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Musings on Cash Buffers

General discussions about equity high-yield income strategies
CryptoPlankton
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Re: Musings on Cash Buffers

#321885

Postby CryptoPlankton » June 26th, 2020, 5:17 pm

As someone who derives around 20% (+/- a few per cent, depending on circumstances) of my income from a group of HYPish shares (I have never actually considered them as a discrete "HYP") I'm not sure whether that qualifies as a "significant portion"?

Regardless, I have to say that the questions raised are purely academic for someone in my position. My investment portfolio has been built up over many years with regular injections of new cash, with the intention of starting to draw an income when I felt I had a comfortable "safety margin". Consequently, I have been oblivious to "sequence of returns risk" as it simply took as long as it took to get to where I wanted to be. And where I wanted to be is being able to absorb income shocks like that currently impacting the average "HYP". This necessitated developing an excess of dividend income above that desired and, of course, a "cash buffer".

This is where I think the concept of a cash buffer makes this whole exercise potentially unfruitful. Hopefully, any investor in any strategy will never have every last penny committed to it. Whether uninvested cash in a trading account, cash in the bank, NSANDI bonds of some sort, or whatever, any prudent person will retain an easily accessible amount of 'safe' money equivalent to a period of income they feel comfortable with. For me, this is a holistic thing and, as GS said, the cash (or near cash) is just another asset to be redeployed as necessary. I am pretty confident that I won't need to go further and sell other assets to maintain my income, which is quite reassuring given the global economic shock we have experienced.

Anyway, with regard to HYP1, I think perhaps people get a little obsessed with it as being put forward as some kind of exemplar for HYP*. It is interesting to see how it has evolved and is quite educational in many ways, but, largely because of that, I doubt it remotely resembles either the portfolio or method of the majority of people who profess to run a HYP these days and I would be very surprised if there are many who don't also run some kind of complementary portfolio (foreign shares, ITs and such).

And so the question of a cash buffer really is a bit foggy when you take into account the totality and distribution of someone's wealth...


* I do understand why people continue to criticise PYAD's rules, but I really think they are, by and large, preaching to the converted - my guess is that most "modern day" HYPs are more flexible and/or part of wider income strategies.

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Re: Musings on Cash Buffers

#321892

Postby 1nvest » June 26th, 2020, 5:43 pm

As a annuity (that pays regular and often inflation adjusted income) replacement, HYP income potential variability isn't good. Nor is being restricted to UK stocks. For a more annuity like regular/consistent income stream compare for instance a asset allocation of a 50/50 blend of TJH's Accumulation HYP and US S&P500 index holding (Pound adjusted total returns/yearly rebalanced).

Image
[EDIT : the red bars label/title in that last chart should read TJH Accum]

Applying a conservative 3% SWR against that for income provision had that income rise consistently year after year with RPI. Starting with £100,000 in April 1987, taking the 3% SWR £3000 amount at the offset and subsequent inflation adjusted amounts at the start of subsequent years saw the surplus portfolio value and nominal income value grow ....

Image

Over the years since 1987 (slightly off figures as Terry uses fiscal 5th April years whilst the US data in that is end of March years) has seen the SWR value tending to become a increasingly smaller proportion of the total portfolio value. In effect started at 3%, but has declined down to being just 0.6%.

I've dropped a copy of the spreadsheet into googledrive ...Spreadsheet here

No cash buffer required, and current share price declines have no affect upon income (£8531 for instance having already been drawn at the start of April 2020 as the 2020/2021 fiscal year income provision).

HYP good points IMO are its tendency to equal initial weight across both stocks and sectors and using above average yield as a potential 'good-value' type basic/simple initial purchase metric. Not so good are its ignore capital philosophy; And the risk of being proposed as alternative to a annuity - but where income provision stability is less certain; Also the buy and hold choice that typically results in over-concentration/increased risk.

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Re: Musings on Cash Buffers

#321895

Postby Arborbridge » June 26th, 2020, 5:54 pm

Wizard wrote:
MrFoolish wrote:
GoSeigen wrote:There, I'm sitting on the fence -- what do you think?


I think it's an incomplete strategy - suggested as a replacement for annuities, but seen to be rather lacking during a downturn. For a so-called simple strategy it seems to generate no end of debate and confusion. Yet we hear nothing from its founder on income reserves or other mitigations.

I also fail to see why international shares and ITs are so taboo. What is the benefit of being so UK-centric, especially with the all the unknowns of Brexit? And we have a distinct lack of forward looking tech shares in this country. For a long-term strategy, you don't want too high a concentration in old economy shares, IMHO. Go compare the performance of the FTSE with most other indices.

PYAD's view was made clear not that long ago, I don't have time to search for the quote but it was something like... "...I've always said that if you can't deal with significant swings in income then HYP (and possibly equity investment in general) is not for you...". I took that to mean that unless you have a massive surplus of income over your needs don't try HYP.

Others have created cash buffers to try and address this, but if you are going to hold three years of income in cash that is a fair bit of capital presumably sitting in a deposit account earning next to nothing, which is a drag on returns. When HYP investors quote their yield on investment I suspect many do not factor in that cash buffer in their capital.

Oh and I completely agree on international shares, that is in my view the most unfathomable rule of all in HYPing.


In essence, what both of you are telling us (and, actually, I agree) that one has to be moderately rich to derive an income from investments and not worry about it! Either that, or you invest in higher yields and take on additional risk - and worry about what might happen. There's no golden solution other than being successful in life or inheriting a silver spoon, or earning a decent occupational pension.

BTW, to Mr Foolish: I wouldn't say it was lacking in a downturn - again the answer is to be a rich investor in order to ride over the bumps, well, troughs. And as to the "founder", he doesn't see the need to comment on such matters - he has devised a simple method of investment which he believes works (and has demonstrated that fairly adequately) and doesn't worry about the peripheral matters - it's only us who do that!

BTW, I am far from worrying about HY investment (or HYP) and I do not believe it's had its day. I've heard it all before. It is, after all, as old as the hills. Fashions change: when there's a dip everyone tends to question and worry, but in time things come right - usually fairly quickly.

So dinna fret - keep taking the poison and don't sell out when the going gets tough. Yes, and Wizard's quote is approximately correct and applicable here: if one cannot stand the ups and downs, then maybe equity investment isn't for you. I've had my fair share over more than thirty years, and most of those bad patches become insignificant with time.

Arb.


Arb.

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Re: Musings on Cash Buffers

#321900

Postby Aminatidi » June 26th, 2020, 6:22 pm

SalvorHardin wrote:
MrFoolish wrote:I also fail to see why international shares and ITs are so taboo. What is the benefit of being so UK-centric, especially with the all the unknowns of Brexit? And we have a distinct lack of forward looking tech shares in this country. For a long-term strategy, you don't want too high a concentration in old economy shares, IMHO. Go compare the performance of the FTSE with most other indices.

It's "because Doris..."

1) HYPers can't have international shares because Doris didn't have any. Imagine Gollum saying "nasty foreign shares" and you get the idea.

A reasonable justification for nothing foreign was that it was harder to buy foreign shares and monitor them. That was true in Doris' era, but when the commercial internet emerged in the late 1990s it became much easier. Nowadays it's no more difficult to deal in and monitor companies listed in major overseas markets than in the UK.

I can vouch for the difficulty in buying and monitoring foreign shares back in the time of Doris, having bought my first American share in the mid 1980s (it was Genentech). Even getting a share price was difficult - I relied on checking someone's copy of the weekend Financial Times.

Back on TMF in the early 2000s there was a strong bias against foreign investments, even UK quoted companies whose businesses were wholly outside the UK. Particularly small cap. oils who were routinely described as "bongo tinpot".

2) HYP can't have investment trusts (or unit trusts) because Doris didn't have any ("nasty funds")


Controversial :lol:

That said if it's as simple as you say it answers the one thing I never get about this forum which is why it almost seems people wilfully choose to miss out on the 94% of the investment universe that isn't the UK.

It always seems a really difficult one to fathom other than if it's as simple as religion and "we've always done it that way".

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Re: Musings on Cash Buffers

#321901

Postby Arborbridge » June 26th, 2020, 6:40 pm

Aminatidi wrote:Controversial :lol:

That said if it's as simple as you say it answers the one thing I never get about this forum which is why it almost seems people wilfully choose to miss out on the 94% of the investment universe that isn't the UK.

It always seems a really difficult one to fathom other than if it's as simple as religion and "we've always done it that way".


You just do not know, do you? I and quite a few others have mentioned having foreign investments (in my case, not directly owned but in ITs) - enough people saying that, I would say, to indicate that it's a large proportion. This includes HYP or HY investors too.
So, my point is, in the face of the certain knowledge that people here do invest outside the UK, what basis is there to claim we don't!?

Arb.

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Re: Musings on Cash Buffers

#321904

Postby Aminatidi » June 26th, 2020, 7:00 pm

Arborbridge wrote:
Aminatidi wrote:Controversial :lol:

That said if it's as simple as you say it answers the one thing I never get about this forum which is why it almost seems people wilfully choose to miss out on the 94% of the investment universe that isn't the UK.

It always seems a really difficult one to fathom other than if it's as simple as religion and "we've always done it that way".


You just do not know, do you? I and quite a few others have mentioned having foreign investments (in my case, not directly owned but in ITs) - enough people saying that, I would say, to indicate that it's a large proportion. This includes HYP or HY investors too.
So, my point is, in the face of the certain knowledge that people here do invest outside the UK, what basis is there to claim we don't!?

Arb.


It's a perception that you're in the minority I guess.

I'm probably in a minority in that I'm not here for HYP or any of the stuff that seems to cause all kinds of drama if you utter the wrong word in a thread.

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Re: Musings on Cash Buffers

#321906

Postby MrFoolish » June 26th, 2020, 7:10 pm

Arborbridge wrote:You just do not know, do you? I and quite a few others have mentioned having foreign investments (in my case, not directly owned but in ITs) - enough people saying that, I would say, to indicate that it's a large proportion. This includes HYP or HY investors too.
So, my point is, in the face of the certain knowledge that people here do invest outside the UK, what basis is there to claim we don't!?
Arb.


So you don't really run a HYP, you run a balanced portfolio. But you can have a nice exclusive natter about your high yielding shares on the HYP-P board :-)

It's a bit like posting on the Vegetarian Board, staying clear of pointing out that you enjoy a nice steak at the weekends :-)

Does anyone here run a "pure" HYP, from which they intend to derive the vast majority of their retirement income?

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Re: Musings on Cash Buffers

#321907

Postby TUK020 » June 26th, 2020, 7:17 pm

tjh290633 wrote:
05-Apr-09 21.60
05-Apr-10 11.91

TJH

TJH,
like your description of your income as "adequate".
Problem comes to those who are running closer to the wind (to use a nautical expression) and are more dependent on the income to meet essential bills.
A drop from 09 to 10 seen above would be catastrophic without reserve.
I suggest that there is another equivalent happening in the next year for most HYP investors.
This would seem to make it a once in a decade happening

This needs to be compensated for in terms of cash buffer, and the compensation necessary needs to be factored into the investment strategy chosen.

I am trying to understand the process to do so.

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Re: Musings on Cash Buffers

#321917

Postby midgesgalore » June 26th, 2020, 8:26 pm

I think this topic is regularly discussed. The earliest I recall at the lemon fool is under the heading "How much Income Reserve?"
viewtopic.php?p=4708#p4708
which was in November 2016, when we all moved here after TMF shut down the UK discussion boards. It is still what I work to and I am not in the least sorry it costs me returns on the capital I leave aside for a rainy year (or two).

Before moving over to TLF it was discussed regularly at the motley fool.

midgesgalore

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Re: Musings on Cash Buffers

#321934

Postby Arborbridge » June 26th, 2020, 10:41 pm

MrFoolish wrote:So you don't really run a HYP, you run a balanced portfolio. But you can have a nice exclusive natter about your high yielding shares on the HYP-P board :-)

It's a bit like posting on the Vegetarian Board, staying clear of pointing out that you enjoy a nice steak at the weekends :-)

Does anyone here run a "pure" HYP, from which they intend to derive the vast majority of their retirement income?


I am puzzled as to why you have such an emotional approach to this matter: why the sarcasm? I've noted this from you on a previous occasion, and I still do not understand your ire. Have I ever said to you or anybody that one must become a HYP investor and nothing else? We can invest as we see fit and I'm not advocating that anyone should put all their eggs in one basket.

I have a HYP (pure? - define that for me sometime) and I have other investments, which include BTL property, ITs and OEICS, and no it isn't balanced at all - i.e no gilts and only one bond fund. So what? Why is that so offensive to you?

If I did not account for my HYP investment separately, how on earth would I be able to tell how successful that investment was compared with my other activities? How could I tell which way my investment regime should be modified or continued?

The comparison with being a vegetarian is competely erroneous. Being a vegetarian is possibly a matter of health, or possibly a matter of belief in a certain ethical approach to life. Whilst there can be an ethical consideration in investment, I invested in HYP because it seemed a sensible approach. not because it was ethical appealing. And would have no hesitation in investing in some other way if it suited me, so don't you or anyone else try to pretend that HYP is for me some sort of "religion" - it's just that way I choose to invest most of my capital at the moment.

And just for the record, yes apart from the state pension, the majority of my remaining income does indeed derive from HYP, by a factor of around 1.5 to 1 as I remember. I publish the figure annually at around New Year.

Arb.

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Re: Musings on Cash Buffers

#321936

Postby Arborbridge » June 26th, 2020, 10:50 pm

TUK020 wrote:
tjh290633 wrote:
05-Apr-09 21.60
05-Apr-10 11.91

TJH

TJH,
like your description of your income as "adequate".
Problem comes to those who are running closer to the wind (to use a nautical expression) and are more dependent on the income to meet essential bills.
A drop from 09 to 10 seen above would be catastrophic without reserve.
I suggest that there is another equivalent happening in the next year for most HYP investors.
This would seem to make it a once in a decade happening

This needs to be compensated for in terms of cash buffer, and the compensation necessary needs to be factored into the investment strategy chosen.

I am trying to understand the process to do so.


Regarding the big drop 09 to 10, Terry will no doubt fill you in but I believe his income prior to that had been climbing quite steeply (I see it went up 15% the previous year). Therefore, the comparison you are looking for is whether the drop fell far below the inflation corrected income from the year dot. That is, don't just look at the one year, but check out the whole history.

The question is, if one had extracted a sensible RPI corrected income from the series, how long would it be before the dividends came back up to strength after 2010? That's the sort of calculation you need to define what safety margin or income reserve you should run.

In my case, I've allowed for a 50% drop in income and a five year recovery rate - that's what I've always expected to have to deal with.

Arb.
Arb.

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Re: Musings on Cash Buffers

#321940

Postby tjh290633 » June 26th, 2020, 11:11 pm

TUK020 wrote:
tjh290633 wrote:
05-Apr-09 21.60
05-Apr-10 11.91

TJH

TJH,
like your description of your income as "adequate".
Problem comes to those who are running closer to the wind (to use a nautical expression) and are more dependent on the income to meet essential bills.
A drop from 09 to 10 seen above would be catastrophic without reserve.
I suggest that there is another equivalent happening in the next year for most HYP investors.
This would seem to make it a once in a decade happening

This needs to be compensated for in terms of cash buffer, and the compensation necessary needs to be factored into the investment strategy chosen.

I am trying to understand the process to do so.

That is not the full story, of course. If you look at the data, you will observe a considerable rise in dividend per unit, prior to 2009:

05-Apr-04        11.13
05-Apr-05 13.03
05-Apr-06 14.21
05-Apr-07 15.18
05-Apr-08 18.73
05-Apr-09 21.60

This was occasioned by a number of take-over actions, and reinvestment in shares with higher yields than those departing. Not all of those were reliable, of course, and that led to the fall in income observed in 2010, which was just above the 2004 level. Had the income been drawn and increased in line with the RPI, then there would have been a large surplus, as the following table demonstrates:

.            Ordinary    Rebased     RPI    
Year to Divs/unit Divs/unit Rebased
05-Apr-88 2.86 100.00 100.00
05-Apr-89 2.72 94.81 112.28
05-Apr-90 4.24 147.94 122.89
05-Apr-91 5.42 189.25 130.75
05-Apr-92 7.52 262.34 136.35
05-Apr-93 6.91 241.32 138.11
05-Apr-94 6.27 218.85 141.65
05-Apr-95 7.48 261.07 146.37
05-Apr-96 7.38 257.48 149.90
05-Apr-97 8.40 293.36 153.54
05-Apr-98 8.88 310.04 159.72
05-Apr-99 8.46 295.34 162.28
05-Apr-00 11.33 395.51 167.09
05-Apr-01 11.73 409.64 170.04
05-Apr-02 13.02 454.50 172.59
05-Apr-03 12.10 422.26 178.00
05-Apr-04 11.62 405.63 182.42
05-Apr-05 12.07 421.42 188.21
05-Apr-06 13.12 458.13 193.03
05-Apr-07 14.04 490.19 201.77
05-Apr-08 24.32 849.07 210.22
05-Apr-09 21.17 739.15 207.76
05-Apr-10 11.06 386.20 218.86
05-Apr-11 16.71 583.44 230.26
05-Apr-12 17.46 609.34 238.21
05-Apr-13 19.91 694.93 245.09
05-Apr-14 20.47 714.45 250.29
05-Apr-15 21.33 744.60 253.44
05-Apr-16 21.67 756.58 256.78
05-Apr-17 24.93 870.11 265.82
05-Apr-18 29.23 1,020.51 274.75
05-Apr-19 29.25 1,020.97 283.10
05-Apr-20 31.57 1,102.06 284.38

There are some differences between these data and that in the earlier post, possibly down to special dividends being included. I am still trying to reconcile the different sources. The second year is an anomaly, because the new money was invested later in the year, so there were fewer dividends received. One could rebase it to 2001, which would show a number of years when the dividend income lagged the RPI. Indeed, by 2010 it had fallen in actual terms below that of 2000. In real terms, somewhat more. From the 2001 level, the RPI had risen by 50% by 2016, and the dividend per unit by then was almost twice the 2001 level. Not only that, but reinvested dividends would have increased the number of units and so the amount of cash being received.

I believe that the potential has been there to amass a cash buffer, although the starting date would have a big influence.

TJH

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Re: Musings on Cash Buffers

#321955

Postby MrFoolish » June 27th, 2020, 7:08 am

Arborbridge wrote:I am puzzled as to why you have such an emotional approach to this matter: why the sarcasm? I've noted this from you on a previous occasion, and I still do not understand your ire. Have I ever said to you or anybody that one must become a HYP investor and nothing else? We can invest as we see fit and I'm not advocating that anyone should put all their eggs in one basket.
Arb.


I wasn't wanting to come across in an unfriendly way, hence I put smileys on my comments. My apologies if it came across as such.

As you correctly say "We can invest as we see fit". But unfortunately people cannot post as they see fit. There are posters who are much closer to the original idea of running their pension exclusively from high yielding shares, but they get run out of town when they mention they need certain mitigations (e.g. a splattering of investment trusts) to make it work satisfactorily. Surely the board should be as much for these people as for those who wish to compartmentalise a HYP within their broader strategy.

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Re: Musings on Cash Buffers

#321956

Postby Arborbridge » June 27th, 2020, 7:48 am

MrFoolish wrote:
I wasn't wanting to come across in an unfriendly way, hence I put smileys on my comments. My apologies if it came across as such.

As you correctly say "We can invest as we see fit". But unfortunately people cannot post as they see fit. There are posters who are much closer to the original idea of running their pension exclusively from high yielding shares, but they get run out of town when they mention they need certain mitigations (e.g. a splattering of investment trusts) to make it work satisfactorily. Surely the board should be as much for these people as for those who wish to compartmentalise a HYP within their broader strategy.


People cannot post "as they see fit" on any board, they all have guidelines: that's not so difficult to understand. What I find incomprehensible is that for many years posters on HYP-P understood and obeyed the rules, and then about a year or two back an exceedingly small group of posters decided they didn't like this anymore, which has effectively lead to the destruction of that board - from hero to zero.
Mentioning mitigation has always been acceptable provided we don't start going into details about how wonderful some other investment idea is compared with HYP. The sort of discussion we've had in this thread would normally have taken place on HYP-P - in fact most of this thread is actually HYP-P material and could appropriately have appeared there. Were it not for a bout of persistent pseudo-trolling which lead to the recent guideline change, it certainly would have done so.
And I agree that the HYP-P board should be for those with investment trusts too - everyone on HYP-P must know that I have investments trusts because I mention them - I just don't discuss the details - and I've never felt I am being "run out of town". I've no reason to discuss my ITs on a board meant for HYP, and frankly I do see a reason to do so, or complain about it.

Arb.

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Re: Musings on Cash Buffers

#321957

Postby Dod101 » June 27th, 2020, 8:05 am

Returning to the original topic I have just gathered together all my cash in my two ISAs, my SIPP, Trading Account and bank accounts and without really trying I have something like 9 months of normal expenditure, and that is without touching any of my cash reserves, that is just from dividends unspent because of the lockdown. I need to invest some of that I guess because we are only about halfway through the year and whilst I may have some more cuts/cancellations I will certainly have a chunk of dividends still to come. I think that is part of the answer; if dividend income drops just cut expenditure. It is not necessarily a good idea, because I would rather be meeting friends for lunch, getting away for expensive weekends and seeing more of my family but for the time being so be it.

I think maybe people worry too much.

Dod

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Re: Musings on Cash Buffers

#321960

Postby Aminatidi » June 27th, 2020, 8:23 am

Dod101 wrote:Returning to the original topic I have just gathered together all my cash in my two ISAs, my SIPP, Trading Account and bank accounts and without really trying I have something like 9 months of normal expenditure, and that is without touching any of my cash reserves, that is just from dividends unspent because of the lockdown. I need to invest some of that I guess because we are only about halfway through the year and whilst I may have some more cuts/cancellations I will certainly have a chunk of dividends still to come. I think that is part of the answer; if dividend income drops just cut expenditure. It is not necessarily a good idea, because I would rather be meeting friends for lunch, getting away for expensive weekends and seeing more of my family but for the time being so be it.

I think maybe people worry too much.

Dod


So disclaimer I'm still working so don't think about income from anything other than salary.

But a genuine question.

Surely the answer to the original question is simply spend less or keep more cash available?

I'm struggling to see too many alternatives?

Now how big a cash buffer is of course a question that I guess we all have.

But this seems to be where I don't understand HYP as it always appears to focus on stuff that whipsaws all over the place so it's not like it's as clear cut as "just sell some units" as Terry Smith might advocate with his total return approach.

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Re: Musings on Cash Buffers

#321962

Postby MrFoolish » June 27th, 2020, 8:41 am

Does anyone have a view on holding corporate bonds as a buffer? I have some SLXX within my ISA and SIPP. It keeps paying out and I keep re-investing the proceeds in whatever takes my fancy (I still work, so don't need the income). I guess the economy would need to get pretty bad before these stop paying out? But I'm not an expert.

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Re: Musings on Cash Buffers

#321963

Postby Dod101 » June 27th, 2020, 8:42 am

Aminatidi wrote:[But a genuine question.

Surely the answer to the original question is simply spend less or keep more cash available?

I'm struggling to see too many alternatives?

Now how big a cash buffer is of course a question that I guess we all have.

But this seems to be where I don't understand HYP as it always appears to focus on stuff that whipsaws all over the place so it's not like it's as clear cut as "just sell some units" as Terry Smith might advocate with his total return approach.


Personally I think you are correct. I have so far lost only HSBC but have had cuts in Shell, Admiral and Imperial Brands. I will probably be short by 10/15% over the year. I can live with that. I do not think that HYP income need 'whipsaw all over the place' as you put it. In fact as HYP 1 has demonstrated the income seems to generally hold up pretty well, but it gets dangerously skewed if you are not careful and of course there will be the occasional disaster like this year unless we are very lucky and /or careful. I am not in the business of criticising HYP and I think any strategy is better than none.

Dod

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Re: Musings on Cash Buffers

#321965

Postby MrFoolish » June 27th, 2020, 8:48 am

Dod101 wrote:I have so far lost only HSBC but have had cuts in Shell, Admiral and Imperial Brands. I will probably be short by 10/15% over the year. I can live with that.
Dod


Interesting. Would you say there's something in your selection procedure that has given you this relatively benign outcome?

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Re: Musings on Cash Buffers

#321984

Postby Arborbridge » June 27th, 2020, 10:16 am

Aminatidi wrote:But this seems to be where I don't understand HYP as it always appears to focus on stuff that whipsaws all over the place so it's not like it's as clear cut as "just sell some units" as Terry Smith might advocate with his total return approach.


Whether it's true that HYP shares "whipsaw all over the place" compared with growth shares, one would need to prove. I'm not convinced that's true, but it's up to you to back up the statement. Not all growth investors can invest as successfully as Terry Smith. The growth shares I used to have I would say, anecdotally, were just as prone to whipsawing -which is one reason I decided to go with large companies which rarely go bust but which provide an income.

I could equally assert that a growth share's price depends on continuing growth and when that disappoints the price suffers badly - thus putting an end to one's hope of asset harvesting to pay one's pension.

Some people have the knack, but I don't - which I why I found more success in HY investing generally.
If I had put my trust in one fund i.e. Terry Smith and depended on that, the outcome would have been good. However, I could never bring myself to depend on one fund, and I could not have known beforehand that he would be as successful as he has been.

So, I went down the HY route, and so far haven't regretted it. It's provided my pension for ten years so I'm happy enough. For those with the skill to do otherwise, well done - you are better than I am in that respect and I take my hat off to you.

Arb.


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