Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

HYP1 is 20 - thread discussing income and capital diversification

General discussions about equity high-yield income strategies
Wizard
Lemon Quarter
Posts: 2829
Joined: November 7th, 2016, 8:22 am
Has thanked: 68 times
Been thanked: 1029 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357833

Postby Wizard » November 18th, 2020, 4:43 pm

Bubblesofearth wrote:
Wizard wrote:

The first sentence tells us that Doris' portfolio had not behaved like HYP1 has, it remained diversified. If this was not the case surely the sentence would have referred to it being well diversified at the time of selection (from the article I think it is clear Stephen Bland would have had no insight into the level of diversification at purchase, he only knew the portfolio from the time he started to do Doris' tax returns many years later). Indeed, if that had changed surely it would have been worth mentioning in the article that that diversification had been watered down over the forty years Doris owned the portfolio. So I think it is pretty clear that the article was telling this portfolio retained its diversification.

I believe my conclusion above is confirmed in the second highlighted sentence. If Doris' portfolio showed the imbalance that HYP1 does I can not see how it could be described as relatively low risk.

So whether the story was fact, fiction, or a bit of both, what we are told is that Doris had a portfolio that was initially well diversified and remained so after over forty years. In that situation I can see why nobody would worry about 'tinkering' with the portfolio. But that is not how HYP1 looks after half that time. My guess is that PYAD did not expect HYP1 would ever look anywhere near as unbalanced as it does now when it was first selected.


If diversification was maintained by tinkering then how is this possible, and who did it, if Doris had no desire to get involved? I think you are drawing conclusions to fit your opinion rather than as supported from the statements.

On the second point I do not agree that a portfolio cannot be low risk just because there is imbalance in share holdings. Is the Vanguard World tracker high risk because of the weighting it has to a few shares such as Apple?

On the whole issue of the risk of a portfolio that equal weights across shares and sectors and is then left alone I would throw the following challenge - show me one that has failed. Every study I've seen, Doris, HYP1, studies of the original Dow components or my own experience has confirmed my belief that the approach is sound.

You diversify on purchase precisely because you know some shares will do better than others! Thats how portfolios and markets evolve. Why incur an endless succession of charges to try to maintain equal weightings when there is no evidence to suggest it helps overall performance. Again, if there is evidence, let's see it.

BoE

I never suggested anyone tinkered with Doris' portfolio. What I suggested was it remained well diversified without tinkering, hence why I said it had performed differently to HYP1. I think the language used makes it hard to conclude anything else. As far as I can see, the alternative is this part of the story was not factual, as per the opening paragraph.

Bubblesofearth
Lemon Quarter
Posts: 1080
Joined: November 8th, 2016, 7:32 am
Has thanked: 8 times
Been thanked: 432 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357855

Postby Bubblesofearth » November 18th, 2020, 5:26 pm

dealtn wrote:Well I suspect it will be difficult, as you say, to find anything, at least that won't be open to the accusation of anecdotal. Any LTBH portfolio is going to be affected by Corporate events. Look at the original 100 components of the FTSE100, for instance. Only around a quarter remain. Some have been demoted, many taken over, many taken private, some gone bust.

So what would an equal weighted portfolio now look like, and how would you measure its success? It all depends on what happened under all those Corporate Events, plus all the rights issues etc. on the way. It is likely that such a portfolio, were it be truly no tinker, would have large holdings of cash, which are likely to have meant a drag not just on performance, but in real terms not kept up with inflation.

As I said you need to be concious of Survivor Bias. HYP-P is not my natural Board, indeed its not clear if I should ever be allowed to post there, so I haven't followed its evolution over the years. But no doubt there will be many posters from times past that are no longer regular posters. Some of those may have become disillusioned with the failure of their HYPs, and unsurprisingly don't post there, or "highlight" the failure for others to see. That's no more than human nature. It doesn't meant they, or their portfolios, don't exist. On the other hand there will be many who have been both successful and vocal.

I'm sure if there was a TLF Coin Tossing Board there would be an above average posting about successes, and even some with perhaps a 75% ability in such a "sport" to tell us about it. I doubt many would be convinced it was anything other than a 50:50 random "sport", but from comments alone that might not immediately be obvious. Why would it be so different on an investment site?


I don't really disagree with anything you have written. Regarding forced corporate actions all I can add is that I reinvest any resulting cash into the portfolio, usually in the form of a new share.

Other than that there remains a lack of any evidence, even in the form of a single anecdotal, that a 15 (or more) share, equal weight, LTBH portfolio has done badly. By that I mean worse than the index from which it is taken. All I hear are theoretical reasons why it's risky, absurd, unreal or whatever. Is it credible that there is an army of disillusioned HYPers to there and not a single one has taken the time to share their pain in the form of actual performance?

Yes, one has to be aware of survivor bias but to not have any negative results reported is surely unusual?

BoE

Gengulphus
Lemon Quarter
Posts: 4255
Joined: November 4th, 2016, 1:17 am
Been thanked: 2628 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357858

Postby Gengulphus » November 18th, 2020, 5:28 pm

Charlottesquare wrote:
Gengulphus wrote:
Charlottesquare wrote:
There are a fair few quasi Doris figures in Edinburgh (One is an honorary Great Aunt to my kids), all those who worked for our two wonderful banks (HBOS/RBOS) and held large slabs of their shares in their retirement savings know precisely what over concentration can mean to their standard of living.

If they know that, that's a major difference between them and the article's Doris: the article says "Although she was knowledgeable on many things, Doris had a blind spot when it came to money. ... Due to her blind spot with money she neither knew nor cared what shares were held ...". Of course, when you say "quasi Doris figures", you may be referring to the struggling Doris I typically saw talked about in TMF posts, or to Lootman's retirement-planning-with-limited-funds Doris, or some other type of Doris you've seen mentioned...

They know from experience- Edinburgh has vast numbers of ex staff re both banks, some had over concentrations in the shares of their former employers, they learned that over concentration was dangerous the really hard way. (My Brother in Law may have experienced similar with all his Centrica Shares)

IMHO that just reinforces my point that your "quasi Doris figures" are unlike the article's Doris in an important respect. To learn something from experience, it's necessary first to be aware that the experience has happened - which they clearly were, but the article's Doris probably wouldn't have been even if it was quite a major overconcentration! A really gross overconcentration, yes - I'm pretty certain she would have become aware of a 99% fall in her income, as based on my estimates of her wealth level in my last post that would take her income down to a low-to-average level. But losing roughly a third of her income, as would happen to a HYP1 owner if its top dividend payer BATS cancelled its dividend payments, I doubt she would even notice...

Gengulphus

Alaric
Lemon Half
Posts: 6035
Joined: November 5th, 2016, 9:05 am
Has thanked: 20 times
Been thanked: 1400 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357863

Postby Alaric » November 18th, 2020, 5:38 pm

Bubblesofearth wrote: Is it credible that there is an army of disillusioned HYPers to there and not a single one has taken the time to share their pain in the form of actual performance?


If they had tried to post on HYP-P, their posts would likely be deleted, as material critical of HYP is liable to be regarded as off topic.

I believe I've seen comments by those who have given up on HYP after a brief experience. They are liable to be told by the enthusiasts that either they were doing it all wrong or they didn't let it run long enough.

dealtn
Lemon Half
Posts: 6072
Joined: November 21st, 2016, 4:26 pm
Has thanked: 441 times
Been thanked: 2324 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357871

Postby dealtn » November 18th, 2020, 5:59 pm

Bubblesofearth wrote:Yes, one has to be aware of survivor bias but to not have any negative results reported is surely unusual?

BoE


Well not reported on this thread perhaps, but are you really claiming no-one has reported a negative experience of the HYP strategy on this site? I know the search facility is poor, but I think that stretches credulity a little far.

Bubblesofearth
Lemon Quarter
Posts: 1080
Joined: November 8th, 2016, 7:32 am
Has thanked: 8 times
Been thanked: 432 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357875

Postby Bubblesofearth » November 18th, 2020, 6:17 pm

dealtn wrote:
Bubblesofearth wrote:Yes, one has to be aware of survivor bias but to not have any negative results reported is surely unusual?

BoE


Well not reported on this thread perhaps, but are you really claiming no-one has reported a negative experience of the HYP strategy on this site? I know the search facility is poor, but I think that stretches credulity a little far.


I'm not talking about a negative experience. I'm talking about the posting of an actual HYP that has underperformed the index over a meaningful period of time. Quantitative not qualitative. I've been active on TLF and TMF before it for about 15 years and cannot recall such a post. It would have attracted a fair bit of attention I would think, as do most postings of actual portfolios with performance.

Of course I could have missed such a post which is one reason why I would welcome anyone coming forward with the same.

BoE

Lootman
The full Lemon
Posts: 18681
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6564 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357891

Postby Lootman » November 18th, 2020, 7:25 pm

Bubblesofearth wrote:
dealtn wrote:
Bubblesofearth wrote:Yes, one has to be aware of survivor bias but to not have any negative results reported is surely unusual?

Well not reported on this thread perhaps, but are you really claiming no-one has reported a negative experience of the HYP strategy on this site? I know the search facility is poor, but I think that stretches credulity a little far.

I'm not talking about a negative experience. I'm talking about the posting of an actual HYP that has underperformed the index over a meaningful period of time. Quantitative not qualitative. I've been active on TLF and TMF before it for about 15 years and cannot recall such a post. It would have attracted a fair bit of attention I would think, as do most postings of actual portfolios with performance.

Of course I could have missed such a post which is one reason why I would welcome anyone coming forward with the same.

I have been on TMF/TLF for 22 years and I have no idea whether such reports of under-performance have been published or not. But if they have not been then there is a fairly simple explanation for that. Why would someone go to the trouble of doing that?

Suppose I adopted a HYP for a few years and it under-performed some reasonable alternatives. Would I then go to a lot of trouble to report in detail about that? Isn't it more likely that I would just quietly abandon HYP and therefore post on other boards? Why dwell on a strategy that failed?

And what I am fairly certain of is that a number of people on TMF and TLF tried HYP and later abandoned it. Because they said exactly that. I was one although I feel sure someone will claim mine wasn't a "pure" HYP.

So yes, there will always be survivorship bias on this board. Subjectively it feels like there are fewer adherents than in the heyday of TMF. And there is no other community of HYP'ers that I am aware of other than here. So what you see here is most likely it for the utilisation of HYP in this country.

Wizard
Lemon Quarter
Posts: 2829
Joined: November 7th, 2016, 8:22 am
Has thanked: 68 times
Been thanked: 1029 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357893

Postby Wizard » November 18th, 2020, 7:29 pm

OldPlodder wrote:...
I am a new poster, and profoundly disliked the aggressive attitude, and quoting part of my posts out of context, basically willingly ignoring my meaning and distorting things, which I experienced from one particular poster. I am seriously considering packing it in already.

Please stick with it, these boards need new blood. That individual is not being personal, he takes the same abrasive, if not downright rude, approach in his replies to anyone with a different opinion to his own. I for one would be keen to hear more of your thoughts going forward.

tjh290633
Lemon Half
Posts: 8209
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4097 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357903

Postby tjh290633 » November 18th, 2020, 7:56 pm

Bubblesofearth wrote:I'm not talking about a negative experience. I'm talking about the posting of an actual HYP that has underperformed the index over a meaningful period of time. Quantitative not qualitative. I've been active on TLF and TMF before it for about 15 years and cannot recall such a post. It would have attracted a fair bit of attention I would think, as do most postings of actual portfolios with performance.

Of course I could have missed such a post which is one reason why I would welcome anyone coming forward with the same.

BoE

This is a comparison of the values of my Income units and the FTSE100 for the following years and the difference between them:

Year-end   Value   Change   FTSE       Change   Difference
Apr-87 1.00 1,949.40
Dec-87 0.88 -12.1% 1,717.00 -11.9% -0.2%
Dec-88 1.00 13.7% 1,773.70 3.3% 10.4%
Dec-89 1.28 28.2% 2,367.00 33.4% -5.2%
Dec-90 1.25 -2.3% 2,167.80 -8.4% 6.2%
Dec-91 1.37 9.2% 2,418.70 11.6% -2.4%
Dec-92 1.54 12.7% 2,846.50 17.7% -5.0%
Dec-93 1.87 21.7% 3,396.50 19.3% 2.3%
Dec-94 1.72 -8.2% 3,083.40 -9.2% 1.0%
Dec-95 2.01 17.0% 3,687.90 19.6% -2.6%
Dec-96 2.16 7.3% 4,092.50 11.0% -3.7%
Dec-97 2.97 37.8% 5,132.30 25.4% 12.4%
Dec-98 3.51 17.8% 5,882.60 14.6% 3.2%
Dec-99 3.95 12.7% 6,930.20 17.8% -5.1%
Dec-00 3.72 -5.9% 6,179.90 -10.8% 4.9%
Dec-01 3.43 -7.7% 5,217.40 -15.6% 7.8%
Dec-02 2.68 -21.7% 3,940.40 -24.5% 2.7%
Dec-03 3.09 15.2% 4,476.90 13.6% 1.5%
Dec-04 3.52 13.8% 4,814.30 7.5% 6.3%
Dec-05 4.27 21.5% 5,618.80 16.7% 4.8%
Dec-06 5.16 20.7% 6,220.80 10.7% 10.0%
Dec-07 4.83 -6.5% 6,456.90 3.8% -10.3%
Dec-08 2.79 -42.3% 4,434.17 -31.3% -10.9%
Dec-09 3.71 33.1% 5,412.88 22.1% 11.0%
Dec-10 4.06 9.4% 5,899.94 9.0% 0.4%
Dec-11 4.30 6.0% 5,572.28 -5.6% 11.6%
Dec-12 4.73 9.9% 5,897.81 5.8% 4.1%
Dec-13 5.61 18.6% 6,749.09 14.4% 4.1%
Dec-14 5.55 -1.0% 6,566.09 -2.7% 1.7%
Dec-15 5.61 1.1% 6,242.32 -4.9% 6.1%
Dec-16 6.12 9.0% 7,142.83 14.4% -5.4%
Dec-17 6.37 4.1% 7,687.77 7.6% -3.5%
Dec-18 5.47 -14.2% 6,728.13 -12.5% -1.7%
Dec-19 6.20 13.4% 7,542.44 12.1% 1.3%
Nov-20 5.50 -11.3% 6,385.24 -15.3% 4.0%

There are no more than 3 successive years where my HYP income units have underperformed the FTSE100 index.

TJH

TUK020
Lemon Quarter
Posts: 2039
Joined: November 5th, 2016, 7:41 am
Has thanked: 762 times
Been thanked: 1175 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357912

Postby TUK020 » November 18th, 2020, 8:30 pm

JamesMuenchen wrote:
dealtn wrote:
Bubblesofearth wrote: Every study I've seen, Doris, HYP1, studies of the original Dow components or my own experience has confirmed my belief that the approach is sound.



Have you heard of Survivor Bias? (Or Confirmation Bias come to that).

Have you ever gone looking for failed strategies? If not it's hardly surprising the ones you have seen are "positive" and you have the belief you express.

Yes, it would be nice to get an occasional update on HYP2, HYP3, HYP4, HYP-lite and the rest of Pyad's non-tinker demos.

Isn't this just standard OEIC Fund Marketing?
Launch a bunch of funds, with different stock selections. There will inevitably be a spread of performance
At a later date, market the help out of the top performing one, and let the others wither/get acquired.

IanTHughes
Lemon Quarter
Posts: 1789
Joined: May 2nd, 2018, 12:01 pm
Has thanked: 730 times
Been thanked: 1117 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357920

Postby IanTHughes » November 18th, 2020, 9:02 pm

TUK020 wrote:
JamesMuenchen wrote:
dealtn wrote:Have you heard of Survivor Bias? (Or Confirmation Bias come to that).
Have you ever gone looking for failed strategies? If not it's hardly surprising the ones you have seen are "positive" and you have the belief you express.

Yes, it would be nice to get an occasional update on HYP2, HYP3, HYP4, HYP-lite and the rest of Pyad's non-tinker demos.

Isn't this just standard OEIC Fund Marketing?
Launch a bunch of funds, with different stock selections. There will inevitably be a spread of performance
At a later date, market the help out of the top performing one, and let the others wither/get acquired.

That is quite an accusation. Do you know that the results for HYP2, HYP3, HYP4, HYP-lite and the rest of Pyad's non-tinker demos were worse than that for HYP1?

If so, could you share the evidence for that please? Or are you simply musing?


Ian
Last edited by IanTHughes on November 18th, 2020, 9:15 pm, edited 1 time in total.

TUK020
Lemon Quarter
Posts: 2039
Joined: November 5th, 2016, 7:41 am
Has thanked: 762 times
Been thanked: 1175 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357923

Postby TUK020 » November 18th, 2020, 9:14 pm

IanTHughes wrote:
TUK020 wrote:
JamesMuenchen wrote:Yes, it would be nice to get an occasional update on HYP2, HYP3, HYP4, HYP-lite and the rest of Pyad's non-tinker demos.

Isn't this just standard OEIC Fund Marketing?
Launch a bunch of funds, with different stock selections. There will inevitably be a spread of performance
At a later date, market the help out of the top performing one, and let the others wither/get acquired.

So, that must mean that you know that the results for HYP2, HYP3, HYP4, HYP-lite and the rest of Pyad's non-tinker demos were worse than that for HYP1

Could you share the evidence for that please? Or are you simply musing?


Ian

Simply musing.
I've slapped my own wrist already!
:-)

Bubblesofearth
Lemon Quarter
Posts: 1080
Joined: November 8th, 2016, 7:32 am
Has thanked: 8 times
Been thanked: 432 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357926

Postby Bubblesofearth » November 18th, 2020, 9:37 pm

Lootman wrote:I have been on TMF/TLF for 22 years and I have no idea whether such reports of under-performance have been published or not. But if they have not been then there is a fairly simple explanation for that. Why would someone go to the trouble of doing that?

Suppose I adopted a HYP for a few years and it under-performed some reasonable alternatives. Would I then go to a lot of trouble to report in detail about that? Isn't it more likely that I would just quietly abandon HYP and therefore post on other boards? Why dwell on a strategy that failed?

And what I am fairly certain of is that a number of people on TMF and TLF tried HYP and later abandoned it. Because they said exactly that. I was one although I feel sure someone will claim mine wasn't a "pure" HYP.

So yes, there will always be survivorship bias on this board. Subjectively it feels like there are fewer adherents than in the heyday of TMF. And there is no other community of HYP'ers that I am aware of other than here. So what you see here is most likely it for the utilisation of HYP in this country.


I've seen plenty of reports of failure on TMF, from individual shares to whole asset classes. And there are a lot of critics of HYP that would, I imagine, be only too happy to shoot it down. So I don't think the absence of evidence of a poor performing HYP can simply be put down to reluctance to post.

It's not just HYP performance data that is scarce, it's performance data for any equal weight LTBH portfolios. They are not utilised only on TLF but, from my anecdotal experience, by professional wealth managers as well as individual investors. It's accessing the data that's hard.

BoE

TUK020
Lemon Quarter
Posts: 2039
Joined: November 5th, 2016, 7:41 am
Has thanked: 762 times
Been thanked: 1175 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357928

Postby TUK020 » November 18th, 2020, 9:51 pm

Bubblesofearth wrote:
I've seen plenty of reports of failure on TMF, from individual shares to whole asset classes. And there are a lot of critics of HYP that would, I imagine, be only too happy to shoot it down. So I don't think the absence of evidence of a poor performing HYP can simply be put down to reluctance to post.

It's not just HYP performance data that is scarce, it's performance data for any equal weight LTBH portfolios. They are not utilised only on TLF but, from my anecdotal experience, by professional wealth managers as well as individual investors. It's accessing the data that's hard.

BoE


I cannot remember the source details, so I am afraid this is at the half remembered anecdote level..........
This only relates to LTBH, not equal weighting.

A while back, one of the major US stockbroker services (Fidelity?) had the smart idea of doing a major data trawl and correlation analysis between portfolio returns, and investor characteristics. If they could work out what it was about successful investors that made them successful, they could derive some edge.

There were 2 categories of portolio manager who outperformed
- deceased
- had forgotten they had a portfolio.

More a summary of the impact of trading costs

No source data. Slapped wrist again

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357930

Postby Arborbridge » November 18th, 2020, 10:00 pm

Bubblesofearth wrote:
Lootman wrote:I have been on TMF/TLF for 22 years and I have no idea whether such reports of under-performance have been published or not. But if they have not been then there is a fairly simple explanation for that. Why would someone go to the trouble of doing that?

Suppose I adopted a HYP for a few years and it under-performed some reasonable alternatives. Would I then go to a lot of trouble to report in detail about that? Isn't it more likely that I would just quietly abandon HYP and therefore post on other boards? Why dwell on a strategy that failed?

And what I am fairly certain of is that a number of people on TMF and TLF tried HYP and later abandoned it. Because they said exactly that. I was one although I feel sure someone will claim mine wasn't a "pure" HYP.

So yes, there will always be survivorship bias on this board. Subjectively it feels like there are fewer adherents than in the heyday of TMF. And there is no other community of HYP'ers that I am aware of other than here. So what you see here is most likely it for the utilisation of HYP in this country.


I've seen plenty of reports of failure on TMF, from individual shares to whole asset classes. And there are a lot of critics of HYP that would, I imagine, be only too happy to shoot it down. So I don't think the absence of evidence of a poor performing HYP can simply be put down to reluctance to post.

It's not just HYP performance data that is scarce, it's performance data for any equal weight LTBH portfolios. They are not utilised only on TLF but, from my anecdotal experience, by professional wealth managers as well as individual investors. It's accessing the data that's hard.

BoE


As regards private investors running HYP (or anything else) we've seen a number of people admit they do not keep rigorous records - sometimes no records at all. We've seen teh reluctance to unitise, for example, though I'm not saying this is the only way you could judge a portfolio.
Most people, I would say, just keep a HYP running and they either "know" it works well enough or that it's been a failure. However, if they do not have the records, they can't prove it and there isn't anything they can publish.

This alone explains the shortage of examples. Even the well known HYPers or HYP-ish investors around here often cannot tell you what the performance has been.

Arb

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10023 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357955

Postby Itsallaguess » November 19th, 2020, 6:43 am

Arborbridge wrote:
Most people, I would say, just keep a HYP running and they either "know" it works well enough or that it's been a failure.


Not forgetting that well-known poster who keeps a HYP running *even though his own records* show that it's been a failure Arb....

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=24960&p=335451#p335443

I'm teasing, of course, and I know full well that you're happy to continue with both experiments, so please, the above is just a leg-pull given the recent talk of record-keeping...

As an aside, are you able to update the chart linked above with the HYP and income-IT figures up to this month, as I'd go so far as to say that your 'income-per-unit' chart is one of the most interesting long-term personal investment records that I've ever seen on this site, and especially so given that it's comparing two of the most discussed income-strategies...?

Cheers,

Itsallaguess

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357963

Postby Arborbridge » November 19th, 2020, 7:41 am

Itsallaguess wrote:
Arborbridge wrote:
Most people, I would say, just keep a HYP running and they either "know" it works well enough or that it's been a failure.


Not forgetting that well-known poster who keeps a HYP running *even though his own records* show that it's been a failure Arb....

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=24960&p=335451#p335443

I'm teasing, of course, and I know full well that you're happy to continue with both experiments, so please, the above is just a leg-pull given the recent talk of record-keeping...

As an aside, are you able to update the chart linked above with the HYP and income-IT figures up to this month, as I'd go so far as to say that your 'income-per-unit' chart is one of the most interesting long-term personal investment records that I've ever seen on this site, and especially so given that it's comparing two of the most discussed income-strategies...?

Cheers,

Itsallaguess


I thought of your earlier comment as I wrote my previous post :) I almost mentioned that some of us don't just boats about the good news: I have always aspired to being transparent and showing what my HYP is doing whether good or bad. As the results have fallen behind over the years, the observant will have noticed that the proportion of my wealth invested in ITs has increased compared with HYP. I'm not rushing to make changes, and that is because throughout my investing life, I've been aware of what I call the "supermarket queue" syndrome. Change queues from a slow one to a faster, and the faster queue then slows down.

With investment, it can take decades to find essential truths, and it's likely that by the time, the market has morphed towards another fashion. At present HYP is receiving a huge shock with Covid, the first major test since I started, and I am not about the abandon the experiment now during its most interesting time.

As regards the income chart - yes, I'll put up the latest version during the day. As you can imagine, HYP looks very sad against ITs at present.

Arb.

dealtn
Lemon Half
Posts: 6072
Joined: November 21st, 2016, 4:26 pm
Has thanked: 441 times
Been thanked: 2324 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#357982

Postby dealtn » November 19th, 2020, 9:14 am

Bubblesofearth wrote:
It's not just HYP performance data that is scarce, it's performance data for any equal weight LTBH portfolios. They are not utilised only on TLF but, from my anecdotal experience, by professional wealth managers as well as individual investors. It's accessing the data that's hard.

BoE


I suspect there really isn't the data out there.

Honestly, on this site, how many examples do we have of portfolios that meet the criteria of equal, and diversified initial selection, and truly "buy and hold". I'm struggling to think of any real world examples.

The majority of posters on the HYP-P Board, at least to me, seem to be "in construction". That is a completely different beast to the portfolio model you are looking for examples of. Many too will be "tinkering" rather than any strict adherence to the LTBH standard you are expecting. HYP1 appears to be about the only example portfolio anyone is putting forward.

I don't know anything about HYP2, HYP3 etc. it could be they did slightly different things, haven't run as long, or maybe aren't as successful as HYP1, and detract from the "HYP is great" narrative you appear to get here (and the pantomime "O no it isn't" response).

My recollection was that 20 years ago Stephen Bland "selected" a portfolio of 15 shares. There was no "rules" of the system then about ranking by yield, one per sector etc. The outcome was a general portfolio of large companies, mostly in the FTSE100, that mostly had significantly higher yields than the underlying Index. That portfolio was HYP1, and has evolved somewhat due to Corporate Events. The majority of its success is down to a few of those 15, and it would only have taken a slight change in those initial selections to have radically altered the outcome, and the debate today no doubt!

Consider if only 1 per sector was a "rule" (or if 2 were allowed they had 1/2 allocations). What if AA was chosen and not RIO? IMB and not BATS (well GLH). What if the Corporate Event never took place leading to cash available to make the acquisition of Persimmon (indeed what if an alternative share was "selected")? Alternatively if only 1 bank was selected, not 2, the portfolio could have been bigger, the same with the decision to have 2, not 1, insurer.

I think few here deny the success of the portfolio, barring criticisms of its subsequent concentrations, that don't sit comfortably with the desire for initial diversification. But the success of the portfolio I suggest is as much down to marginal initial selection decisions, than to the "HYP Strategy" itself.

Charlottesquare
Lemon Quarter
Posts: 1775
Joined: November 4th, 2016, 3:22 pm
Has thanked: 105 times
Been thanked: 560 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#358042

Postby Charlottesquare » November 19th, 2020, 11:16 am

Arborbridge wrote:
Bubblesofearth wrote:
Lootman wrote:I have been on TMF/TLF for 22 years and I have no idea whether such reports of under-performance have been published or not. But if they have not been then there is a fairly simple explanation for that. Why would someone go to the trouble of doing that?

Suppose I adopted a HYP for a few years and it under-performed some reasonable alternatives. Would I then go to a lot of trouble to report in detail about that? Isn't it more likely that I would just quietly abandon HYP and therefore post on other boards? Why dwell on a strategy that failed?

And what I am fairly certain of is that a number of people on TMF and TLF tried HYP and later abandoned it. Because they said exactly that. I was one although I feel sure someone will claim mine wasn't a "pure" HYP.

So yes, there will always be survivorship bias on this board. Subjectively it feels like there are fewer adherents than in the heyday of TMF. And there is no other community of HYP'ers that I am aware of other than here. So what you see here is most likely it for the utilisation of HYP in this country.


I've seen plenty of reports of failure on TMF, from individual shares to whole asset classes. And there are a lot of critics of HYP that would, I imagine, be only too happy to shoot it down. So I don't think the absence of evidence of a poor performing HYP can simply be put down to reluctance to post.

It's not just HYP performance data that is scarce, it's performance data for any equal weight LTBH portfolios. They are not utilised only on TLF but, from my anecdotal experience, by professional wealth managers as well as individual investors. It's accessing the data that's hard.

BoE


As regards private investors running HYP (or anything else) we've seen a number of people admit they do not keep rigorous records - sometimes no records at all. We've seen teh reluctance to unitise, for example, though I'm not saying this is the only way you could judge a portfolio.
Most people, I would say, just keep a HYP running and they either "know" it works well enough or that it's been a failure. However, if they do not have the records, they can't prove it and there isn't anything they can publish.

This alone explains the shortage of examples. Even the well known HYPers or HYP-ish investors around here often cannot tell you what the performance has been.

Arb


Agreed- when I did run my SIPP as a part HYP the last thing I wanted to bother doing was record keeping, I spent most of my working day dealing with accounts etc so why on earth would I want to take a busman's holiday with my SIPP?

Wizard
Lemon Quarter
Posts: 2829
Joined: November 7th, 2016, 8:22 am
Has thanked: 68 times
Been thanked: 1029 times

Re: HYP1 is 20 - thread discussing income and capital diversification

#358059

Postby Wizard » November 19th, 2020, 12:02 pm

Wizard wrote:
Itsallaguess wrote:Sure - here's the HYP1 Year 10 to Year 20 data, showing the percentage of overall dividend income that was provided from the highest three payers in each year -

Image

It should be noted that the specific shares in the top-three payers did sometimes change from year to year, but it's clear from the above chart that the trend is to add more and more income-dependency over time to a very small number of HYP1 holdings.

Looking at the reports Gengulphus has posted so far (many thanks to him for that), the percentage of income from the top three shares for HYP1 up to Year 4 is as follows:
Year 0 - 26.8%
Year 1 - 26.2%
Year 2 - 27.1%
Year 3 - 31.1%
Year 4 - 33.2%


Taking account of the next three years we now have:
Year 0 - 26.8%
Year 1 - 26.2%
Year 2 - 27.1%
Year 3 - 31.1%
Year 4 - 33.2%
Year 5 - 31.8%
Year 6 - 35.4%
Year 7 - 37.8%

There must still be a reasonable increase to come to bridge the gap from 37.8% in year 7 to 52.0% in year 10.


Return to “High Yield Shares & Strategies - General”

Who is online

Users browsing this forum: No registered users and 5 guests