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Variations on PYADs HYP strategy

General discussions about equity high-yield income strategies
jackdaww
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Variations on PYADs HYP strategy

#209542

Postby jackdaww » March 23rd, 2019, 7:55 am

..

this strategy is mostly fine by me.

of crucial importance - are these phrases --

....i consider other fundamentals that can influence my selection.

...it's not entirely a mechanical process because I apply some judgement to each share.

so its more than high yield alone .

thus i can involve factors such as debt , ROCE and margins - easy metrics to find these days .

also i can eliminate contractors, which have caused many so much distress , and also avoid some shares (which others may be well happy with) , such as some utilities and telecomms for example .

8-)

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Re: Stephen Bland - New HYP Portfolio @ Stockopedia

#209543

Postby Alaric » March 23rd, 2019, 8:06 am

jackdaww wrote:so its more than high yield alone .


The problem with selection is that stocks can become high yield not because the dividend has massively increased or because the Company is exceptionally profitable, but because the share price has collapsed somewhat, often because "the market" is pricing in bad news. Those shares where the Company does make consistent profits and increases the dividend to match can be priced at a premium and thus fail the initial yield screening.

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Re: Stephen Bland - New HYP Portfolio @ Stockopedia

#209551

Postby Raptor » March 23rd, 2019, 8:47 am

Moderator Message:
Split off from thread on HYP Practical. To allow discussion of "strategy". Raptor.


For those wishing to see the PYAD discussion on stockopedia follow the link. Be aware to see the whole thread you need to register. There is a 14 day "free" trial, but you will receive e-mails from them even if you unsubscribe (from recent experience)

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Re: Stephen Bland - New HYP Portfolio @ Stockopedia

#209554

Postby Alaric » March 23rd, 2019, 8:54 am

Raptor wrote:
Moderator Message:
Split off from thread on HYP Practical. To allow discussion of "strategy". Raptor.


Moderator Message:
Off-topic and unwelcome jibe regarding HYP-Practical's remit deleted. Chris


A couple of extra metrics. On a five year view how does the dividend growth compare to RPI/CPI? Over the same period, how does share price growth compare to dividend growth?

Dod101
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Re: Stephen Bland - New HYP Portfolio @ Stockopedia

#209559

Postby Dod101 » March 23rd, 2019, 9:23 am

jackdaww wrote:..

this strategy is mostly fine by me.

of...it's not entirely a mechanical process because I apply some judgement to each share.


I do not think it is ever a mechanical strategy. Investing is art not science. Judgement, judgement and judgement. These are the most important three considerations, probably at the expense of most others, I think.

Dod

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Re: Stephen Bland - New HYP Portfolio @ Stockopedia

#209620

Postby Gengulphus » March 23rd, 2019, 3:57 pm

jackdaww wrote:this strategy is mostly fine by me.

of crucial importance - are these phrases --

....i consider other fundamentals that can influence my selection.

...it's not entirely a mechanical process because I apply some judgement to each share.

so its more than high yield alone .

thus i can involve factors such as debt , ROCE and margins - easy metrics to find these days .

also i can eliminate contractors, which have caused many so much distress , and also avoid some shares (which others may be well happy with) , such as some utilities and telecomms for example .

8-)

When you say "this strategy", I presume you mean "a HYP strategy" (not "the HYP strategy" - there's more than one). That's probably just a bit of context that has been lost in the board move, but if by any chance I've misunderstood, please say what type of strategy you do mean.

You say that it is "mostly fine" for you, which suggests that HYP strategies necessarily include bits you don't like. What are they, please? I ask because considering other fundamentals, not being entirely mechanical, and using more than high yield alone are all entirely consistent with what the HYP Practical board guidance says about HYPs, especially "Additional criteria may be used by individuals." And involving debt is specifically mentioned in it as well, and indeed it has a long history of being involved in HYP share selections, ranging all the way back to the original HYP1 selection.

What I suspect is really going on is not any type of disagreement with HYP strategies, but disagreements with other HYPers about which additional criteria should be used and which shouldn't. And IMHO such disagreements are perfectly OK - indeed, some disagreement is necessary for an interesting discussion. What isn't OK is trying to impose decisions about additional criteria on the discussion - either by trying to impose those criteria on the discussion or by trying to ban them from it. At least as far as I'm concerned, trying to suppress discussion of ideas about rejecting shares just because "their yield is too high" or because "the company's culture is wrong", e.g. by labelling them as "heresy" or "not HYP", is just as much against the board guidance as putting forward low-yield or foreign shares for new purchases. That doesn't mean that I agree with those rejection reasons - I believe "their yield is too high" is better used as a warning flag telling one to look hard for something wrong about the company's dividend prospects, not as a rejection reason in itself, and I simply don't understand what exactly is meant by "the company's culture", or even with a rather vague idea of it, how a HYPer can come to a reasonable verdict about it without spending a for-me-ridiculous amount of time on the job. But it's entirely OK to suggest them (just don't expect everyone to agree with them!) and they should be discussed calmly, without more-heat-than-light comments, and with 'agree to disagree' outcomes once it's clear that agreement is not going to be reached and nothing new is being brought into the discussion.

I'll also point out that one can report a post for trying to restrict on-topic discussion or for becoming personal, just as much as for indulging in off-topic discussion. If someone replies to an idea you post about an additional criterion you use to reject some shares, to say that your criterion is not HYP and so must be taken elsewhere when it is in fact perfectly compatible with the board guidance, reporting for trying to suppress on-topic discussion is an option to consider besides the obvious ones of ignoring their reply and replying to it - and if they start labelling you as a heretic or not a HYPer, reporting it for making things unnecessarily personal is as well. Not an option to be used lightly IMHO, but it can end up being the only reasonable solution if someone is persistently telling you off or getting personal when you're posting material that is actually entirely compatible with the board guidance.

Gengulphus

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Re: Variations on PYADs HYP strategy

#210378

Postby Wizard » March 26th, 2019, 12:44 pm

I think this is clearly an income strategy, but a very different one to high yield investing. I am reminded of the old joke...
Q: Who was the first person to get a million pounds on Who Wants To Be A Millionaire?
A: Chris Tarrant

Surely the strategy is all about PYAD replacing the lost income from the Dividend Letter being cancelled with a new income stream from Stockopedia ;)

Arborbridge
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Re: Variations on PYADs HYP strategy

#210476

Postby Arborbridge » March 26th, 2019, 7:35 pm

Wizard wrote:I think this is clearly an income strategy, but a very different one to high yield investing. I am reminded of the old joke...
Q: Who was the first person to get a million pounds on Who Wants To Be A Millionaire?
A: Chris Tarrant

Surely the strategy is all about PYAD replacing the lost income from the Dividend Letter being cancelled with a new income stream from Stockopedia ;)


Nothing wrong with that, is there? If I was a brilliant wordsmith, I'd want to make the most of my talents to. Especially if I had something of interest to say, as Stephen does.
Are we not placed on this earth to do make the most of our talents?

Arb.

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Re: Variations on PYADs HYP strategy

#210481

Postby Lootman » March 26th, 2019, 7:55 pm

Wizard wrote:Surely the strategy is all about PYAD replacing the lost income from the Dividend Letter being cancelled with a new income stream from Stockopedia ;)

The fact that he needs the income from a tipsheet or some scribbling might indicate to some souls that his investing methods have not been as successful as he would have us believe.

Although to be fair I think that applies to anyone who recommends shares for a living. The real investing talent keeps their ideas to themselves because they are that profitable.

JamesMuenchen
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Re: Stephen Bland - New HYP Portfolio @ Stockopedia

#210482

Postby JamesMuenchen » March 26th, 2019, 7:56 pm

Raptor wrote:
Moderator Message:
Split off from thread on HYP Practical. To allow discussion of "strategy". Raptor.


For those wishing to see the PYAD discussion on stockopedia follow the link. Be aware to see the whole thread you need to register. There is a 14 day "free" trial, but you will receive e-mails from them even if you unsubscribe (from recent experience)

Outline is a great way to read such articles in their entirety. EG:
https://outline.com/JheMz7

I don't understand how it works, or how it supports itself, but there you go

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Re: Variations on PYADs HYP strategy

#210486

Postby Wizard » March 26th, 2019, 8:11 pm

Having looked at the first article I would be interested to see if he justifies this statement...

For investors prepared to take the risks of equity income investing, HYPs suit both those building a portfolio for future income and those seeking immediate income, with seamless switching between the two modes.

Personally I disagree with the statement because I do not think a strategy that puts so much emphasis on income over capital should be recommended to those who do not need the income now. I know others disagree. However, as Stockopedia is a new forum for Stephen Bland I do not think it is unreasonable to expect such statements to be expanded upon. Maybe that comes in later articles.

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Re: Variations on PYADs HYP strategy

#210488

Postby moorfield » March 26th, 2019, 8:25 pm

Wizard wrote:Personally I disagree with the statement because I do not think a strategy that puts so much emphasis on income over capital should be recommended to those who do not need the income now. I know others disagree.


One approach builders can adopt is to think in terms of a target income needed or wanted in future and extrapolate to that from the income now. I have published my own income curve elsewhere which is now my principal measure of how well or badly my own HYP(ish) strategy is performing each year. For extra marks one can try to adjust that target income for inflation and guesstimate its present value each year.

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Re: Variations on PYADs HYP strategy

#210494

Postby Alaric » March 26th, 2019, 8:31 pm

Wizard wrote:Personally I disagree with the statement because I do not think a strategy that puts so much emphasis on income over capital should be recommended to those who do not need the income now.


Is he using the term HYP without defining it? Particularly for those whose income needs are well into the future, they might do better with lower yielding shares which increased their dividend payout both absolutely and above inflation, rather than bond like shares with high yields where the expectation of the market seems that of a dividend cut and the hope of the investor that it doesn't happen.

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Re: Variations on PYADs HYP strategy

#210501

Postby Itsallaguess » March 26th, 2019, 8:54 pm

Wizard wrote:
Having looked at the first article I would be interested to see if he justifies this statement...

For investors prepared to take the risks of equity income investing, HYPs suit both those building a portfolio for future income and those seeking immediate income, with seamless switching between the two modes.


Personally I disagree with the statement because I do not think a strategy that puts so much emphasis on income over capital should be recommended to those who do not need the income now. I know others disagree. However, as Stockopedia is a new forum for Stephen Bland I do not think it is unreasonable to expect such statements to be expanded upon. Maybe that comes in later articles.


I think it's a really quite fair statement when you take into account the target-audience....

Even if we agree, for the sake of this particular discussion, that an improved total-return might be achievable by investors who seek out two different investment strategies, based on capital returns during the pot-building-phase, and then switch to an income-strategy later in their personal-investment career, I think at that point the potential investors that might be interested in doing that, and trying to learn two really quite different investment strategies, are likely to be completely different to the ones being targeted with these PYAD articles....

PYAD has consistently said that his HYP strategy was intended for people that might not want to think about investment, beyond carrying out the initial work to select an income portfolio, so any criticism that might start with 'yes, but if you do this, and then this, things might work out better' are almost a non-starter, because his 'target audience' don't want to do 'this', and then 'that' - they just want a fire-and-forget strategy, and here they have one that can be switched from accumulation to draw-down with the flick of a dividend-payment-switch.....

No-one, not even PYAD as far as I'm aware, ever sells the HYP strategy as the *best* strategy from a pure-performance (total-return) aspect - it's recommended for it's simplicity, and it's attractiveness to non-investors, who don't want to have to think too hard, and certainly not after doing what thinking they initially need to do following the portfolio-building phase...

I think the key word in PYAD's statement is 'suits' - I suspect that you might be thinking that a better round-trip performance might be gained by taking two different approaches at different times, but I suspect PYAD would say that would not 'suit' his target audience - and that what 'suits' his target-audience is first and foremost the simplicity of the strategy, and the simplicity of being able to easily implement it over an investment lifetime, with just one simple dividend-switch to throw at the point between income-accumulation and income-spending.

For all my own misgivings about the original HYP strategy, that specific point is a really difficult one to refute, in my opinion...

Cheers,

Itsallaguess

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Re: Variations on PYADs HYP strategy

#210505

Postby tjh290633 » March 26th, 2019, 9:24 pm

Alaric wrote:
Wizard wrote:Personally I disagree with the statement because I do not think a strategy that puts so much emphasis on income over capital should be recommended to those who do not need the income now.


Is he using the term HYP without defining it? Particularly for those whose income needs are well into the future, they might do better with lower yielding shares which increased their dividend payout both absolutely and above inflation, rather than bond like shares with high yields where the expectation of the market seems that of a dividend cut and the hope of the investor that it doesn't happen.

We have been over this ground time and time again. For a long time the TR version of HIX and LIX (the FTSE350 high and low yield indices) drew gradually apart. They both started with the same value and if you look at the values you have your answer. More recently they are starting to converge.

My approach was always to build a flow of income, rather than to go for capital growth, which came anyway.

TJH

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Re: Variations on PYADs HYP strategy

#210513

Postby Wizard » March 26th, 2019, 9:50 pm

Itsallaguess wrote:
Wizard wrote:
Having looked at the first article I would be interested to see if he justifies this statement...

For investors prepared to take the risks of equity income investing, HYPs suit both those building a portfolio for future income and those seeking immediate income, with seamless switching between the two modes.


Personally I disagree with the statement because I do not think a strategy that puts so much emphasis on income over capital should be recommended to those who do not need the income now. I know others disagree. However, as Stockopedia is a new forum for Stephen Bland I do not think it is unreasonable to expect such statements to be expanded upon. Maybe that comes in later articles.


I think it's a really quite fair statement when you take into account the target-audience....

Even if we agree, for the sake of this particular discussion, that an improved total-return might be achievable by investors who seek out two different investment strategies, based on capital returns during the pot-building-phase, and then switch to an income-strategy later in their personal-investment career, I think at that point the potential investors that might be interested in doing that, and trying to learn two really quite different investment strategies, are likely to be completely different to the ones being targeted with these PYAD articles....

PYAD has consistently said that his HYP strategy was intended for people that might not want to think about investment, beyond carrying out the initial work to select an income portfolio, so any criticism that might start with 'yes, but if you do this, and then this, things might work out better' are almost a non-starter, because his 'target audience' don't want to do 'this', and then 'that' - they just want a fire-and-forget strategy, and here they have one that can be switched from accumulation to draw-down with the flick of a dividend-payment-switch.....

No-one, not even PYAD as far as I'm aware, ever sells the HYP strategy as the *best* strategy from a pure-performance (total-return) aspect - it's recommended for it's simplicity, and it's attractiveness to non-investors, who don't want to have to think too hard, and certainly not after doing what thinking they initially need to do following the portfolio-building phase...

I think the key word in PYAD's statement is 'suits' - I suspect that you might be thinking that a better round-trip performance might be gained by taking two different approaches at different times, but I suspect PYAD would say that would not 'suit' his target audience - and that what 'suits' his target-audience is first and foremost the simplicity of the strategy, and the simplicity of being able to easily implement it over an investment lifetime, with just one simple dividend-switch to throw at the point between income-accumulation and income-spending.

For all my own misgivings about the original HYP strategy, that specific point is a really difficult one to refute, in my opinion...

Cheers,

Itsallaguess

My bold.

Do you think that describes most people who have chosen to pay for a subscription to Stockopedia?

Itsallaguess
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Re: Variations on PYADs HYP strategy

#210540

Postby Itsallaguess » March 27th, 2019, 4:57 am

Wizard wrote:
Itsallaguess wrote:
PYAD has consistently said that his HYP strategy was intended for people that might not want to think about investment, beyond carrying out the initial work to select an income portfolio, so any criticism that might start with 'yes, but if you do this, and then this, things might work out better' are almost a non-starter, because his 'target audience' don't want to do 'this', and then 'that' - they just want a fire-and-forget strategy, and here they have one that can be switched from accumulation to draw-down with the flick of a dividend-payment-switch.....


My bold.

Do you think that describes most people who have chosen to pay for a subscription to Stockopedia?


I completely understand the point that you're trying to make, but to help answer that, I think it's instructive to also highlight another passage of PYAD's first Stockopedia HYP article too -

The main characteristics of my HYP strategy are to choose high yielding UK big caps, widely diversified with equal investment in each industry and totalling 15-20 sectors. Then just do nothing and enjoy the income, reinvesting as much as possible or withdrawing it according to need.

https://outline.com/JheMz7

I'd then have to ask you if you think that passage describes an investment strategy that would intimately align with 'most people who have chosen to pay for a subscription to Stockopedia'?

Personally, I'd say perhaps not, but we're now conflating two separate issues in my view -

1. Your initial point, discussing the description of a really simple, very low maintenance 'switchable' income investment strategy, which is the specific point I'm trying to discuss on this thread.

2. The chances of a Stockopedia subscriber being interested in following such a strategy....

I'm not really interested in this second point, as that's a marketing decision that someone else has made, but that should still not detract from the actual point that I'm trying to make, which is to say that for someone that *is* looking for a simple-to-follow and simple-to-implement income-strategy, then using the HYP approach for both the building and the draw-down phases can tick both of those boxes, and whilst we can talk all day about 'total-return performance', and why a different approach at different stages of our investment-careers might possibly deliver an *improved* total-return performance, PYAD isn't actually making any claims to deny that possibility - it's simply that one of the main selling points of the HYP strategy is that is might well deliver an adequate performance using a single, very simple-to-implement approach....

I maintain my view that you're trying to raise questions that some investors might well ask, regarding the HYP strategy, but that those investors are really not the people that PYAD thinks might actually benefit from his HYP strategy....

If my gran came to me asking about a new car for running around town, do you think it would be appropriate for me to lead her towards a high-performance vehicle with modern computer controls that would be difficult for her to understand and operate, or do you perhaps think it would it be better to help her look for a good reliable run-around, with a simple dashboard that she can easily understand?

Cheers,

Itsallaguess

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Re: Variations on PYADs HYP strategy

#210545

Postby Wizard » March 27th, 2019, 6:28 am

Itsallaguess wrote:I completely understand the point that you're trying to make, but to help answer that, I think it's instructive to also highlight another passage of PYAD's first Stockopedia HYP article too -

The main characteristics of my HYP strategy are to choose high yielding UK big caps, widely diversified with equal investment in each industry and totalling 15-20 sectors. Then just do nothing and enjoy the income, reinvesting as much as possible or withdrawing it according to need.

https://outline.com/JheMz7

I'd then have to ask you if you think that passage describes an investment strategy that would intimately align with 'most people who have chosen to pay for a subscription to Stockopedia'?

Personally, I'd say perhaps not, but we're now conflating two separate issues in my view -

1. Your initial point, discussing the description of a really simple, very low maintenance 'switchable' income investment strategy, which is the specific point I'm trying to discuss on this thread.

2. The chances of a Stockopedia subscriber being interested in following such a strategy....

I'm not really interested in this second point, as that's a marketing decision that someone else has made, but that should still not detract from the actual point that I'm trying to make, which is to say that for someone that *is* looking for a simple-to-follow and simple-to-implement income-strategy, then using the HYP approach for both the building and the draw-down phases can tick both of those boxes, and whilst we can talk all day about 'total-return performance', and why a different approach at different stages of our investment-careers might possibly deliver an *improved* total-return performance, PYAD isn't actually making any claims to deny that possibility - it's simply that one of the main selling points of the HYP strategy is that is might well deliver an adequate performance using a single, very simple-to-implement approach....

I maintain my view that you're trying to raise questions that some investors might well ask, regarding the HYP strategy, but that those investors are really not the people that PYAD thinks might actually benefit from his HYP strategy....

If my gran came to me asking about a new car for running around town, do you think it would be appropriate for me to lead her towards a high-performance vehicle with modern computer controls that would be difficult for her to understand and operate, or do you perhaps think it would it be better to help her look for a good reliable run-around, with a simple dashboard that she can easily understand?

Cheers,

Itsallaguess

Fair points, and I agree I have ended up conflating points about strategy and audience.

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Re: Variations on PYADs HYP strategy

#210598

Postby Gengulphus » March 27th, 2019, 9:54 am

Arborbridge wrote:
Wizard wrote:I think this is clearly an income strategy, but a very different one to high yield investing. I am reminded of the old joke...
Q: Who was the first person to get a million pounds on Who Wants To Be A Millionaire?
A: Chris Tarrant

Surely the strategy is all about PYAD replacing the lost income from the Dividend Letter being cancelled with a new income stream from Stockopedia ;)

Nothing wrong with that, is there? If I was a brilliant wordsmith, I'd want to make the most of my talents to. Especially if I had something of interest to say, as Stephen does.
Are we not placed on this earth to do make the most of our talents?

Oy! Why we're placed on this earth (and indeed whether we've been 'placed' on it at all) is even more off-topic for this thread and board than what pyad's motives are! ;-)

Gengulphus

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Re: Variations on PYADs HYP strategy

#210634

Postby Arborbridge » March 27th, 2019, 11:16 am

Gengulphus wrote:Oy! Why we're placed on this earth (and indeed whether we've been 'placed' on it at all) is even more off-topic for this thread and board than what pyad's motives are! ;-)

Gengulphus


Quite right. I must have been reading some 19th C sermons or feeling a bit more philosophical than usual :lol:

Probably an age thing


Arb.


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