 'lazy approach' such as buying a FTSE tracker or market-proxy-IT will satisfy that specific aspect of your argument too?

When you buy a market tracker, you get the shares that perform well in addition to the dross.

My distrust of at least some of the interpretations of HYP are that they appear to set out to select shares with recent poor performance, because these have yields exceeding the market mean, whilst excluding stocks whose price performance is even better than their dividend growth, because the price growth has forced the yield down.

[IanTHughes]

Are you suggesting that a 'lazy approach' such as buying a FTSE tracker or market-proxy-IT will satisfy that specific aspect of your argument too?

When you buy a market tracker, you get the shares that perform well in addition to the dross.

My distrust of at least some of the interpretations of HYP are that they appear to set out to select shares with recent poor performance, because these have yields exceeding the market mean, whilst excluding stocks whose price performance is even better than their dividend growth, because the price growth has forced the yield down.

In that case why can you not put us right and give us a selection that excludes "shares with recent poor performance" whilst leaving us only those "stocks whose price performance is even better than their dividend growth"?

If you cannot, I for one will have to assume that you are you just one more of the cultists that dreams of HYP failure without knowing why, of how to better its success. Is that you?


Ian

[tjh290633]

Are you suggesting that a 'lazy approach' such as buying a FTSE tracker or market-proxy-IT will satisfy that specific aspect of your argument too?

When you buy a market tracker, you get the shares that perform well in addition to the dross.

My distrust of at least some of the interpretations of HYP are that they appear to set out to select shares with recent poor performance, because these have yields exceeding the market mean, whilst excluding stocks whose price performance is even better than their dividend growth, because the price growth has forced the yield down.

I've said it before and I will say it again. Last year's winners are often this year's losers and vice versa.

You select shares for an HYP on the basis of their yield, rather than on the basis of their recent capital performance. If you are chasing capital performance, you are likely to choose shares with a lower yield. As we have seen countless times, such shares can take many years, if ever, to catch up with a higher yield share whose income is increasing, albeit at a slower rate, in terms of total income received.

TJH

[Itsallaguess]

Are you suggesting that a 'lazy approach' such as buying a FTSE tracker or market-proxy-IT will satisfy that specific aspect of your argument too?

When you buy a market tracker, you get the shares that perform well in addition to the dross.

My distrust of at least some of the interpretations of HYP are that they appear to set out to select shares with recent poor performance, because these have yields exceeding the market mean, whilst excluding stocks whose price performance is even better than their dividend growth, because the price growth has forced the yield down.

I'm not really sure that progresses the conversation much...

You must be aware that pointing at something and saying there is 'a better way' only really works if you're willing to hold up that 'better way' and show that this is the case.

Until now, you seem intent on pursuing the 'pointing' bit, but seem to have neither the evidence, or the means to provide the evidence, that your 'better way' actually exists...

Are you going to continue simply 'pointing', or are you willing to progress the conversation to the next, more 'evidence based', situation?

Surely it's obvious that your proposals require such evidence to have any credibility?

Again, I should add that I've got some sympathy with your view, but I can only honestly say that such sympathy comes from a 'gut-feel', rather than anything more serious, and as such I would not be as confident as you seem to be in continuing to disparage the HYP methods with no evidence that an improved income approach can be taken by amateur investors, who are the target audience for the HYP approach.

Are you willing to propose how such evidence might be gathered to prove your point?

Cheers,

Itsallaguess

[JamesMuenchen]

This virtual portfolio is barely 3 months old so It is far too early to make any conclusions.

Doesn't it show how HYP selection might tend towards underperforming shares?

Looking at the Reinvestment version you are demo-ing
viewtopic.php?f=15&t=17908&p=241371#p241371
we see that IMB was purchesed on 21.03.2019 for 14,988.79.

By 31.05.2019 IMB stood on a loss of -4,111.59 and received a top-up of £3,159.52.

On the latest update 02.08.2019, IMB is still highest yielding but rejected for a further top-up, with a reference to a deterioration in its dividend policy and its portfolio weighting. Loss stands at -2,790.47 against income of 177.67

The 3rd candidate for a top-up, ITV, is rejected due to held dividend. Loss -2,560.57 against income of 629.20

The 4th candidate, AV, is selected for a top-up of £2,172.43. It is on a loss of -419.11 against income of 754.67

The 2nd candidate by yield ranking, IGG, was rejected based on its portfolio weighting. This was "already high enough", having increased in value slightly by 666.74

True it is only a couple of months, but it surely backs up some of what Alaric has claimed about favouring investment in underperforming shares that have fallen.

It's clear this selection process favours relative weakness, even over high yield.

And if I had reported at Close of Business on 1 August ……
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.
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Wow, portfolio capital increased by £5,247.39? Not a bad result for just over 4 months wouldn’t you say? Well a complete amateur investor might say that, but that is not me!

How does that song go?

“What a difference a day makes …
Twenty four little hours”

I am sorry but the messianic cult of HYP detraction will just have to show some patience

What a bizarre reply.

I'm not sure why you think a tiny capital increase funded by dividends is relevant or impressive. It isn't.

And someone performing 'backroom admin' for Pyad's fantasy portfolio might want to ease off on calling others amateurs and cultists.

Talk of hindsight and patience is also off the mark. We're not looking at the portfolio performance here. Simply observing that the to-up selection is skewed heavily towards shares that have recently underperformed. Where the Yield filter alone might allow a profitable share to slip through occasionally, your Weighting criteria kicks in and guarantees funds will go to boost a straggler. We don't need hindsight to see that this is baked into your method.

Whether it will make a good or bad strategy remains to be seen. But it's clearly the process.

While I'm thinking of hindsight, I'm reminded that you've often said that your HYP investing method involves careful consideration of Reports and Trading Statements for sustainability of the dividend. So far, the only examples of that seems to be ITV is out as it held its div and IMB is out as it ditched it's dividend policy. I thought you were talking about something predictive. Maybe you could describe your method in a bit more detail in one of your updates?

[IanTHughes]

Doesn't it show how HYP selection might tend towards underperforming shares?

Looking at the Reinvestment version you are demo-ing
viewtopic.php?f=15&t=17908&p=241371#p241371
we see that IMB was purchesed on 21.03.2019 for 14,988.79.

By 31.05.2019 IMB stood on a loss of -4,111.59 and received a top-up of £3,159.52.

On the latest update 02.08.2019, IMB is still highest yielding but rejected for a further top-up, with a reference to a deterioration in its dividend policy and its portfolio weighting. Loss stands at -2,790.47 against income of 177.67

The 3rd candidate for a top-up, ITV, is rejected due to held dividend. Loss -2,560.57 against income of 629.20

The 4th candidate, AV, is selected for a top-up of £2,172.43. It is on a loss of -419.11 against income of 754.67

The 2nd candidate by yield ranking, IGG, was rejected based on its portfolio weighting. This was "already high enough", having increased in value slightly by 666.74

True it is only a couple of months, but it surely backs up some of what Alaric has claimed about favouring investment in underperforming shares that have fallen.

It's clear this selection process favours relative weakness, even over high yield.

And if I had reported at Close of Business on 1 August ……
.
.
.
Wow, portfolio capital increased by £5,247.39? Not a bad result for just over 4 months wouldn’t you say? Well a complete amateur investor might say that, but that is not me!

What a bizarre reply.

I'm not sure why you think a tiny capital increase funded by dividends is relevant or impressive. It isn't.

I never said it was impressive, merely that there was a big difference from one day to the next, the next being the day I originally reported the status of the portfolio. I thought that was clear to all, although obviously not clear enough for you, my apologies for that.

And someone performing 'backroom admin' for Pyad's fantasy portfolio might want to ease off on calling others amateurs and cultists.

The only reference to amateurs was when I claimed not to be one. In case you missed it here is what I said:

Well a complete amateur investor might say that, but that is not me!

Do you see that now?

Further, with regard to anti-HYP cultists, I believe your scornful attitude to myself together with your use of the phrase:

Pyad's fantasy portfolio

rather proves my point. Would you not agree?

Talk of hindsight and patience is also off the mark. We're not looking at the portfolio performance here.

Never once in my reply to you did I use the word “hindsight". Check again if you do not believe me! Furthermore, all I said about patience was that HYP, like any Investment Strategy requires patience, both on behalf of its adherents and those anti-HYP cultists, before any judgement with regards to the success of particular portfolio of shares. I am rather surprised that you disagree.

Simply observing that the to-up selection is skewed heavily towards shares that have recently underperformed. Where the Yield filter alone might allow a profitable share to slip through occasionally, your Weighting criteria kicks in and guarantees funds will go to boost a straggler.

If you had taken the trouble to look at the portfolio performance you would have seen that, with the exception of Imperial Brands (IMB), those shares bought on the highest yields were the ones that have so far showed some of the highest overall gain.

EPIC | Buy Yield | P/L (£)    | Total Inc (£) | Overall (£) | Overall Inc (%)
VOD  |     9.00% |    153.30  |       375.37  |     528.67  |           3.52%
IGG  |     8.61% |    666.74  |         0.00  |     666.74  |           4.45%
SLA  |     7.97% |  1,043.59  |       786.92  |   1,830.51  |          12.21%
AV   |     7.32% |   -419.11  |       754.67  |     335.56  |           2.24%
IMB  |     7.16% | -2,790.47  |       177.67  |  -2,612.80  |         -14.40%
WPP  |     7.13% |  1,684.61  |       663.94  |   2,348.55  |          15.66%
HSBA |     6.32% |    669.65  |       190.04  |     859.69  |           5.73%
ITV  |     6.25% | -2,560.57  |       629.20  |  -1,931.37  |         -12.88%
RDSB |     6.00% |    -39.39  |       114.23  |      74.84  |           1.00%
BP   |     5.63% |   -398.76  |       108.64  |    -290.12  |          -3.87%
LAND |     5.33% |   -994.45  |        95.29  |    -899.16  |         -11.99%
BLND |     5.26% | -1,124.15  |        98.65  |  -1,025.50  |         -13.68%
BHP  |     5.11% |    460.21  |         0.00  |     460.21  |           3.07%
GSK  |     5.05% |    912.94  |       178.79  |   1,091.73  |           7.28%
GNK  |     5.05% | -1,054.35  |         0.00  |  -1,054.35  |          -7.03%
BA   |     4.53% |  1,583.06  |       401.67  |   1,984.73  |          13.24%
SMDS |     4.34% |   -420.69  |       224.12  |    -196.57  |          -1.31%
CCL  |     3.84% | -1,113.55  |       152.57  |    -960.98  |          -6.42%
IBST |     3.73% | -2,552.80  |       380.18  |  -2,172.62  |         -14.48%

One of them, Aviva Plc (AV) is the selection for top-up this month.

And yes, the value weighting is monitored in order that the occasional top-ups do not over over-weight one particular holding. As I am sure you are aware, that is considered important in the HYP Strategy although I do accept that I may be being rather strict on this point at the moment.

While I'm thinking of hindsight, I'm reminded that you've often said that your HYP investing method involves careful consideration of Reports and Trading Statements for sustainability of the dividend. So far, the only examples of that seems to be ITV is out as it held its div and IMB is out as it ditched it's dividend policy. I thought you were talking about something predictive. Maybe you could describe your method in a bit more detail in one of your updates?

Yes I do resort to Reports and Trading Statements but, for the time being at least, I am happy to accept that as pyad selected the holdings, it is fine to top-up in the absence of anything detrimental since that original selection.

And no, except for the bullet points I do mention, I will not be describing my method in any more detail. Top-ups will be made to the highest yielding holding where I consider the dividend sustainable and which do not over-weight the overall holding in any one Business. This was of course why AV was chosen for this month.


Ian