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Timing the market has given better results than time in the market

General discussions about equity high-yield income strategies
Alaric
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Re: Timing the market has given better results than time in the market

#243343

Postby Alaric » August 10th, 2019, 4:28 pm

IanTHughes wrote:If I was investing for income, whether using HYP or another Strategy, I would "prefer" the portfolio that produced the "best income result"! I really do fail to see why you cannot grasp such a simple explanation!

Ian


Just so I am not misunderstanding, you are saying that the portfolio with the lower market value is preferred even where the intention is to reinvest the dividends?

IanTHughes
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Re: Timing the market has given better results than time in the market

#243345

Postby IanTHughes » August 10th, 2019, 4:38 pm

Alaric wrote:
IanTHughes wrote:If I was investing for income, whether using HYP or another Strategy, I would "prefer" the portfolio that produced the "best income result"! I really do fail to see why you cannot grasp such a simple explanation!

Just so I am not misunderstanding, you are saying that the portfolio with the lower market value is preferred even where the intention is to reinvest the dividends?

No!


Ian

Alaric
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Re: Timing the market has given better results than time in the market

#243346

Postby Alaric » August 10th, 2019, 4:41 pm

IanTHughes wrote:No!


What are you saying then? There's a choice between a portfolio with a higher market value after reinvestment and one that had a higher dividend income but whose market value after reinvestment is lower than the first. If the second is preferred, that's ignoring market value.

IanTHughes
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Re: Timing the market has given better results than time in the market

#243349

Postby IanTHughes » August 10th, 2019, 4:48 pm

Alaric wrote:
IanTHughes wrote:No!

What are you saying then? There's a choice between a portfolio with a higher market value after reinvestment and one that had a higher dividend income but whose market value after reinvestment is lower than the first. If the second is preferred, that's ignoring market value.

You can play with your toy portfolios as much as you like, my answer is quite clear as explained here:

viewtopic.php?p=243340#p243340
IanTHughes wrote:If I was investing for income, whether using HYP or another Strategy, I would "prefer" the portfolio that produced the "best income result"!

If it remains too complex for you to understand, don't worry, just copy out my above text rather than making up what you think I would say. Others will understand it even if you do not.


Ian

Alaric
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Re: Timing the market has given better results than time in the market

#243351

Postby Alaric » August 10th, 2019, 4:52 pm

IanTHughes wrote:If it remains too complex for you to understand


I am afraid it is. But asserting that white is black has that effect.

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Re: Timing the market has given better results than time in the market

#243366

Postby IanTHughes » August 10th, 2019, 5:29 pm

Alaric wrote:
IanTHughes wrote:If it remains too complex for you to understand


I am afraid it is. But asserting that white is black has that effect.

Then why do you not stop making such an assertion!


Ian

johnhemming
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Re: Timing the market has given better results than time in the market

#243388

Postby johnhemming » August 10th, 2019, 7:25 pm

I am currently going through a review of how to invest some cash that I have got from selling an asset.

I am trying to go for a reasonably low level of risk and I would want reasonably liquid stocks. I also prefer stocks that pay a dividend and are for this purpose at least to some extent established. I would prefer to buy by value of the underlying investment hence I am interested in how well the company is doing.

My first selection criterion is FTSE350, then yield over 5% then PE under 20 and ideally a dividend cover over 1.

What I am doing at the moment is creating a spreadsheet with the basic figures from a list produced by ADVFN, adding to that a copy of the chart for about the past 7 years also from ADVFN and then taking the figures from Sharecast (previously digital look) as to turnover profit etc in the past 4 years and forecasts for the next two or three. What I find is that the figures from different sources tend to vary and so it is quite a complex task bringing all of this together. I am not sure where to get the forecast yield figure from in a way that is timely and accurate.

I am working through the list from the lowest PE through to the highest. As I get to the higher PEs they are more likely to be investments where the underlying business is not profitable enough.

The charts are particularly good to show stocks that have lost the confidence of the market.

For example Playtech (PTEC) looks like one of those. It dropped in early 2018 having peaked in mid 2017, but although its gross margins have dropped it still seems solidly profitable. Hansteen also dropped quite a bit in early 2018 but that appears to be one where ADVFN's PE figure is not a forward looking figure hence it depends moreso on the dividend strategy and I probably would not invest. The sharecast historic figures also don't seem to correlate properly.

I wonder if anyone has any source that seems reliable for summary histories?

I still don't think there is any alternative to doing my own detailed research on these as so many of the publicly available figures are not that reliable. (obviously the annual report is reliable up to a point, but it is the work after that which require additional work)

TUK020
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Re: Timing the market has given better results than time in the market

#243392

Postby TUK020 » August 10th, 2019, 7:51 pm

johnhemming wrote:
I still don't think there is any alternative to doing my own detailed research on these as so many of the publicly available figures are not that reliable. (obviously the annual report is reliable up to a point, but it is the work after that which require additional work)


Gengulphus did an excellent job a while back of providing a worked example of how he set up an HYP from scratch, that may be of use in referring to:
viewtopic.php?f=15&t=13813&p=167905&hilit=gengulphus+UHYP15#p167905

tjh290633
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Re: Timing the market has given better results than time in the market

#243432

Postby tjh290633 » August 10th, 2019, 10:38 pm

johnhemming wrote:What I am doing at the moment is creating a spreadsheet with the basic figures from a list produced by ADVFN, adding to that a copy of the chart for about the past 7 years also from ADVFN and then taking the figures from Sharecast (previously digital look) as to turnover profit etc in the past 4 years and forecasts for the next two or three. What I find is that the figures from different sources tend to vary and so it is quite a complex task bringing all of this together. I am not sure where to get the forecast yield figure from in a way that is timely and accurate.

I still don't think there is any alternative to doing my own detailed research on these as so many of the publicly available figures are not that reliable. (obviously the annual report is reliable up to a point, but it is the work after that which require additional work)

The annual report of the company you are looking at is the definitive source. Because of the various ways in which figures are reported in the same report, you need to adopt a consistent approach. Of course the report only gives you historical figures. If you want forecasts, then adopt your own crystal ball or consult Mystic Meg. The forecast that you need is of future dividends, not yield. The yield will be whatever the share price reflects in the future. You may find a consensus in one or other of the websites, which lists the predictions of each analyst making a forecast. They are only a guide and could all be 100% wrong.

TJH

Alaric
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Re: Timing the market has given better results than time in the market

#243438

Postby Alaric » August 10th, 2019, 10:53 pm

johnhemming wrote:I am trying to go for a reasonably low level of risk and I would want reasonably liquid stocks. I also prefer stocks that pay a dividend and are for this purpose at least to some extent established. I would prefer to buy by value of the underlying investment hence I am interested in how well the company is doing.

My first selection criterion is FTSE350, then yield over 5% then PE under 20 and ideally a dividend cover over 1.


Have you looked at the dividenddata site which lists both yields and past dividend performance?

https://www.dividenddata.co.uk/dividend ... et=ftse100

The dividend yield on the FTSE 100 Index is currently quoted as 4.66%, whilst that of the FTSE 250 is quoted as 3.09%

So if looking for 5% or more from FTSE 350 it's a decided tilt towards income.

As yield increases as prices fall, such a selection is also tilted towards recovery stocks. In other words where the price has dropped, but the dividend has been maintained.

Tracker ETFs and OEICs for the UK FTSE indexes are readily available, so can give a comparison of what an individual share selection has to match or beat.

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Re: Timing the market has given better results than time in the market

#243462

Postby johnhemming » August 11th, 2019, 4:54 am

Alaric wrote:Have you looked at the dividenddata site which lists both yields and past dividend performance?

I have now. It loses the distinction between different types of dividend (interim, final, special) on the historic dividends.

I am personally not sure of the value of a measure of dividend growth as a single figure. Past performance is only one factor that can be taken into account in looking at what may happen in the future and if the history is too summarised it is difficult to work out what weight to put on that.

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Re: Timing the market has given better results than time in the market

#243511

Postby SDN123 » August 11th, 2019, 10:37 am

johnhemming wrote:It loses the distinction between different types of dividend (interim, final, special) on the historic dividends.


See for example (for PSON):

https://dividenddata.co.uk/dividend-history.py?epic=PSON

Which data is missing?

SDN

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Re: Timing the market has given better results than time in the market

#243564

Postby johnhemming » August 11th, 2019, 3:49 pm

I hadn't seen that. Personally I like lists so I can reconcile discrepancies.

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Re: Timing the market has given better results than time in the market

#243592

Postby tramrider » August 11th, 2019, 6:12 pm

Alaric wrote:
The idea I am working on is that the long term return on a share can under some conditions of theory be established from the sum of the dividend yield and the dividend growth rate. That might not give enough immediate income to those wanting income today, but should not be a barrier for those seeking deferred income. You also have to accept that the relevant metric is market value.


I can understand your very interesting logic here, that the CAGR dividend growth rate ought to lead to share price growth, so that the yield of a share stays roughly constant. The total return should then be the sum of the yield and the CAGR. It seems as though this ought work for many 'dividend' shares.

However, I am rather puzzled by the behaviour of some popular investment trusts, with figures taken from the AIC web site.



The method roughly works for the high-yield (on topic :) ) RECI, which is relatively 'bond-like' with 5*9.3 ~ 43, and suffers from little share price variation. For most of the others, it seems that the total return values over 5 years bear little resemblance to 5 times the Yield + CAGR figure for 1 year (plus a bit of compounding). There seems to be a lot of share price total return that isn't accounted for by just the yield and the dividend growth, especially in the case of SMT.

I don't think closing of NAV discounts can account for this. There must be a lot of underlying share price growth that hasn't been returned to investors by way of dividends. So I think the simple dividend growth model is not sufficient to cope with factors such as share buybacks, which increase the share price but not the dividends.

Tramrider

johnhemming
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Re: Timing the market has given better results than time in the market

#243670

Postby johnhemming » August 12th, 2019, 9:07 am

Further to this issue (stock picking for HYP) I have just gone on holiday and bought a load of magazines to read on the planes. Included in those was the Investors Chronicle, which I had not really looked at before. That had pieces on the stocks I was looking at and was very useful. I already have a subscription online to the FT which does give access to the IC some how in the online search.

I will be talking to my brokers (Charles Stanley and Cheviot Quilter, I also have an account with II, but am not sure they do this but I will rummage around) about how easy it is to get research briefings on stocks. I have not really done some detailed portfolio analysis reviewing lots of stocks for probably over a decade and my priorities in the past were different anyway and I made some really bad decisions (as well as some really good ones with the balance strongly to the good ones).

It remains that secondary sources are not that reliable and probably some are better than others. However, I can always go back to source (which the internet makes a lot easier). I don't know when I first opened a broking account it was probably the late 80s (with Charles Stanley who I provided computer software for), but things have come along a long way in terms of access to information.


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