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HYP1 is 21 - thread discussing income and capital diversification

General discussions about equity high-yield income strategies
MDW1954
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Re: HYP1 is 21 - thread discussing income and capital diversification

#484598

Postby MDW1954 » March 5th, 2022, 8:41 pm

Arborbridge wrote:The key word was "background" - this may not be a mere 20-30 years ago. Assuming IAAG is past the first flush of youth, or similar in age to me, I would say my background would mean my parents' generation and that's way before the Thatcher kids. So, I would have say my experience is the same: I am probably the first to become interested in the stock market from 1986 onwards.
Arb.


From what I know of Arb and IAAG, I suspect that the age difference is 25-30 years.

MDW1954

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Re: HYP1 is 21 - thread discussing income and capital diversification

#484607

Postby funduffer » March 5th, 2022, 9:47 pm

My experience is that my income ITs have proven to be much more successful than my HYP. I started both portfolios back in 2013 when I retired from work with a lump sum, and invested more or less equally in a HYP and a bunch of income producing IT’s. I was inspired by pyad and his followers on TMF and Luni’s IT baskets.

My IT portfolio has delivered much higher income and capital growth than the HYP over the 8 years they have been running.

I have a year or so to go, but after 10 years, unless things change, I will probably start to wind down the HYP and boost up the IT portfolio.

As regards this thread, I have some imbalances in the HYP but they are not extreme. I haven’t worked out the percentages, no share exceeds 10% of capital nor 10% of income.

Itsallaguess
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Re: HYP1 is 21 - thread discussing income and capital diversification

#484624

Postby Itsallaguess » March 6th, 2022, 7:00 am

Arborbridge wrote:
MrFoolish wrote:
Itsallaguess wrote:
I come from a background where absolutely no-one, either in my home-life or my work-life, discussed financial matters in those days, even of a basic kind - never mind in terms of such lofty ideas as 'stock market investment'...


Whilst I can't comment on your experience, I find this rather odd. We are only talking 20 years ago, not the stone age. I remember back in Mrs Thatcher's day, people around me were dabbling in privatision shares (tell Sid!) and unit trusts, etc. All the share prices were listed in the newspapers as well.



The key word was "background" - this may not be a mere 20-30 years ago. Assuming IAAG is past the first flush of youth, or similar in age to me, I would say my background would mean my parents' generation and that's way before the Thatcher kids. So, I would have say my experience is the same: I am probably the first to become interested in the stock market from 1986 onwards. There must, however, have been some sort of ideas floating around.

I remember me Dad talking about making your money work for you, and myself playing about with compound interest. But he never had any shares, of that I'm sure, and he never discussed finances. Except that after he retired I became aware that he was still making mortgage payments which came out of his state pension. I went to pay it off, and it turned out the balance was only £109! - around 1972.


I'm a bit younger that you Arb, but with a similar experience in terms of the complete absence of positive financial discussions during my youth.

I say the word 'positive' because those are the types of discussions I initially became aware of through The Motley Fool, where for the first time I was able to digest how ordinary people could make money work for them, and how we could start to personally take control of our long-term financial health. Suddenly financial topics felt accessible, and what had previously felt covered in an air of mystique, with an additional layer of class-dislocation to be quite honest, began to feel accessible and actionable.

That's opposed to the 'negative' aspects of finances that I'd only ever been exposed to up to that point, where parental-generation issues were completely dominated by the lack of finances, and the all-too-regular poor outcomes of such a situation, rather than anything positive at all, for most of my younger days.

I'm making sure that my own son has a much better understanding and appreciation of these things than I did at his age, and have set up a Junior ISA to allow him to see and understand the long-term implications of being able to incorporate good financial health from an early age.

When he's a bit older, and hopefully appreciates what we're trying to build for him now, I'll no doubt mention Pyad to him, and tell him about that fork in the road that will have hopefully so positively influenced both of our long term financial futures at that point.

Cheers,

Itsallaguess

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Re: HYP1 is 21 - thread discussing income and capital diversification

#484628

Postby dealtn » March 6th, 2022, 8:34 am

Itsallaguess wrote:
dealtn wrote:
Itsallaguess wrote:
Pyad has reported that HYP1 has seen a 104.9% rise in dividend income since last year's COVID-related income-drop of 47.6%, a welcome recovery, and one that continues to show the resilience of this type of income strategy to short and medium term market-related issues.


Sorry I have to disagree. What this shows is a "potential" resilience. There will be a huge set of potential HYPs, and this is a subset of one that has performed well (this year and previously) but many others will look far less healthy. There is a huge selection and survivor bias being made.


I think in general terms, we've seen over the years that income-strategies reported here tend to be fairly resilient to short and medium-term market-related issues, and dividends generally hold up quite well in broad terms, and where they don't, due to short or medium term market-related issues, then they generally tend to recover fairly quickly. I hope that in general terms, we might be able to agree that as a broad outcome of income-investment on the whole...

If we're then going to get into holding up the potential for outlier income portfolios not to have shown such general resilience over the years, then of course you won't find any argument from me on that point, but the danger of that approach is that absolutely any investment strategy can have outlier investors implementing them that skew into outlier results when set against more general outcomes for a given strategy, and so I don't think getting into granular discussions around this area is likely to produce any really useful debate, given that we could take that approach against any particular investment strategy and start to claim that any evidence anyone ever sees about them as only being 'potentially' representative...



I think we mostly agree. Where I disagreed was on your use of "this", using a single sample, to then extrapolate to draw conclusions about an entire strategy. Mathematically that is a nonsense conclusion to draw statistically. And that's before you consider selection and survivor bias.

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Re: HYP1 is 21 - thread discussing income and capital diversification

#484629

Postby dealtn » March 6th, 2022, 8:37 am

Bubblesofearth wrote:
dealtn wrote:Sorry I have to disagree. What this shows is a "potential" resilience. There will be a huge set of potential HYPs, and this is a subset of one that has performed well (this year and previously) but many others will look far less healthy. There is a huge selection and survivor bias being made.



No, what this shows is actual resilience of an actual HYP. I'm not aware of many other actual HYP's that look far less healthy, are you? Of course we can all go back in time and design HYP's that cherry pick dogs and would now look awful but that's different from what reality presents us with.



I agree. It shows the actual performance of a single actual HYP. Nowhere have I denied that. It does not though show the resilience of the strategy. A single example as evidence, and one that is subject to selection and survivor bias can't do that.

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Re: HYP1 is 21 - thread discussing income and capital diversification

#484630

Postby dealtn » March 6th, 2022, 8:45 am

Bubblesofearth wrote:
MrFoolish wrote:
Bubblesofearth wrote:No, what this shows is actual resilience of an actual HYP. I'm not aware of many other actual HYP's that look far less healthy, are you?


How would you know? Nobody has maintained a list of all the HYPs that started out. The ones reported here are likely to be subject to survivorship bias.


I said I wasn't aware of poor performing HYP's and asked if dealtn was. It's a question not a statement of knowledge.

I'm always sceptical of theoretical arguments trumping evidence. The only evidence I've seen on here is of successful HYP's, admittedly few with the detailed history of HYP1. Yes, that could be survivor bias but it's still the only evidence we a have. Until we see the logged poor performance of an actual HYP then these remain hypothetical (no pun intended).



Be sceptical if you wish, but scepticism of bias has stood me in good stead throughout my life, as well as in financial matters.

I don't HYP, and could never envisage myself ever doing so, and therefore won't have studied any real life HYP portfolios. I won't be able to produce any counterexamples - and suspect most of the available evidence is lost due to the original sites demise. Were one inclined, and access possible, I'd be surprised if many "HYPs" didn't underperform (but likely still meet their objective of a rising real income). That's not the dog I have in the fight. And I wouldn't even have engaged were this on a particular Board - but it isn't.

How many do you think would have been honest enough to continue publishing the outcomes of a poor performing portfolio do you think? Where are all the contributors from 20 years ago? That is how survivor bias works.

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Re: HYP1 is 21 - thread discussing income and capital diversification

#484771

Postby csearle » March 6th, 2022, 10:12 pm

Moderator Message:
The annuity-related interleaved discussion can now be found here. Please can that thread be used for any further discussion of them. Thanks. - Chris


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