Itsallaguess wrote:IanTHughes wrote:Itsallaguess wrote:If we take HYP1 as an example of what can happen over many years though Ian, we do know *now* which shares you see as the 'best performers', as we can see that two of them are delivering nearly 50% of the HYP1 income.
If we take your view that all the market has done has been to 'expose' the best performing shares from the original HYP1 selection, I think Alaric has a point if he were to ask why not simply now sell the large number of shares delivering the other half of the income, and plough that capital into what we can clearly now see as 'the two best performers'.....
Is that something you'd countenance?
No of course not!
How would we know that those two, now historical "best performers", would continue into the future as the two "best performers"?
Hang on though Ian - the reason you've given for not rebalancing HYP1, so that it's not relying on just two shares to deliver nearly 50% of the current dividend-income is that you'd be, in your own words - 'cutting your winners'.
But now you seem to also be saying that we shouldn't sell the dog-half of the HYP1 portfolio and concentrate all the HYP1 capital into those two stellar-performers, because we don't know that they are going to 'continue to be best-performers'.
You do seem to want it both ways Ian....
Surely it can't be both ways, so which is it?
Sorry, but you please hang on a moment. In your post above, you did not ask me whether, if I owned HYP1 as it is now currently constituted, I would countenance re-balancing it now. In fact what you asked was whether I would:
1) Completely un-balance it by concentrating all capital into only those two, now historical, "best performers", or
2) Starting out from scratch, re-create such an un-balanced portfolio as HYP1 is now, over-concentrated on those two, now historical, "best performers"'.
The answer to both questions was of course no.
Furthermore the question of whether, if I owned HYP1 as it is now currently constituted, would I now countenance re-balancing it is, if you will excuse me, irrelevant.
The scenario is: someone, not me of course, has owned HYP1, for 18+ years, right from the outset, without any re-balancing process at all, such that years ago the concentration of the portfolio income became un-balanced and has now ended up so completely un-balanced as you believe it now is.
The relevant question you should be asking is: would that person, after years of inactivity, suddenly spring into action and re-balance it now? To me the answer is clear: that person would do no such thing!
As I tried to explain in my earlier posts, if you want to avoid such over-concentration of Income, you have to do so from the outset, you do not wait 18+ years and only then act! Furthermore, I whole-heartedly agree that such a process, if properly conducted from the outset, will surely result in less over-concentration of Income, not least because there will be less Income growth to create over-concentration in the first place!
Would I institute such a process from the outset, possibly damaging, even foregoing Income Growth? Doubtful!
I do hope that is now clear
Ian